Accounting and Finance for Managers

This study material focuses on accounting and finance for managers. It covers topics such as financial targets, performance evaluation, and investment opportunities. The document includes case studies of BARR PLC, BRITVIC Corporation, and COCA-COLA EUROPEAN PARTNERS. It also provides analysis of financial and non-financial ratios for these companies.

Accounting and Finance for Managers

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
SECTION A.....................................................................................................................................3
Question 1...............................................................................................................................3
1a. Main financial targets, and also measurable success benchmarks in regards to financial
development, financial sustainability including financial performance used in strategic plans
for corporations:.....................................................................................................................3
1b. Companies' performance is evaluated critically using financial and non-financial statistics
from the previous three years:................................................................................................5
3c. Rationalize why best-performing company (as determined by the ranking outcome from
task 2) would have or would not have been successful investment.....................................12
SECTION B...................................................................................................................................13
Question 2.............................................................................................................................13
2a. Analyse the various forms of internal and external longer-term financing options available
to publicly traded companies.:..............................................................................................13
2b. Choose one origin of long-term financing used by one of companies in case study to
analyze how it impacts existing stakeholders' interests:......................................................14
CONCLUSION..............................................................................................................................15
References......................................................................................................................................16

INTRODUCTION
Accounting and finances are two of the most significant elements of a company as well
as procedures that are linked. Accounting is concerned with recording business transactions,
while finance is concerned with organizing and using financial resources (Davies and Crawford,
2011). BARR PLC, BRITVIC Corporation, and COCA-COLA EUROPEAN
PARTNERS are three companies analysed in this study. These selected companies are leaders
in soft drink industry in the United Kingdom. In addition, the report assesses main internal and
external funding sources. This also covers the debate about how source of finance could impact
various stakeholders.
MAIN BODY
SECTION A
Question 1
1a. Main financial targets, and also measurable success benchmarks in regards to financial
development, financial sustainability including financial performance used in strategic
plans for corporations:
BARR (A.G.) PLC:
Customers vary, in number place, and culture, so the corporation makes a point of giving
major attention towards them, taking into account their tastes, and providing a range of greater-
tasting, higher-quality products. The enterprise is brand maker and developer, offering a diverse
and specialized product line to its buyers. With the business's own prominent products,
complementary affiliates partner products, including a long established history of bringing
promising inventions to marketplace, they hope to build brand loyalty raise brand awareness, and
surpass the competition (AGUILAR, JAIN and NEAVES, 2019). In corporation, it is critical to
establish and maintain good longer-term relationships. Customers and the corporation work
together to develop integrated strategies that facilitate them to leverage in growth through
multiple pathways to industry. The organization is proud of its ability to reshape these shared
plans into operation, delivering excellent in-store advancement of brand-led activities and
offering the maximum level of customer satisfaction. Moreover, through working with product
franchise affiliates international distributors, retailers, including third-party logistics companies,
the corporation establishes collaborative relationships that support both parties and support the
company developments.

The corporation is also seeking to strengthen efficiency across board whilst keeping strict
financial discipline and preparing for potential expansions. As the company expands, it is
committed to continually improving its processes and innovations. The Corporation's
expansionary strategic investments initiative has provided the corporation with some of most
advanced operating advancements in the industry enabling us to increase organizational
sustainability and efficiency faster.
BRITVIC PLC:
Britvic plc is a consumer-focused as well as purpose-driven business with industry-leading
product offering which is possibly the best to succeed in a competitive environment and strives
to provide investors with compelling returns All across 2019, the organization improved its
business strategy to ensuring it persisted competitive in face of growing consumer and retail
developments. The business is confident in its growth strategy, which it believes will stand the
test of period and deliver excellent returns in the future, so it considers this is even more relevant
in light of Covid-19. The corporation 's key strategic plan is built around four core strategic
priorities which will enable them to achieve their aim of being world's most innovative soft
drinks organization, laying the groundwork for a prosperous future. The following are Britvic's
primary strategic objectives:
 Establish both local classics and massive premium tags;
 Taking people health on top priority while serving its products
 Introduce flavor to millions of water events
 Think outside the framework to get exposure to different areas..
The corporation is focusing on growing their products, which are mainly range two or
multiple in segments, have low or without sugars, and are better positioned for future growth.
Their brands, such as Robinsons, Pressade and, more recently, Tango, have a strong background
of growing, evolving, and revitalizing them. After 2013, company has been steadily increasing
PepsiCo brand awareness and market share throughout United Kingdom.
COCA-COLA EUROPEAN PARTNERS PLC:
Diversity, according to the corporation, is the secret to longer success. Since no market or
consumer is same, businesses need customized strategies created by a diversified workforce in
order to meet the needs of their customers. To sustain current growth trajectory, organization is
empowering its employees - those closest to every sector's consumers - to recognize
opportunities, develop strategies to meet their demands and develop skills to achieve brilliant
implementation at sale-point. By combining the power of our global corporation with strength

and experience of community groups the business will achieve the maximum potential break-
through in market. The corporation 's mission statement acts as the basis for their strategic plan,
detailing what needs to be done in order to ensure longer-term, greater performance (Andjelic
and Vesic, 2017).
 People: Become a pleasant place to work whereby people feel inspired to reach their full
capabilities.
 Bring to the world a variety of higher-quality soda brands that anticipate and suit people's
preferences and expectations.
 Partners: Build a strong network of customers and suppliers for whom company can build
long-term credibility.
 Planet: As dedicated individual who could makes difference, facilitate in the development
and encouragement of social sustainability.
 Profit: Enhance long-term equity returns while also being mindful of overall
responsibilities.
 Productivity: Developing a market that is highly profitable, lean, and fast-moving.
1b. Companies' performance is evaluated critically using financial and non-financial statistics
from the previous three years:
Financial and non-financial ratios:
BARR (A.G.) PLC
Year 2020 2019 2018
Financial Ratio
ROE using Net income (%) 14.31 17.06 18.5
ROCE using Net income (%) 12.77 15.39 16.65
Profit margin (%) 14.52 15.95 17
Gross Margin 46.52 47.06 47.44
Current ratio 1.44 1.62 1.52
Liquidity ratio 1.44 1.29 1.22
Stock Turnover 14.07 13.68 14.67
Collection period (Days) 77 70 73
Credit period (days) 20 26 24

Interest cover 65 76.67 44.8
Non-Financial Ratios
Profit per employee 39 46 46
Operating revenue per employee 271 292 273
Average cost of employee 49 56 50
Total assets per employee 313 312 298
BRITVIC PLC
Year 2019 2018 2017
Financial Ratio
ROE using Net income (%) 19.64 31.04 32.89
ROCE using Net income (%) 9.96 13.04 13.68
Profit margin (%) 7.14 9.7 9.7
Gross Margin 56.79 58.08 57.97
Current ratio 0.81 0.93 0.93
Liquidity ratio 0.6 0.73 0.69
Stock Turnover 10.12 10.41 9.75
Collection period (Days) 80 75 71
Credit period (days) 68 64 61
Interest cover 8.43 8.12 5.94
Non-Financial Ratios
Profit per employee 23 30 29
Operating revenue per employee 332 314 295
Average cost of employee 45 44 41
Total assets per employee 362 368 333

COCA-COLA EUROPEAN PARTNERS PLC
Year 2019 2018 2017
Financial Ratio
ROE using Net income (%) 17.71 13.85 10.29
ROCE using Net income (%) 8.48 7.27 5.61
Profit margin (%) 12.1 10.46 10.48
Gross Margin 43.22 43.02 43.21
Current ratio 0.75 0.79 1.01
Liquidity ratio 0.58 0.61 0.81
Stock Turnover 16.62 16.62 17.02
Collection period (Days) 50 52 56
Credit period (days) 34 35 34
Interest cover 10.68 9.29 8.51
Non Financial Ratios
Profit per employee 53 46 44
Operating revenue per employee 442 442 418
Average cost of employee 65 68 65
Total assets per employee 687 699 687
Analysis of performance:
ROCE using Net income (%):

BARR has the maximum ROCE as compared to CCEP company and BRITVIC plc, as
per analysis focused on ROCE ratio of all 3 selected firms. Despite the fact that the corporation's
ROCE decreased from 2018 to 2020, it still has the highest ROCE in comparison. As a result,
BARR company will be ranked here first in respect of ROCE, followed by BRITVIC and then
CCEP. This shows that BARR is most efficient among others, in generating yeild form overall
capital employed in business (Fairchild and Hahn, 2020).
Profit margin (%):
The profit level of BARR has been falling over the last three years. However, as
compared to other companies, BARR company has the biggest operating margin. The company
with the highest profit margin level is BARR company, followed by CCEP, and finally
BRITVIC plc.
Current Ratio:

In contrast to the current ratios of CCEP and the BRITVIC plc, company BARR's current
ratio is maximum as shown in chart. The ratios of both of these firms are decreasing. Therefore,
BARR corporation is presently ranked first in terms of existing ratios, followed by BRITVIC,
and then CCEP.
Liquidity Ratio:
The liquidity ratio of BARR corporation is higher than that of all other corporations, as
seen in the diagram above. In addition, there is gradual trend in BARR ratio, whereas CCEP ratio
is declining. BARR plc is first in liquidity, followed by BRITVIC corporation, and afterwards
CCEP (Cetin and Icigen, 2017).
Stock tunover:

As seen in the graph above, CCEP, which has a larger stock turnover, is most effective at
converting inventory into revenue as compared to other two firms. On basis of the stock turnover
ratio, CCEP corporation is first, BARR plc is second, while BRITVIC corporation is third.
Credit Period:
BARR reported the shortest credit period over a three-years period. BRITVIC, on the
other hand, has the most credit days throughout the time span. According to the data, BARR is
the most effective and timely in paying its creditors. The BARR plc is first in the credit cycle
ranking, followed by CCEP then BRITVIC (Kyriakopoulos, Ntanos and Asonitou, 2020).
Collection Period:

As seen in the diagrams shown, BRITVIC as well as BARR stated nearly identical
collection periods, whereas CCEP reported the shortest. BRITVIC plc is the most successful in
collecting payments by debtors, according to the pattern and figures from the collection era. As a
result, the rankings would be BRITVIC is first, BARR is second, while CCEP is third.
Profit per employee:
This ratio indicates how well an organization utilizes its human capital. The chart shows
that CCEP is most effective at maximizing their human capital and rising profit per employee
proportion CCEP will be the first, BARR company is second, while Britvic plc is third,
dependent on that ratio (Guo and Wang, 2019).
Avergae cost per employee:

This ratio demonstrates how much more expensive their employees are. The graph
mentioned reveals that CCEP company's costs of employee proportion is also larger, whereas
BRITVIC company's cost of employee proportion is the smallest. In comparison to other firms,
BRITVIC has stated the most effective and desirable ratio. As a result, BRITVIC will be first,
then BARR second while CCEP is third.
Total Asset per employee:
This ratio indicates how effectively an organization uses its human capital to grow its
overall assets. Since CCEP has the highest efficiency ratio, it should be ranked first, followed by
BRITVIC corporation, and then BARR plc.

3c. Rationalize why best-performing company (as determined by the ranking outcome from task
2) would have or would not have been successful investment
BARR is most effective firm according to the cumulative review of ratios stated of all
these selected companies and also the ranking given, as company has achieved the maximum
profit percentage current ratio, liquidity ratios a well as ROCE. All of such ratios are necessary
for attracting new investors In almost every financial factor, the company performed admirably.
While BARR plc's rating is lower in terms of non-financial metrics, this would have little impact
on investors/stakeholders’ decisions because they are more concerned with the corporation 's
financial performance.

SECTION B
Question 2
2a. Analyse the various forms of internal and external longer-term financing options available to
publicly traded companies.:
The following are some of the key significant internal as well as external sources
available to a publicly traded company:
External Sources:
 Equity Shares: Ordinary stock also referred as equity shares, constitute the value of a
corporation 's ownership These shares are held by the corporation 's shareholders and key
stakeholders. They have full voting privileges and unrestricted claims to the corporation's
revenues and resources. In fact, a corporation's primary objective is to increase the value
of shares. They are corporation's owners and bear the responsibilities of owning.
Shareholders are liable for dividends post preference dividends have been paid. The
dividend percentage paid on these shares is not fixed; it is calculated by the availability of
divisible profits and the executives' goals (He, Chen and Hu, 2019).
 Preferences Shares: One other longer-term funding choice for a publicly traded
corporation is preference shares capital. In respect of dividends payout including capital
gains, these stocks have preferential privilege over equities, as their name suggests. The
dividends rate on such shares is fixed, and it must be repaid in full before dividends on
equity securities can be compensated. Similarly, when a business is liquidated, whole
preference capital in business is paid even before equity shareholders are paid.
 Debentures: Debt securities are amongst the most common options for an organization to
raise long-term capital. The proceeds generated by the issuing of debt securities are
alluded to debt funding, since they represent the corporation 's debts/obligations.
Debenture is paper which recognizes debt owed to owner and bears the seal of the
company. In US, there is contrast between debentures and bonds. Phrase bond refers to a
protected instrument supported by the company's assets, whereas debentures refers
to corporation's unsecured instruments.
 Loans from Banks/Financial Institutions: Financial institutions or banks are another
important source of longer-term funding. There are a variety of regional and state-level

finance institutions and banking companies that provide medium- and long-term lending
to business enterprises in United Kingdom.
Internal Sources:
 Sale of Assets: The sale of corporation assets is substantial means of internal financing.
Internal stream of financing by asset sale occurs when a business sells their assets as well
as uses proceeds to finance its capital needs internally. It can be used for short-term or
longer-term funding, depending on type of properties sold For instance, selling a car can
satisfy short-term as well as smaller financing needs, while selling land, apartments, or
equipment may meet longer-term and bigger financing needs (Jaafar, Salleh and Hamzah,
2021).
 Ploughing Back of Profits: New businesses can access external-sources of capital like
shares, debt instruments, and mortgages. A continuing publicly traded business, on the
other hand, can collect funds from own resources, like retained earnings and dividends
reinvested. Ploughing-back of revenue, also known as aggregation of earnings, happens
when a company doesn't pay dividends and instead reinvests portion of its income back
into organization. That type of finance is referred to as self-funding or internal financing.
Business profits are plowed back into the company by allocating a proportion of post-tax
profits to various funds like General Reserve, Replacement Fund, Reserves
Funds, Dividend Equalizations Fund and so forth. The corporation's longer, medium-
term, and short-term financial objectives would be met with these retained earnings.
2b. Choose one origin of long-term financing used by one of companies in case study to analyze
how it impacts existing stakeholders' interests:
All three selected companies balance sheets show a rise in amount of loans they have received
from banks or financial institutions. In this context, the following below is discussion about how
it can affect existing stakeholders' interests:
Shareholders: Increased debts as a percentage of equity indicates a company's poor liquidity
situation. In addition, interest payments on borrowed funds are passed over to interest and tax
section of corporation's profit and loss account. Third cost component that affects a company's
net income is interest. This is reported on the income statement because direct and indirect costs
are paid. Debt costs vary with depreciation expenses that are usually calculated using matching
concept. Income statement's third section, which covers interests and tax reductions may be used
to determine a corporation 's debt capital efficiency (Michiels and Molly, 2017).

Investors: The balance sheet simply shows the loan from the bank, which can be a troubling
consideration for investors. Longer-term debt-related liquidity inflows are typically reported
as debit to the cash reserves as well as credit to liabilities on the balance sheet. Whenever the
corporation receives the whole principal on long-term debt, this reports debit to cash and credit
to longer-term debt from the bank. Shorter-term commitments are recorded as debit to
obligations and credit to assets as company repays its debts. After corporation has paid off all of
its long-term debt commitments, the balance sheet will show cancellation of principal and
liability payments for total amount of interest required. As a result, while making business
investment, investors weigh all of these factors.
Management: An increase in the sum of bank loans shows ineffectiveness of management's
ability to finance business activities. Management is still concerned with company success and
therefore this type of funding has a huge effect on them.
Customers and Employees: Dependence on bank loans has an effect on a company's brand image
and employee as well as consumer confidence. This serves as a warning signal for the
corporation's insolvency, which has a direct impact on consumers' and employees' trust in the
organization and its products (Zhou, Huang, Guo and Xue, 2019).
CONCLUSION
According to the findings of the report, BARR Plc performs admirably in almost all
the financial and non-financial aspects as compared to BRITVIC company and CCEP. The
organization is the most effective and appealing for investment. From the perspective of
investors, the company has announced improved liquidity, profitability level and solvency
ratios and also an improvement in ratios.

References
Books and Journals:
Davies, T. and Crawford, I.P., 2011. Business accounting and finance. Financial Times Prentice
Hall.
AGUILAR, B., JAIN, A. and NEAVES, K., 2019. Short-Term Funding and Financing
Alternatives. Debt Markets and Investments, p.167.
Andjelic, S. and Vesic, T., 2017. The importance of financial analysis for business decision
making. In Book of proceedings from Sixth International Scientific Conference
Employment, Education and Entrepreneurship (pp. 9-25).
Fairchild, C. and Hahn, W., 2020. Accounting and finance majors outperform other majors on
the major field test in business and the Comprehensive Business Exam: An analysis of
exam performance drivers. Journal of Education for Business, 95(6), pp.345-350.
Cetin, E.I. and Icigen, E.T., 2017. Personnel selection based on step-wise weight assessment
ratio analysis and multi-objective optimization on the basis of ratio analysis
methods. International Journal of Economics and Management Engineering, 11(11),
pp.2718-2722.
Kyriakopoulos, G., Ntanos, S. and Asonitou, S., 2020. Investigating the environmental behavior
of business and accounting university students. International Journal of Sustainability
in Higher Education.
Guo, L. and Wang, Z., 2019. Ratio analysis of J Sainsbury plc financial performance between
2015 and 2018 in comparison with Tesco and Morrisons. American Journal of
Industrial and Business Management, 9(2), pp.325-341.
He, Y., Chen, C. and Hu, Y., 2019. Managerial overconfidence, internal financing, and
investment efficiency: Evidence from China. Research in International Business and
Finance, 47, pp.501-510.
Jaafar, S.B., Salleh, A. and Hamzah, H., 2021. Financial ratio analysis as a device for predicting
financial distress. Available at SSRN 3818116.
Michiels, A. and Molly, V., 2017. Financing decisions in family businesses: a review and
suggestions for developing the field. Family Business Review, 30(4), pp.369-399.
Zhou, B., Li, Y., Huang, S., Guo, S. and Xue, B., 2019. Customer concentration and corporate
innovation: Effects of financing constraints and managers’ expectation of Chinese listed
companies. Sustainability, 11(10), p.2859.