Accounting & Finance for Managers: Strategic Plans and Performance Evaluation of AG Barr Plc., Britvic Plc. and Coca Cola Plc

This report evaluates the strategic plans and financial goals of AG Barr Plc., Britvic Plc. and Coca Cola Plc. It also analyzes their performance using latest three year financial and non-financial data and discusses why investing in best performing company is would or would not be a positive investment opportunities. The report also discusses the long-term finance sources available to company.

Accounting & Finance for
Managers

Table of Contents
INTRODUCTION...........................................................................................................................3
Section A..........................................................................................................................................3
Question 1....................................................................................................................................3
1a Strategic Plans of AG Barr Plc., Britvic Plc. and Coca Cola Plc............................................3
1b Critical evaluation of the performance of the companies using latest three year financial
and non-financial data..................................................................................................................5
1c Why best performing company would/ would not be a positive investment opportunity....14
SECTION B...................................................................................................................................15
Question 2..................................................................................................................................15
2a. Critical evaluation of long term sources of finance.............................................................15
2b. ..............................................................................................................................................16
CONCLUSION..............................................................................................................................16
REFERENCES................................................................................................................................1

INTRODUCTION
Business finance refers to the funds which is availed by the business owners to meet its
operational as well as financial goals. The report will discuss the strategic plan, financial goals
and ratio analysis of three company i.e., AG Barr Plc., Britvic Plc and Coca Cola Plc in order to
rank company between first to third. Further, the report will also discuss why investing in best
performing company is would or would not be a positive investment opportunities. The report
will also discuss the long-term finance sources available to company.
Section A
Question 1
1a Strategic Plans of AG Barr Plc., Britvic Plc. and Coca Cola Plc
Strategic Plan of AG Barr Plc.
Financial Goals of company:
 The company wants to launch new flavour of soft drinks in order to increase the organic
revenue from 4% to 6%. The company also looking forward to saving funds to pay off retirement liabilities of
employee s (Islami and Rio, 2019).
Measurable success indicator
 The company will use financial ratios such as Earning per share to measure its financial
growth.
 In order to measure the financial sustainability, the company will analyse its current ratio. The company uses net profit margin to measure financial performance of company.
Nature of Decision The financial goals of the AG Barr company require both short-term and long-term
decision.
Impact of decision on both financial goals and performance
 The short-term decision regarding launching of new flavour of products help the
company to increase revenue percentage.
 The long-term decision regarding creation of saving fund account help the company to
achieve its retirement liabilities goals (Guo and Wang, 2019).

 This decision increases the gross and net profit margin of the company which is currently
46.52% and 14.52% and also reduces the earning per share of the company.
Strategic Plan of Britvic Plc.
Financial Goals of company: The Britvic company wants to expand its business worldwide and for this they want to
restructure its capital sources.
Measurable success indicator
 The Britvic company benchmark their own company against competitors to measure its
financial growth.
 Operating surplus ratio is used by the company for measuring financial sustainability. In order to measure financial performance, the company will use debt to equity ratio to
which is 163.8 in the year 2019 (Cashwell, Copley and Dugan, 2019).
Nature of Decision In order to achieve the expansion and capital restructuring financial goal the company
require long-term decision.
Impact of decision on both financial goals and performance
 This decision regarding analysing and restructuring capital sources helps the company to
achieve its expansion goals.
 The impact of this decision over the business is that their debt-equity ratio get change
which may be higher or lower when compared to current year ratio of 163.8 (Krauß and
Vetter, 2020).
Strategic Plan of Coca Cola Plc.
Financial Goals of company:
 Coca cola aims to maximize their profits from 12% to 15% and also the earnings per
share from 12 to 20 while maintaining a long-term sustainability growth within beverage
industry. In order to do so, the company will allow discounts to customers on drinks for the period
of winter which further increase its sales.
Measurable success indicator

 Coca cola company basically uses profitability ratio such as return on capital employed
and net profit margin along with the earning per share to measure financial growth and
performance. The company measure its financial sustainability by using the total debt service cover
ratio and assets sustainability ratio (Taous and et.al., 2020).
Nature of Decision The coca cola company required short-term decisions to achieve its financial goals of
profit maximization and high earning per share.
Impact of decision on both financial goals and performance
 Currently, the coco cola company net profit margin and return on capital employed is
12.1 and 10.9% while its earning per share is 12.
 The short-term decision regarding allowing discount on product will help the company to
increase its profit and earning per share financial goals and performance (Perini and et.al.,
2019).
1b Critical evaluation of the performance of the companies using latest three year financial and
non-financial data
Particulars AG Barr Plc. Britvic Plc. Coca Cola Plc.
2017 2018 2019 2017 2018 2019 2017 2018 2019
Profitability Ratio
Net Profit
margin (%)
17 15.95 14.52 9.7 9.7 7.14 10.48 10.46 12.1
Return on
capital
employed (%)
20.01 19.06 15.97 16.59 15.74 12.84 8.77 9.33 10.98
Liquidity Ratio
Current Ratio 1.52 1.62 1.44 0.93 0.93 0.81 1.01 0.79 0.75
Quick Ratio 1.22 1.29 1.14 0.69 0.73 0.6 0.81 0.61 0.58
Financial Leverage Ratio

Debt-equity
Ratio
14.07 12.77 14.26 200.12 196.85 163.86 122.99 119.74 144.27
Assets based
solvency ratio
69.83 70.33 69.92 21.04 21.43 23.72 36.74 36.03 32.95
Efficiency Ratio
Trade
Receivable
collection
days
73 70 77 71 75 80 56 52 50
Trade Payable
payment days
24 26 20 61 64 68 34 35 34
Inventory
holding days
30 24 20 10 15 20 20 25 30
Market Test Ratio
Earnings Per
share
19 17 14 33 34 35 10 15 12
Non-financial Ratio (Per employee ratio)
Operating
revenue per
employee
273 292 271 295 314 322 418 442 442
Shareholders
fund per
employees
208 219 219 70 79 86 252 252 226
Interpretation of ratio analysis and result
 Profitability Ratio

On the basis of above calculation and graphical presentation, the net profit margin of AG
Barr Plc., Britvic Plc and Coca cola plc is decreasing from 2017 to 2018. It may be because of
the COVID-19 and pandemic situation. But on the other side, net profit of the AG Barr plc is far
better than Britvic plc and coca cola plc. While on the other hand, return on capital employed of
the AG Barr plc and Britvic plc is decreasing but of coca cola plc is increasing but has less
percentage than AG Barr plc. This indicates that the profitability performance of all the
companies are poor in their own way but AG Barr Plc performance is better than its other two
competitive companies. As per the opinion of Orsi and et.al. (2020), having low percentage than

previous year indicate poor performance while high percentage indicate better profitability
performance.
 Liquidity Ratio
After analysing the ratio results and graphs, it is clearly interpretable that current ratio
and quick ratio of all the three companies i.e., AG Barr, Brivtic plc, Coca cola plc is decreasing
as compared to the previous years. But the current ratio and quick ratio of AG Barr plc. is higher
than its two other competitors. The liquidity performance of the companies is very poor in their
own which indicate that all company do not have an ability to pay its current obligation on time.
As per the views of the Srinivasan (2018), the industry trend of current and quick ratio is 2:1 and

1:1 respectively and all the companies are unable to touch the standard which indicating poor
liquidity performance of the companies.
 Financial Leverage ratio
On the basis of above data and graph, it is analyzed and interpretative that debt-equity
ratio of all the three companies are decreasing from previous year but assets based solvency ratio
of AG Barr and Coca cola plc is decreasing while of Britvic company are increasing. This means
that all the companies leverage performance is poor which need to be improved in order to meet
the industry trend of debt-equity ratio of 2:1. The Islami and Rio (2019), state that the company
need to keep at least 2:1 ratio between the debt and equity financing. But on the other hand,

Nagaraja and et.al. (2020), state that company need to issue more shares than debt as debt
financing increases the fixed interest cost of the company.
 Efficiency Ratio
After analyzing above data and graph, it is interpreted that debtor's collection period of and
payable payment days are low in case of Britvic plc. This indicate that efficiency performance of
Britvic is best. While the inventory holding days of AG Barr company is less which indicate that
company is able to use its stock as soon as possible. As per the opinion of Devine and et.al.
(2020), having low debtors’ collection and payables payment period indicate the best
performance of the company and in order to improve it the company need to launch discount

schemes. This also improve the credit worthiness of the company and help them to increase
customer trust and loyalty.
 Market Test Ratio
On the basis of above charts and tables, it is identified that the earning per share of AG
Barr and coca cola company is decreasing while Britvic company are increasing. This means that
Britvic plc is able to satisfy its shareholders while other two companies not. The market
performance of Britvic company is best while other company has poor market performance. As
stated by Cashwell, Copley and Dugan (2019), if EPS of the company decreases it means that
company is unable to keep their equity shareholders happy. However, the Guo and Wang,

(2019), state that sometime low EPS could mean that company is retaining the money for their
future development with the consent of their equity shareholders.
 Non-financial ratio (Per employee ratio)
From the above data and charts, it is identified that operating revenue per employees of
AG Barr company is decreasing while the other two companies are increasing as compared to
previous years. On the other hand, the shareholders’ funds per employees are balance in case of
AG Barr company and are decreasing in case of other two companies. As per the opinion of
Taous and et.al. (2020), the non-financial ratios do not affect the decision of the investors that's
why is not important. While Krauß and Vetter (2020), state that the non-financial is also
important for the aspects of decision-making as it influence employees of the organizations. This

indicates the better performance of Britvic and coca cola plc but show poor performance of AG
Barr company.
Financial and Non-financial ratio Ranking result
Ratios/ Name of the company AG Barr Plc. Britvic Plc. Coca cola Plc.
Profitability ratio Net Profit margin 1 3 2
Return on capital
employed
1 3 2
Liquidity ratio Current ratio 1 2 3
Quick ratio 1 2 3
Financial
Leverage ratio
Debt-equity ratio 2 1 3
Assets based
solvency ratio
1 3 2
Efficiency ratio Trade receivable
collection period
2 3 1
Trade payable
collection period
1 3 2
Inventory holding
days
1 2 3
Market Test ratio Earnings per share 2 1 3
Non-financial
ratio (per
Operating revenue
per employee
3 2 1

employee) Shareholders fund
per employee
2 3 1
Interpretation:
On the basis of above ranking which is as per each financial and non-financial ratio, it is
interpretable that AG Barr is a best performing company with 1st rank, Coca cola is second best
performing company with 2nd rank. While on the other hand, Brivtic Plc is poor performing
company with 3rd rank.
1c Why best performing company would/ would not be a positive investment opportunity
On the basis of above information and result, it is identified that AG Barr Plc is best
performing company as its high profitability, liquidity leverage and efficiency ratio as compared
to its competitors. Investing in this company is highly profitable for the business because the
company is able to pay off its current and fixed obligations on time without any delay. As per the
opinion of the Orsi and et.al. (2020), if an investor wants to invest in AG Barr Plc in the form of
debt and bond that it be a positive investing opportunity because of the company high liquidity
and leverage ratio. However, the Perini and et.al. (2019), argue the above statement and state that
if investors wants to purchase equity shares of the company than they need to analyse its market
ratio such as earning per share. The EPS of AG Barr company is poor as compared to Britvic but
best as compared to Coca cola which means that investing in AG Barr Plc in the form of equity
shares is not that much profitable to the investors. If the investors wants to double its money than
they have to properly analyse the financial and non-financial ratios of the company and that take
a decision between debt and equity. The financial goals of best performing company include
increase in earning per share and for this they can buyback its own share which further would not
be a positive investment opportunity for investors that wants equity financing. That's why it is
advisable to the investors to invest in this company in form of debt and bonds only.
SECTION B
Question 2
2a. Critical evaluation of long term sources of finance
There are various sources of finance available for the listed companies to resort to for obtaining
finance externally. The overall capital of the company is divided into debt and equity

components. Long term borrowings or loan from bank and financial instituion are resorted to in
terms of debt capital and issue of equity and preference shares forms part of equity capital of the
company.
Equity shares are generally issued to general public by the listed companies in the form of small
units known as shares (Canuto and Cavallari, 2017). On these shares, companies provide
dividend to the investors out of the profit amount remaining after paying interest and taxes. The
repayment of capital is done only when the company get wind up and also after making payment
for all the debt capital and interest thereon.
On the other hand, bank loan, term loan and public deposits form part of debt capital of the
company. These type of sources of long term finance costs to the company in terms of interest
components attached to it. It is compulsory on the part of the company to repay these loans and
deposits after the expiry of time period for which it has been provided. The debtholders of the
company has the right to cease company's assets for the unpaid amount of principal and interests.
In the following illustration, various alternatives of long term financing from external sources
will be evaluated:

In this example, we can see the option C is highly preferable due to offering highest earning per
share. Regrading option A and B, it can be seen that option A is offering lowest EPS due to
higher costs for the company in terms of taxes, however, there is a cost attached with option B as
well in terms financial distress, interest costs and risk in terms of getting bankrupt (Monk,
Sharma and Sinclair, 2020). Cash flows are affected by opting for more of debt capital as the
interest payment along with principal repayment has to be done in a timely manner and
accordingly, there would be an impact on working capital as well.
Therefore, it is always advisable to the companies to opt for optimum capital structure by
including both external and internal sources of long finance in the capital structure to ensure
maximum profitability and liquidity alond with minimum cost and risk.
2b.
In the case study given, it has been identified that Britivic PLC is using long term debt which
comprises of loans as an external source of long term finance. It can have a great impact on
various stakeholders of the company, such as follows:
 interest of shareholders can be affected in positive terms as inclusion of debt components
allows for higher EPS (Leon, 2019).
 Interest of tax authority can be affected in negative terms as lower taxes are provided for
with the inclusion of debt capital as interests are tax deductible in nature.

 It poses pressures on management and owners due to compulsory and timely financial
commitments towards the interest and principal repayment.
CONCLUSION
The report has concluded the financial concepts which help the businesses to expand it
companies as well achieve its operational and financial goals. The report has also concluded the
financial goals of three companies and how they achieve it by using long-term internal and
external finances. The report has also concluded the sources of finance use by one of the
company out of the three companies.

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