Bega Cheese Limited: Financial Analysis and Performance

Running Head: BEGA CHEESE LIMITED 0
Bega Cheese Limited

BEGA CHEESE LIMITED 1
Executive Summary
Bega cheese is an Australian dairy company based in the town of New Bega, New South Wales.
It is the agriculture cooperative which is owned by the suppliers of the dairy products. Founded
in the year1899, the company is operating successfully in Australia. The company is listed on the
Australian Securities exchange and is considered to be the largest dairy company in Australia.
The valuation of the company is a$775 million and the Bega Cheese also owns the stakeholder
ship in the Capitol Chilled foods Private Limited @ 25%. In the month of January 2019, Bega
Cheese limited showcased A$460 million deal with multinational food conglomerate known as
Mondelez International to own most of the cheese and the grocery business. Further the company
is involved into the supply of the dairy products and currently the company is operating with the
net income of $28 million along with the sales revenue of $1438 million. This report is directly
showcasing the performance of the Bega cheese limited and the availability of the remedies in
case there are any variances the management had come across during the analysis of the last
three years (Bega Cheese, 2018).

BEGA CHEESE LIMITED 2
Table of Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Income statement.........................................................................................................................................3
Statement of the Financial Position.............................................................................................................5
Ratio Analysis.............................................................................................................................................6
Conclusion.................................................................................................................................................10
References.................................................................................................................................................12
Appendix 1................................................................................................................................................14

BEGA CHEESE LIMITED 3
Introduction
Financial Analysis is an important tool which helps in the determination of the performance of
the company on the basis of analysis of the income statement, statement of financial position,
comparison using the trend analysis and the ratio analysis. In this report a detailed understanding
of these four events have been carried out for the Bega Cheese Limited company (Bega cheese
Limited, 2017).
Income statement
The main focus of any company is on the financial statements of the business and the users of the
financial statements are mainly interested in knowing the profitability position of the business.
The income statement is made in order to report how much profit is generated by the business
and what is the share of the investors. The increase in the equity section of the owners is
reflected by the financial profit earned by the company. The profit in the income statement is
calculated by the deducting the expenses. Further the increase in the income reflects the
enhancement in the economic benefits for the future.

BEGA CHEESE LIMITED 4
2016-06 2017-06 2018-06
0
20
40
60
80
100
120
140
Net income
Net income
Axis Title
The income statement of the Bega Cheese limited showcases that the income of the Bega cheese
was $29 in the year 2016 and it accelerated to $139 in the year 2017. Again the company faced
the downfall due to the excess of the operating expenses (Griffin, 2015). The company has the
pending expenses and poor revenue generation system to cover all the basic expenses and hence
the company faced the fall in the income. The trend of the income statement changed in
comparison to the previous year. However the situation also suggests that there is a scope for
improvement as even after the lot of the operating expenses the company is still making profits
(Bega cheese Limited, 2017).

BEGA CHEESE LIMITED 5
2016-06 2017-06 2018-06
0
200
400
600
800
1000
1200
1400
1600
Revenue
Cost of revenue
Gross profit
(Source: By Author)
Ideally to find out whether the business is operating successfully or not, the sales revenue of the
year shall be greater that the increase in the expenses, which also includes the Cost of goods
sold. Under the horizontal as well as the vertical analysis the Bega Cheese is performing
satisfactorily. The sales revenue increased by 2.6% in the year 2017 and again in the year 2018
the sales increased by 17.2%. With the increase in the sales there was also increase in the cost of
the goods sold. The gross profit also shoots up by 75.5% in comparison to the year 2017. This is
a positive sign for the company and this indicates the market share is changing a bit. Under the
vertical analysis as well the revenue increased with the slow pace but thereafter it increased by
120% and the major change has not been seen in case of the gross profit margin under the
vertical analysis (Robinson, Henry, Pirie & Broihahn, 2015).