Financial Analysis of Farm Pride Limited

The financial statement analysis of Farm Pride Limited shows a satisfactory financial position, with total current assets decreasing by 1.21% in 2015 and total non-current assets decreasing by 11.7%. The company's liquidity ratio is satisfactory at 1.29. However, revenue decreased by 5.72%, while cost of goods sold decreased by 15.9%. Non-operating income increased by 125.4%, and earnings per share increased by 133%. Cash flow generated from operating activities increased by 93.8% due to a decrease in payments to suppliers and employees, finance costs, and income tax paid. The company's financial performance is generally positive, with recommendations including marketing activities, distribution channel improvement, customized products, business expansion, investing in capital markets, and balancing dividend payout ratios.

Running head: ACCOUNTING FOR BUSINESS DECISIONS
FARM PRIDE FOODS LIMITED
Accounting For Business Decisions
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ACCOUNTING FOR BUSINESS DECISIONS 1
Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
A. Statement of financial position.................................................................................................3
B. Stockholders’ Equity................................................................................................................6
C. Statement of profit & loss........................................................................................................7
D. Statement of Cash flow............................................................................................................8
Conclusion.....................................................................................................................................10
Recommendations..........................................................................................................................11
References......................................................................................................................................13

ACCOUNTING FOR BUSINESS DECISIONS 2
Executive Summary
The financial analysis of Farm pride food limited is discussed in the paper. The statement of
financial position reflects that the total current assets are increased in the year 2015, and non-
current assets of the company are decreased. The total current liabilities are decreased in the year
2015, and non-current liabilities are also decreased in the year 2015 from the previous year 2014.
The stockholder's equity of the company is increased by 20.94% which is the good financial
health indicator. The statement of profit & loss shows the total revenue is decreased in the year
2015 from the previous year 2014, and other factors show the positive sign of financial position
of the company. The earning per share of the company is also increase in the year 2015. The
statement of cash flow shows that the cash generated from operating activities is increased by
93.8% in 2015. The cash outflow from financing activities is increased, and the cash outflow
from investing activities is decreased in the year 2015. The net cash generated is increased in the
year 2015 from the previous year 2014.

ACCOUNTING FOR BUSINESS DECISIONS 3
Introduction
In this present paper, we will discuss the financial analysis of Farm pride food limited. The
financial analysis helps to take business decision making. The paper analyzes the statement of
financial position, stockholders equity, statement of profit & loss and statement of cash flow. On
the basis of the analysis, the recommendations have been drawn, and the conclusion is given
after the analysis.
The farm pride foods limited is the Australian farm company which provides the eggs to the
Australians since seventy-five years. It is the listed company which processes, grades, supplies
and markets shell eggs and it also processes the egg products within the country. The company
was started as the egg and egg pulp marketing board of victoria then afterward the company
becomes the Victoria Egg marketing board. The company became privatized in 1993. The
company has more than two hundred employees with six farms within the country. The company
supplies eight billion eggs within a week across the country. The varieties of eggs provided by
the company include laid cage eggs, free range egg, and barn laid eggs with various varieties.
The management and directors of the company are committed towards the high performance and
interest of the shareholders. The written consent is required from ASX for using the shareholder's
information of the company for the commercial purpose.
A. Statement of financial position
1. Total current assets

ACCOUNTING FOR BUSINESS DECISIONS 4
The current assets are defined as the assets which can easily convert into the cash within
one year. The current assets are comprised of account receivables, cash and cash
equivalents, prepaid expenses, marketable securities and others. The total current assets
in the year 2015 are 21,041 and in the year 2014 are 21,296. The total current assets of
the company are decreased by 1.21%. The total current assets are decreased due to a
decrease in inventories and biological assets. The assets which are increased are namely,
cash and cash equivalents, receivables, and other assets. The total assets are 50,776 so the
total current assets are 41.4% of the total assets in the year 2015 and the total assets in the
year 2014 are 54,538, so the total current assets are 39% of the total assets (Annual Report
2015 et al., 2015). The total assets are comprised of total current assets and total non-
current assets. The total current assets are not decreased in the high percentage which is
the acceptable condition of the current assets. The liquidity ratio in the year 2015 is 1.29
and in the year 2014 is 0.80, so the current financial position is good.
2. Total non-current assets
It is defined as the assets which cannot be converted into cash within one year. It is also
known as long-term assets. The non-current assets comprise of long-term investments,
intangible assets and others. The total non-current assets in the year 2015 are 29,735 and
in the year 2014 are 33,242. The total assets in the year 2015 are 50,776, so the total non-
current assets are 58.5% of the total assets. The total assets in the year 2014 are 54,538,
so the total non-current assets are 60.9% of the total assets. The total non-current assets
are decreased in 2015 from the year 2014 by 11.7% (Annual Report 2015 et al., 2015). The
decrease in the non-current assets is due to decrease in property, plant, and equipment.
The deferred tax assets are increased. The total assets include total current assets and total

ACCOUNTING FOR BUSINESS DECISIONS 5
non-current assets. The non-current ratio in the year 2015 is 6.40 and in the year 2014 are
10.36 which mean the assets are contributing less than the previous year.
3. Total current liabilities
It is defined as the liabilities which have to be paid within one year. It is also known as
short term liabilities. It includes short-term debt, accrued liabilities and others. The total
current liabilities for the year 2015 are 16,190 and in the year 2014 are 26,575. The total
current liabilities are decreased in the year 2015 from the previous year 2014 by 64.14%.
The decrease in total current liabilities is due to decrease in borrowings and derivative
financial liabilities. The total liabilities are 20,834, so the total current liabilities are
54.07% of the total liabilities. The total current ratio in 2015 is 1.29 and in the year 2014
is 0.80 which means the company can pay its debts easily in the year 2015 (Annual Report
2015 et al., 2015).
4. Total non-current liabilities
It is defined as the long-term financial obligations of the company which is shown on the
liability side of the balance sheet for example accounts payable, advance income, prepaid
tax, and other long-term loans. The total non-current liabilities in the year 2015 are 4,644
and in the year 2014 are 3,206, so the non-current liabilities are decreased by 44.8%. The
total liabilities are 20,834, so the total non-current liabilities are 22.9% of the total
liabilities. The total non-current liabilities are decreased due to a decrease in provision
and borrowings. The non-current ratio in the year 2015 is 6.40 and 10.36 in the year 2014
which means the non-current assets are contributing less in the year 2015 than the
previous year (Annual Report 2015 et al., 2015).
5. Total stockholder’s equity

ACCOUNTING FOR BUSINESS DECISIONS 6
The stockholders' equity is calculated by deducting the total liabilities from the total
assets. It can also be calculated by adding the share capital and retained earnings fewer
treasury shares. The total stockholder’s equity in the year 2015 is 29,942 and in the year
2014 is 24,757. The total stockholder’s equity is increased due to increase in cash flow
reserve deduction and a decrease in retained earnings. The total stockholder’s equity is
increased by 20.9% in the year 2015 from the previous year 2014 (Annual Report 2015 et
al., 2015). The stockholder's equity of the company is increased in the year 2015 which
means the company is performing well, and its financial position is satisfied.
B. Stockholders’ Equity
It is presented on the liability side of the balance sheet. It represents the paid-in capital, denoted
capital and retained earnings of the company. The total stockholders’ in the year 2015 equity in
the balance sheet is 29,942 which includes contributed capital 29,578, cash flow hedge reserves -
90 and retained earnings 454. The total stockholders’ equity in the year 2014 is 24,757 which
includes the contributed capital 29,578, cash flow hedge reserve -222 and retained earnings -
4599. The percentage change in stockholders equity between the year 2014 and 2015 is 20.94%.
The stockholder's equity is increased due to increase in retained earnings and decreased in cash
flow reserve. The stockholder's equity increment reflects the increase in the profits over the
particular period of time. The analysis of stockholder’s equity is an important tool which helps to
analyze the assets and liabilities of the company. The debt to asset ratio in the year 2015 is 2.43
and in the year 2014 are 2.20 which show the debt financed by the company in the year 2015 is
raised by 0.23%. So, the stockholder’s equity is one of the most important elements among the

ACCOUNTING FOR BUSINESS DECISIONS 7
three main components of the balance sheet which shows the profit is increased from the
previous year (Schoenebeck et al., 2013).
C. Statement of profit & loss
1. Total revenue
It is defined as the total sales of the company in the particular accounting period. The
total revenue of the company in the year 2015 is 91,204 and in the year 2014 are 96,423.
The sales revenues are decreased in the year 2015 by 5.72% from the year 2014 due to
decreasing in the selling of goods and services. The sales of the company are decreased
which needs to be improved because ultimate profit and growth of the company depend
on upon the total revenue (Jans et al., 2012).
2. Cost of goods sold
The cost of goods sold is defined as the accumulated cost which is incurred in the
manufacturing of goods and services in the particular period of time. It is the direct cost
which is incurred at the time of producing such as wages, freight, and other direct costs.
The cost of goods sold is deducted from the revenue to identify the gross profit in the
particular period of time. The formula for calculating the cost of goods sold is adding
beginning inventory and purchases in the particular year less closing stock. The cost of
goods sold in the year 2015 is 60,304 and in the year 2014 are 69,931. The cost of goods
sold in the year 2015 is decreased by 15.9% from the previous year 2014. The cost of
goods sold is decreased which is the positive sign because it helps to increase the profit
margin of the company.
3. Non-operating gains and losses

ACCOUNTING FOR BUSINESS DECISIONS 8
The non-operating income is defined as the income which includes the income generated
from the investments, dividend income and other income from the non-operating
activities. The non-operating profit in the year 2015 is 5,185 and in the year 2014 are
2,300. The comprehensive income is increased in the year 2015 by 125.4%. The non-
operating income is increased which is better for the company because it increases the
profit of the company.
4. Earnings per common share
It is defined as the part of the profit which is allocated to the outstanding shares of the
company. The formula for calculating the earnings per share is net income minus
dividend on preference stock divided by average outstanding shares. The earnings per
share in the year 2015 are 9.16 and in the year 2014 are 3.93. The earnings per share are
increased in the year 2015 by 133% from the previous year 2014. The net profit from
continuing operations in the year 2015 is 5,053 and in the year 2014 are 2,169 which are
used to calculate the basic and diluted earnings per share (Wahlen et al., 2014).
D. Statement of Cash flow
1. Net cash inflow/outflow from operating activities
It is defined as the amount which indicates the inflow and outflow of net cash from the
daily operating activities. The operating activities exclude investment amount and long
term capital of the company. The formula for calculating the operating income is earnings
before interest and tax add depreciation fewer taxes. The net cash generated from
operating activities in the year 2015 is 9,233 and in the year 2014 are 4,763. The net cash
generated from operating activities is increased in the year 2015 by 93.8%. The increase

ACCOUNTING FOR BUSINESS DECISIONS 9
in the net cash is due to decrease in the payment to suppliers and employees, receipts
from employees and financial costs. It includes the change in working capital, accounts
receivables, short-term debts and accounts payables. The income generated from the
operating activities is increased which are a good indicator of financial health (Dumont et
al., 2013).
2. Net cash inflow/outflow from financing activities
It is defined as the portion of cash flow statement which shows the raising of capital,
repayment to investors such as cash dividend issued. The net cash outflow from financing
activities in the year 2015 is -8619 and in the year 2014 is -2,250. The net cash used in
financing activities is increased due to increase in the repayment of borrowings and
repayments of finance leases and no proceedings from borrowings. The net cash outflow
from financing activities is increased in the year 2015 by 283% from the previous year
2014. The increase in the outflow shows that the company is paying a dividend to the
shareholders, serving debts and repurchases the stock. The financing activities outflow is
increased which means the company has raised the dividend amount given to the
shareholders of the company (Dumont et al., 2014).
3. Net cash inflow/outflow from investing activities
It reflects the cash inflow and outflow from investing in the financial market which
generates the profits or losses in the particular period of time. It also shows the amount
invested in the fixed assets such as plant and machinery. The net cash outflow from
investing activities in the year 2015 is -535 and in the year 2014 are -787. The net cash
outflow from investing activities is decreased in the year 2015 by 47.10% from the
previous year 2014. The decrease in the outflow is due to decrease in the payment for the

ACCOUNTING FOR BUSINESS DECISIONS 10
property, plant and machinery and an increase in a number of proceedings from the sale
of property, plant, and machinery. It is important to analyze the investment activities
which show the changes due to investment activities (DeFusco et al., 2015). The decrease
in the outflow of investing activities shows that the capital expenditures of the company
are decreases which are the positive sign for the company. It reflects the overall change in
the position of the cash.
4. Net Increase/decrease in cash during the year
The net cash and cash equivalents at the end of the year 2015 are 586 and in the year
2014 is 507. The change in percentage in the year 2015 and 2014 is 15.58%. The increase
in cash and cash equivalents is due to positive cash and cash equivalents at the beginning
of the year and decrease in the net increase in cash and cash equivalents. The positive
cash flow shows that the liquid assets of the company are increasing which helps to pay
the debts, giving a dividend to the shareholders, reinvest the profit, pay the expenses, and
helps to pay the financial debts (Whitecotton et al., 2013).
Conclusion
The farm pride limited is an Australian company which provides the eggs across the country.
The total current assets of the company in 2015 are 21,041 and in 2014 are 21,296. The total
current assets are decreased by 1.21%, and the liquidity ratio is 1.29 in the year 2015 which
shows the liquidity of the company is satisfactory. The total non-current assets are decreased in
2015 by 11.7%. The total current liabilities are decreased by 64.14% which is a good indicator.
The total non-current liabilities are decreased by 44.8% which is also a good indicator of
financial performance of the company. The stockholder’s equity is one of the most important

ACCOUNTING FOR BUSINESS DECISIONS 11
components among the three components of the balance sheet. The stockholder's equity is
increased in 2015 by 20.94% from the previous year 2014. It shows the profitability of the
company increases and the company has more funds to invest which is a positive sign for the
company. The statement of profit & loss shows that the revenue is decreased by 5.72% which is
not the good indicator of financial health. The cost of goods sold decreased in the year 2015 by
15.9% which shows the less direct expenses and increment in the profit margin of the company.
The non-operating income of the company is increased by 125.4% which is the positive indicator
of financial health. The earnings per share of the company are increased by 133% which is the
positive indicator. The statement of cash flow analysis shows that the cash flow generated from
operating activities are increased by 93.8% in the year 2015 from the previous year 2014. The
cash flow is increased due to a decrease in payments to suppliers and employees, a decrease in
finance costs and income tax paid. The net cash outflow from financing activities is increased by
283% which shows that the dividend paid by the company increases, serving debt and
repurchases. The increase in outflow of financing activities is due to increase in repayments of
borrowings and repayment of finance leases. Net cash outflow from investing activities is
decreased by 47.10% which shows that the capital expenditure paid by the company decreases in
the year 2015 from the previous year 2014. The decrease in net cash outflow from investing
activities is due to decrease in proceeds from the sale of property, plant and equipment and
payment for the property, plant, and equipment.
Recommendations
The financial position of the company sounds satisfactory, but the sales volume is decreased by
5.72% which needs to be improved for increasing the profitability of the company. The second

ACCOUNTING FOR BUSINESS DECISIONS 12
required is to decrease the cash outflow of financing activities. Following are the
recommendations:
1. Marketing activities
The marketing activities such as advertising help to improve the brand image in the eyes of
the consumers which enhance the total revenue of the company. The marketing strategy helps
to generate more revenue through branding and positioning of goods and services in the
market.
2. Distribution channel
The strong distribution channel helps the company to generate more revenue by providing
goods and services to the reachable place of the consumers.
3. Customized products
The concentric customer strategy helps to increase the demand for goods and services which
enhance the brand image, and it directly impacts on the growth of the company.
4. Expansion of business
The company is currently supply within the country which limits the profit margin so the
company y should start supplying across the globe which helps to increase the total revenue
of the company.
5. Investing in capital market
The investment of funds in the capital market helps to improve the cash outflow from
financing activities, and it also helps to generate more funds by investing in the capital
market.
6. Dividend distribution

ACCOUNTING FOR BUSINESS DECISIONS 13
The company should maintain the balance between the dividend payout ratios and retain
earnings which help to reduce the net cash outflow from financing activities. The more
dividend paid leads to increase the outflow of the company, and 100% retain earning is also
not goods for the company. So, it is important to balance both of them.
References
Annual Report 2015. (2015). 1st ed. Australia: Farm Pride Foods Ltd.
Schoenebeck, K.P. and Holtzman, M.P., 2013. Interpreting and analyzing financial statements. Pearson
Higher Ed.
Jans, S., 2012. Comparative Analysis of Financial Statement (Profit And Loss) and Study on Chit Fund.
Wahlen, J.M., Baginski, S.P. and Bradshaw, M., 2014. Financial reporting, financial statement analysis
and valuation. Nelson Education.
Dumont, G. and Schmit, M., 2013. Tier 1 MFIs Financial Performance: Cash-flow statement analysis
(No. 13-054). ULB--Universite Libre de Bruxelles.
Dumont, G. and Schmit, M., 2014. Tier-1 MFIs' Financial Performance: Cash-Flow Statement Analysis
Version 2.0.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative
investment analysis. John Wiley & Sons.
Whitecotton, S., Libby, R. and Phillips, F., 2013. Managerial accounting. McGraw-Hill Higher
Education.