Financial Analysis of Farsons and Heiniken Companies

Financial Analysis
Management Enterprise

INTRODUCTION
Financial analysis is characterised as a method of assessing monetary information of
companies for a specific time frame. In other words, the financial analysis is an component of the
general role of corporate finance involving the review of statistical information to obtain insight
on a corporation's present and potential financial safety. In a wide range of cases, financial
analysis can be used to provide business executives with the knowledge required to make
strategic decisions. Finance is an organizational term. Financially, business goals or objectives
are established and financially quantified. Flexibility in the dialect of financial services, the
ability to learn and comprehend financial information and the current evidence in the form of
financial statements are among the skills needed for understanding and managing a firm. Every
business manager needs the ability to comprehend financial data. In other word, this may be
understood as a way of analysing businesses, projects and budgets in order to assess financial
condition of corporations (Morden, 2016). Basically, it is beneficial for assessing stability,
solvency, liquidity and profitability. The report is based on evaluation of monetary performance
and condition of two entities that are Farsons and Heiniken. These companies operate in
production of beer. The Farsons Company is located in Malta and Heiniken Company at
Netherlands.
MAIN BODY
Task 1. A detailed vertical, horizontal and ratio analysis of the financial statements of the
Farsons and Heiniken companies.
In order to assess financial position, there are different ranges of methods that are applied
by corporations. Some common analysing techniques are horizontal and vertical analysis which
is mentioned below in respect of above mentioned companies:
Vertical analysis- It can be understood as an analysis of financial statement in which element of
financial statement is listed as percentage of another element (Farrell and Gallagher, 2015). It
can understand by an example of income statement in which each item is based on the
percentage of gross sales. Heiniken Company:
Income statement-

One of the three primary financial statements used to disclose a company's financial results over
a particular accounting cycle is an income document, with the other two main accounts being the
balance sheet and the cash flow statement. A declaration of revenue and loss or a related to
financial is also known as a statement of financial position and the assertion of income and costs.
The declaration is split into periods which follow the operation of the firm logically. Quarterly
(methodology) are the most prevalent recurrent divisions, but some firms may use a 13-year
cycle. These recurrent declarations are summarized in the quarterly or annual outcomes in path
coefficients. This presentation is an excellent way to begin a financial plan, because the balance
sheet and cash flow statements need the least level of info. The income statement is therefore a
precursor of the other two main reports, in terms of quality.
As per of vertical analysis of income statement of above company, this may be assessed
that their gross profits are decreasing in a significant manner as compare to their sales revenues.
While, value of net profit is fluctuating in all four years. Such as in year 2015, it was of 4.67%
which decreased till 3.75%. Though in 2017, it increased in become of 4.46 but again in 2018, it
fell down till 4.28%
Statement of financial position:
The financial statement, also comparative balance sheet, is a document which, on a specified
date, lists a company's assets, liabilities and equities. In other terms, on a given day it describes a
company's finances, responsibilities, and property information. In the context that this assertion
is a cultural report, this concept is true. This reveals just the posts on the same day the study was
published. This is opposed to other annual disclosures such as the analyzed by calculating which
portrays the operations of the business over an amount of time. Only the business collected from
two on the last day of the income statement is recorded. In other words, the word for the balance
sheet is the declaration of financial condition. During the audit time, the report reports an
institution's properties, liabilities and equities. For an array of investment studies, such as
contrasting debt to equity or trying to compare liquidity ratios, the details on the financial
statements can be used. This is one of the financial reports, as well as the balance sheet and the
income assertion. It is one of the effective financial statements which can be used by business
entities in order to take crucial decisions for different purpose. As well as it is also used by
different stakeholders in order to take critical decisions. Such as internal stakeholders take many
decisions on the behalf of actual financial position.

In accordance of balance sheet, this can be stated that company’s non-current assets are
based on % of total assets which are decreasing continuously. In 2016, it was of 84.32% which
minimized and became of 79.31% in 2017. Though, in further years it was of 79.90% and
78.38%. On the other hand, their cash proportion of total assets has been increased in year 2018.
It is so because in year 2015, it was of 2.23% that raised by huge margin and became of 7.72% in
year 2016. While in year 2017, it again decreased till 5.95 but in year 2018, this became of
6.92%. In addition, the current assets are also % of total assets and their values are of 15.68%,
20.69%, 20.10% and 21.62% for year 2015,2016,2017 and 2018 respectively.
As well as their shareholder's funds are of 17.06% in year 2018 that are as per the value
of total assets. Amount of shareholder's funds is increasing and decreasing. In year 2015, it was
of 17.90% which minimized and became of 16.78% in 2016. Apart from it, the current liabilities
of company are decreasing in a huge way, in 2015, it was of 26.44 which decline and became of
24.91%. Along with non-current liabilities are also decreasing from 59.52% to 58.03% in the
time frame of 2015-18.
Farsons:
Income Statement:
As per of vertical analysis of above company's income statement, this can be stated that
company’s gross profit is in the % of aggregate sales revenue. In 2015, GP was of 37.97% which
increased and became of 38.82% in year 2016. As well as in upcoming time period, it reached up
to level of 38.64% and 38.95% in 2017 and 2018 (Annual Report of Farsons, 2019). On the other
hand, the net income was of 14.74% in year 2018 that is higher from rest of years’ net income. It
indicates that efficiency of generating net income is raising by huge margin.
Statement of Financial Position:
As per of analysis of balance sheet of above Farsons company, this may be stated that
company’s shareholder's equity was of 67.11% in 2015 that is based on % of total assets. Along
with value of this stockholder's equity has been decreased such as in year 2016, it was of
66.87%, 67.21 in year 2017 and 59.88 in 2018. as well as total amount of current assets has been
raised from 18.58% to 22.22% during year 2017-18.

Horizontal analysis- This is known as trend analysis (Kärkinen and Laitinen, 2015). It is a type
of technique which indicates the variation in amount of corresponding financial statement items
during a particular time period. Eventually, it is beneficial to assess trend situations. As well as
to conduct this analysis, the statements of two or more the two period are taken.
Heiniken:
Income Statement:
As per of horizontal analysis of above Heiniken company it may be assessed that
variance increase in total sales during year 2017 is higher such as in 2017, it was of 5.27 which
reduced and became of 2.66% in year 2018 (Annual Report of Heiniken, 2019). As well as their
value of gross profit has been reduced in year 2018. Though in year 2017, it was showing higher
growth of 6.04%. On the other hand, net profit also decreased in 2018 in compare to 2017.
Statement of financial position:
As per of balance sheet of above company, this may be stated that there is an
enhancement in total of stockholder's fund in 2018. On the other hand, it was of -2.25% and
0.53% during year 2016 and 2017. As well as value of non-current liabilities also increased by
1.69% in year 2018 which raised by 7.24 in year 2017. Apart from it, the value of current
liabilities is also decreasing in year 2018 by -0.08% and in year 2016-17 it raised by 22.09% and
0.59%.
Along with the cash funds of above company raised by 268.33% in 2016 that
dramatically reduced by 19.54%. Though, in year 2018 it was increased by 18.88%. As well as
amount of current assets was of raised by 37.59%, 1.36%, 9.97 for year 2016, 2017 and 2018
respectively. While, non-current assets are raised from 0.31% in financial year 2018 and in year
2016, this was reduced by 1.94%.
Farsons:
Income Statement:
As per the given data, this can be stated that revenues raised by 7.95% in year 2018 that
was enhanced from 3.53% and 7.59% in accounting year of 2017 and 2018. On the other hand,
gross profit of company raised by 10% and 3.03% in year 2016-17 and 8.82 in year 2018.
Similar as above, NP of company also raised from 16.67% in year 2018 that was of 37.50 and
9.09 in year 2016-17.