Financial Analysis of AG Barr plc, Britvic plc, and Coca Cola plc

This report provides a comprehensive analysis of the financial performance of AG Barr plc, Britvic plc, and Coca Cola plc. It includes an evaluation of financial ratios, such as ROE, ROCE, profit margin, and more. The report also discusses the sources of funds for these organizations and their impact on financial management.

Accounting and
Finance for Managers
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Table of Contents
Introduction......................................................................................................................................3
Section A..........................................................................................................................................3
Section B..........................................................................................................................................6
Conclusion.......................................................................................................................................8
REFERENCES..............................................................................................................................10
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Introduction
Financial management is one of the important aspects of every business organisation. For
the purpose of managing such resources it is necessary for different sector organisations to
manage their finances. Present report is based on analysing three organisations financial
statements that includes AG Barr plc, Britivic plc and Coca cola plc. All the organisations are
part of same industry and our competitors of each other. The report is basically divided into two
parts first part analysis is based on long and short term decision making and the way these
decisions impact on financial performance of the organisation. Second part of the report is based
on critical evaluation of the internal and external long term sources of finances that are available
for an organisation.
Section A
AG barr PLC Company: it is an organisation that is working as manufacturing and marketing
of soft drinks. The brand is dealing in products like carbonated soft drinks, fruit juice, energy
drinks and cocktails. .
Britvic plc: BRITVIC is a wholesaler and manufacture of soft drinks and supplying the products
to international food markets. There are different segments that are operating in Central Europe,
Sweden, Australia and Denmark. Britvic plc is one of the best food organisations that are
serving a specific quality food to the customers. The brand is having focus towards maintaining
the satisfaction level of their customers. For which there has been a specific standardization of
quality that is being maintained through years. This aspect has led to creation of high customer
loyalty and organisation is willing to offer quality products as per changing customer demands.
Coca cola plc: Coca cola PLC is providing high quality of food products to customers in terms
of packaging and taste. They are having a unique selling proposition that is helping them to
achieve a competitive advantage as compared to other competitive brands. Coca cola is dealing
in non alcoholic beverages. The overall market share of the organisation can be enhanced by
people getting high quality products and wide range that is offered by this brand.
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 Financial and non-financial ratios:
BARR AG PLC 25-1-2020 26-1-2019 27-1-2018
ROE using Net income (%) 14.31 17.06 18.50
ROCE using Net income (%) 15.97 19.06 20.01
Profit margin (%) 14.52 15.95 17.00
Gross margin (%) 46.52 47.06 47.44
EBIT margin (%) 15.15 19.64 20.07
Collection period (days) 77 70 73
Credit period (days) 20 26 24
Current ratio (x) 1.44 1.62 1.52
Gearing (%) 14.26 12.77 14.07
Net assets turnover (x) 1.08 118 1.15
Table 1: Financial Ratios for BARR AG PLC
Non-financial ratios 25-1-2020 26-1-2019 27-1-2018
Shareholders’ funds per employee (th) 219 219 208
Total assets per employee (th) 313 312 298
 Table 2: Non-Financial Ratios for BARR AG PLC
BRITVIC PLC 25-1-2020 26-1-2019 27-1-2018
ROE using Net income (%) 26.77 38.64 40.91
∟ ROCE using Net income (%) 19.64 31.04 32.89
Profit margin (%) 7.14 9.70 9.70
∟ Gross margin (%) 56.79 58.08 57.97
EBIT margin (%) 11.29 11.51 10.91
Collection period (days) 80 75 71
∟ Credit period (days) 68 64 61
Current ratio (x) 0.81 0.93 0.93
Gearing (%) 163.86 196.85 200.12
Net assets turnover (x) 1.51 1.42 1.44
Non-financial ratios 28-03-2020 30-03-2019 31-03-2018
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Shareholders’ funds per employee (th) 86 79 70
Total assets per employee (th) 362 368 333
 Table 3: Financial and Non-Financial Ratios for BRITVIC Plc
Coca cola PLC 25-1-2020 26-1-2019 27-1-2018
ROE using Net income (%) 17.71 13.85 10.29
ROCE using Net income (%) 8.48 7.27 5.61
Profit margin (%) 12.10 10.46 10.48
∟ Gross margin (%) 43.22 43.02 43.21
EBIT margin (%) 12.88 11.29 11.39
Collection period (days) 50 52 56
∟ Credit period (days) 34 35 34
Current ratio (x) 0.75 0.79 1.01
Gearing (%) 144.27 119.74 122.99
Net assets turnover (x) 0.83 0.80 0.74
Non-financial ratios 28-03-2020 30-03-2019 31-03-2018
Shareholders’ funds per employee (th) 226 252 252
Total assets per employee (th) 687 699 687
 Table 4: Financial and Non-Financial Ratios for Coca cola
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ROE by net income:
Analysis: From the above mentioned aspects it can be analysed that return on earnings of BARR
AG PLC has increased in the year 2019 as compared to in the year 2020. It implies that there has
been increment in the overall productivity of organisation because of which there has been in
enhancement in the return on earning of the organisation.
With respect to BARR AG PLC the success in both of the years is constant along with the overall
organisational productivity. With respect to this position of both the organisations it is
recommended that there is requirement for achievement of significant equity yields. In Britvic
plc organisation the organisation is having lower productivity ratio as compared to other two
organisations.
ROCE (percentage):
Analysis: It is a tool that is very important for the purpose of measuring the overall capacity for
organisation application of capital for the purpose of maximizing overall earnings. It is one of the
important tools for the purpose of measuring the significance of using capital that can help
investors to make judgement where the investment of money is according to the profitability of
organisation. In Britvic plc in the organisation is inefficient in the operations that are leading to
increasing capital investment as per the present probability ratio that is ranging at 19.64 percent.
There has been following in the ratio of 8.48 % that was observed in Coca cola PLC in the year
2020.
Net profit margin: As per the above made analysis it can be said that BARR AG PLC presently
holds a competitive position in the market form a time period of last three years. There has been
a falling of 7.18 percent that can be observed in the overall operating revenue of the Britvic plc
Coca cola. In case of coca cola the growth in the year 2020 can be observed to be much higher as
compared to year 2019 because the overall profitability percentage is quite high.
Net asset turnover ratio: from the above mentioned analysis it can be analysed that the Britvic
plc Coca cola has failed to maintain a proper cash flow. The major reason for this failure is
because of low proportion of assets that is arising because of no proper unit of managing assets.
It is also a rising because of lower availability of resources and time frame.
ROE using Net income: From the above made analysis it can be observed in the Britvic plc food
organisation is having lower productivity as compared to the other two organisations that is in
Britvic plc and the Coca cola. ARR and the coca cola are having effective market positions in the
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year 2019 and have also reflected higher productivity in the year 2020. This is representing that
there has been proper utilisation of resources for the purpose of achieving laid down objectives.
EBIT: From above made analysis it can be said that there has been a higher growth in the year
2019-20 in the Britvic plc Coca cola & coca cola has been running on lower profitability since
the year 2019-20.
Total assets per Employees: It is observed that in Britvic plc food crop there has been large
number of staff as compared to BARR AG PLC and the COCA COLA organisation. The large
workforce present in Britvic plc Coca cola is helping the organisation in having total asset per
employee that is spread across the whole work force. This aspect is very helpful in creation of
proper financial balance by providing effective services to the external stakeholders.
Credit period: from the analysis it can be observed that overall structure of BARR AG PLC group
and the Coca cola is quite similar to each other. In case of Britvic plc Coca cola there is
requirement of larger time frame for the purpose of meeting their commitments in terms of
credit.
Gross margin: Britvic is having lower profit margin. It can be clearly observed that in the year
2018 the overall profit margin of health and was changing at 57 % and it has come down in the
year 2020 that is at 56 percent.
Shareholder fund per employee: It can be said from the above-mentioned information that the
overall shareholder found in Coca cola is twice as compared to BARR AG PLC and the BRITVIC.
Credit period: As per the above mentioned figures it can be said that the overall credit period for
AG BARR plc and Coca cola are same in the similar situation. There is proper following up of
policies and legal laws. Apart from this in Britvic plc foods PLC it takes longer time to meet the
respective commitments and objectives of the organisation.
Collection period: In Britvic plc business it can be observed that there is proper capability of
recovering receivables as compared to the other two competitor organisations. Coca cola is
willing to compensate its debtors for quite long time period. But in AG barr plc business there
has been an increase in the overall turnaround period with relation to trade debts smaller time
frame in year 2019 to 2020.
From the aforementioned results it can be interpreted that AG BARR Organisation is having
higher efficiency of operations as compared to the other two organisations. In terms of present
financial stability and financial management AG BARR is having a competitive advantage.
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Investment enticement is regarded as a scenario here the product has higher probability of
maximizing the overall earnings in a particular market. The concept of earnings revolves around
the understanding of organisation related with management methodologies and fund acquisition
that is better in AG BARR as compared to other two competitor organisations.
It can be concluded that AG BARR has a higher financial position and potential that is related
with further acquisition of funds. All this available information clearly indicates that the other
two organisations that is Coca cola and the Britvic plc Coca cola PLC are required to focus on
effective financial management strategies for the purpose of having optimum utilisation of
available financial resources
Section B.
For the purpose of dealing with the contingency on the different operational efficiencies of
organisation it is necessary to have a good inflow of funds. Organisations have to manage
different aspects for the purpose of maximizing the present resources and having maximum
utilisation. The acquisition of these funds is done through individual sources and there is
requirement to focus on the way the sources can help in maximization of efficiency and
minimization of cost. For this purpose organisation has to work towards acquisition of funds so
that there is forecasting of returns based on pre determined time frames.
Organisations have to collect funds after forecasting of the future returns as per the pre-
determined time frames. The overall dividend and return on investment has to be enough so that
investors can be kept engaged and motivated for future interaction. For this purpose
organisations are undertaking different approaches like crowd funding, Angel investors for the
purpose of acquisition of funds from the general public. But for the purpose of having acquisition
of funds from people there is requirement to have a positive brand image to be built up in the
external marketplace. It is very significant for the purpose of seeking approval of various equity
shareholders and helping them to enable decentralisation of the power. While organisations are
able to collect funds from general public the whole capital gets distributed in small units and it
leads to dividing of overall collected finances.
There are some of the sources of funds that can be used by AG barr plc Coca cola, coca cola and
Britvic plc Coca cola as mentioned below:
Equity financing: Equity financing is regarded as the process of generating capital through
selling of shares. Many organisations are using this as a source for raising finances as they might
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require short-term needs to pay their bills and process long-term objectives that require funds for
investing in future long term growth. Equity financing is different from debt financing and there
is involvement of borrowing money advantages of debt financing there is selling a portion of
equity in the organisation. Government in countries are keeping a close watch on equity
financing by organisations to ensure that there is adherence to proper regulations.
Retained earnings: Retained earnings are the financial resources that are leftover part of overall
organisation earnings that is present after distribution paid to shareholders. Retained earnings can
be invested back in organisations for achievement of higher growth. It is one of the cost effective
sources for organisations because there is no external cost that is associated with retained
earnings. Retention of earnings is generally done after the profits of a business in a particular
financial year. Organisations cannot pay dividends on retained earnings in situation of net loss in
any particular financial year.
Debt financing: debt financing is regarded as an aspect when organisation is raising money from
capital expenditure or working capital by selling of bills bonds, notes to various institutional
investors or individuals. In return for the purpose of lending the money institutions and
individuals are the creditors. They are receiving a written assurance from the organisation to
repay the principal and the calculated interest on the overall debt.
Term loans: It is a monetary loan that is repaid in regular payments and spread over specific
time period. Term loans are lasting between a time period of 1 to 10 years and they can also last
for 30 year in some of the cases. Term loan is an advance that is a first for duration between 12
months to 18 months. These are intermediate loans that are available only the financial
institutions are classified them as medium term loan that comes up with a tenure of 84 months.
Term loans generally available in tickets and have advances efficiently made for big budget
business for boosting of the working capital of machines purchase. Long term loans: These are
the loans that are available at attractive interest rates. General long time loans available on easy
EMI option that makes their advances convenient into repay over the long tenure. Among
multiples options that are available term loans are the convenient ways that can be used for
fulfilling the business requirements for lump sum funding needs. These loans are secured in
terms of legal nature. Loans are also different in terms of fixed loan amount fixed and off
repayment and there are some rules that does not require collateral security. Depending upon the
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suitability of a particular term loan is used by organisations that is typically starting from 1 year
and may range from or a time period of 25 years.
Stakeholders and shareholders: There are some financial institutions but apart from this equity
investors can also help in generation of funds. Stockholders and shareholders are regarded as the
owner of shares in organisation they are the part owners of a business. Stockholder is regarded as
the holder of stock that can be regarded as holding of inventory. Shareholder is a term that is
regarded as ownership in organisation. Both stakeholder and stockholders are having the right to
vote for directors issuing of dividend and issue of share on the residual assets at the time of
liquidating of a company. A shareholder or a stockholder can be a business entity individual trust
or corporation depending upon the business organisation & its specific requirements.
Employees: For the purpose of utilising the remaining benefit for an organisation there is need to
pay to employees from the available funds in the organisation. If organisation is not able to
sufficiently pay to the Employees then it might affect the overall performance of organisation
and there can be reduction in the productivity of employees.
From the above discuss aspects it is concluded that there are different aspects of
corporate financing that are playing a very crucial role for the purpose of accomplishing the laid
organisations objectives. Organisations are relying on financial resources for the purpose of
utilising it to maximize the benefits in long run. Management of the organisation has to monitor
the availability of resources as per changing needs of organisation functioning.
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Conclusion
Financial management is one such aspect that is going to help the organisation in the long-
term survival because general public is willing to support such organisations that are having
higher credibility. When compared with the available data for past two years there has been an
increase in the overall net assets turnover ratio that is one of the indications of suitable financial
position for any organisation.
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REFERENCES
Books & Journal
Atmeh, M.A. and Maali, B., 2017. An accounting perspective on the use of combined contracts
and donations in Islamic financial transactions. Journal of Islamic accounting and
business research.
Hadiyanto, A., Puspitasari, E. and Ghani, E.K., 2018. The effect of accounting methods on
financial reporting quality. International Journal of Law and Management.
Hidayah, N.N., Lowe, A. and Woods, M., 2019. Accounting and pseudo spirituality in Islamic
financial institutions. Critical Perspectives on Accounting, 61, pp.22-37.
Sinclair, R. and Keller, K.L., 2017. Brand value, accounting standards, and mergers and
acquisitions:“The Moribund Effect”. Journal of Brand Management, 24(2), pp.178-192.
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