Financial Analysis for Simonds Farson Cisk and Heineken N.V.

This study analyzes the financial reports of Simonds Farson Cisk and Heineken N.V. using vertical, horizontal, and ratio analysis. It evaluates the cash stability, debt-equity ratio, and profitability of both companies. The study also examines the net working capital and cash flow statements.

Financial Analysis
Management Enterprise

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
........................................................................................................................................................11
TASK 2..........................................................................................................................................14
TASK 3..........................................................................................................................................14
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Financial analysis is useful in determining the current position of organization by
effectively assessing the current market position. This helps in evaluating the cash stability of
business. It also helps in evaluating debt in relation with the equity (Xie, 2015, November). This
helps in evaluating budget, project and various other finance related activities which is useful in
determining suitability and operations of organization. This study will carry out vertical,
horizontal and ratio analysis of the financial reports of two institution. This study also helps in
analysing the value of net working capital statement and cash flow statements of both the
companies.
Simonds Farson Cisk is food and beverage conglomerate company which is
headquartered in 1928. This company is headquartered in Birkirkara, Malta. Heineken N.V. is a
brewing production company which was established in the year 1864. This company is
headquartered in Amsterdams, Netherlands.
TASK 1
Vertical analysis of the fiscal report is considered to be as effective measure where each
financial item is list out as a % of other items. This method is considered to be very useful in
carrying put trend analysis which helps in determining relative change in the various financial
accounts over a period of time.
Horizontal analysis helps in comparing several financial rations and benchmark over the
particular accounting period. This method is considered to be very useful in carrying put trend
analysis which helps in determining relative change in the various financial accounts over a
period of time. This is very useful in evaluating various trend situations.
Income statement
This statement helps in presenting the financial results of the company for a particular
period. This helps in presenting the amount in a systematic and appropriate manner where they
focus on improving the performance of the company. This is considered to be one of the most
crucial financial approach as it helps in proper classification between the profit and loss of the
company.
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Interpretation: From the above conducted study by the using proper and effective tools of
financial accounting. This help to show the proper result of data in order to give more specific
result of work. As per the horizontal analysis of income statement, revenue in 2018 is higher i.e.
22% as compare to 2016 and 2017. On the other side, company Heineken N.V. Share of profit
of associates and joint ventures which shows the new amount of income tax which will company
pays. Net income tax is lower in 2016 as compare with 2017 and 2018, but in 2018, net income
tax show as per the horizontal analysis is 180%. Income statement of Heineken N.V. Company
as per horizontal analysis, company got profit in 2016 i.e. -19%, 2017 i.e. 24% and 2018 i.e. -
3%. As per that, company is get higher profit in 2017.
2

Interpretation: From the above calculation it had been shown the calculation as per vertical
analysis for company in order to consolidate income statement. This is shown revenue, income
tax and profit % of 2015, 2016, 2017 and 2018. As per the, vertical analysis of company is
shown total expenses in the 2015 i.e. 87.01%, 2016 is 86.97%, 2017 i.e. 85.33% and 2018 i.e.
72.39%. On the other side, this shows Profit before income tax which is higher in 2018 as
compare with other year i.e. 13.84%. But in the another years 2016, 2017 and 2018 that is lower
than compare 2016. That is beneficial for company to pay its income tax because lower profit
before income tax is created lower % of income tax rate. As well as this also shows, the profit in
the end of year 2015 is 10.44%, 2016 is 8.36%, 2017 is 9.84% and 2018 is 7.81%. As per the
stated statement profit of company is high in 2015 as compare with another years like 2016,
2017 and 2018. In that company need to make focus on their performance at the workplace in
order to gain more profit. This statement is shows the complete expenses and income of
company in the end of year as well as for compare with another years.
3

Interpretation: From the above analysis, is shows the complete consolidate income statements of
Simonds Farson Cisk company in the vertical formats. This shows the complete revenue,
operating profits, PBT and profits of three years i.e. 2016, 2017 and 2018. This is very important
for company ton know about its proper income statement in respective manner. The revenue of
company in 2016 is 9%, 2017 is 2% and 2018 is 9%. As per that, it concluded that the in the
2016 revenue is higher than compare with 2017 and 2018. This stated the company decrease
their revenue which is beneficial for company. But generated profit in the end of year is high in
2016 that is reflected the performance of company is reduces because their revenues are higher
and their expenses as well. In that company need to control on their expenses for better growth.
The profit of company is decreases as per horizontal analysis.
Simonds Farson Cisk
4

Interpretation: From the above conducted study of Simonds Farson Cisk it has been
critically examined that, the profit of the company has been increasing year after year. The profit
of the Simonds Farson Cisk company in the year 2015 was 10% and it has increased by 3% in
the year 2016. The profit for the year 2017 and 2018 is 14%. This in turn states that the company
is in a good position to generate higher profit returns. It also focuses on reducing their expenses
which in turn leads to higher operational growth and efficiency.
Statement of Balance sheet
Balance sheet is considered to be as effective financial statement which helps in
determining the assets and liabilities of the company (Yang, and et.al., 2015, June). This is
considered to be one of the most crucial statement in order to predict the financial statements of
the company. It is considered to be an effective tool which h helps management of the company
in providing the snapshot of the of the assets and liabilities of the company. This helps in
determining what company owns and how much amount is invested by the shareholders. It is an
effective statement which is very useful in calculating the financial ratios and in turn useful in
predicting the financial position of the company.
Horizontal analysis of Heineken N.V
Horizontal analysis of Heineken N.V.
5

Interpretation: From the above conducted study of Heineken N.V. it has been critically
examined that, the total non- current assets of the company is varying each year. In the year
2017, the total non current asset has increase to 5%. But on the contrary, in the year 2018 the
total non current asset of the company has reduced to -4%. It has been evaluated that, the total
assets of the company has been fluctuating every year. I/n the year 2017 the total assets of the
company has increased from -2% in the year 2016 to 4% in the year 2017 and it has reduced to
2% in the year 2018. The total equity of the firm is good because the total equity of the firm has
increased to 7%. The total current liabilities of the company has reduced to 0% in the year 2018
which in turn states that the Heineken N.V. Has lower current liabilities and have enough cash to
pay off its debt.
Vertical Analysis of Heineken N.V.
6

Interpretation: From the above conducted study of Heineken N.V. it has been critically
examined that, the maximum total non cur rents assets of the company is intangible assets. The
cash and cash equivalents of the company was estimated to be at 39% in the year 2015. But on
the contrary, cash and cash equivalents of the company has declined over the years to 32% in the
year 2018. This in turn states that, the company tends to focus on investing more cash outside the
business for higher investment and purchase of assets, or paying off of liabilities. The assets of
the company which are held for sale tends to determine the fact that, it will lead to increase in
profit and higher generation of cash (Levytskyi, 2019). Assets of the company which are held
for sale are 1% in the year 2015 and 2016. But in the year 2018 the assets of the company which
are held for sale has increased to 4%. It has been evaluated that, the loans and borrowings of the
company has reduced to 15% in the year 2018 from 75% in the year 2015. This in turn states that
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the, Heineken N.V. is in a good position where the liabilities of the company are low as
compared with the assets. This in turn states that, the company is in a good position.
Horizontal analysis of FARSON
Horizontal analysis
Assets 2016 2017 2018
Property, plant and equipment 12% 23% 6%
Investment property
Intangible assets -8% -6% -7%
Investments in subsidiaries
Investments in jointly-controlled entities
Deferred tax assets 149% -17% 53%
Trade and other receivables 98% 9% 24%
Total non-current assets 16% 21% 8%
Current assets
Inventories 20% 18% -6%
Loans and receivables
Trade and other receivable 11% -1% 4%
Current tax assets -61% -78% -83%
Cash and cash equivalents -46% -69% 384%
Total current assets 5% 1% 8%
Non-current assets classified as held for
sale
-4% -1%
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Total assets 9% 13% -11%
Capital and reserves
Share capital 0% 0% 0%
Revaluation and other reserves 2% 9% -16%
Hedging reserve 8% -23% -30%
Retained earnings 22% 18% -31%
Total equity 9% 13% -22%
Non-current liabilities
Provisions for other liabilities and
charges
-47% -33% 56%
Trade and other payables -26% -24% -16%
Derivative financial instruments 8% -31% -42%
Borrowings 6% 33% 5%
Total non current liabilities 4% 27% 4%
Current liabilities
Trade and other payables 27% -5% 13%
Current tax liabilities 37% -17% 60%
Derivative financial instruments 10% 2% -3%
Borrowings 67% 45% 120%
Total current liabilities 31% 1% 34%
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Liabilities directly attributable to non-
current assets held for sale
-41% -26%
Total liabilities 9% 12% 12%
Total equity and liabilities 9% 13% -11%
Interpretation: From the above conducted study of Farson company it has been critically
examined that, In 2016 Property plan and equipment of Farson was 12% it has been increased in
2017 by 23%. So it is the positive sign for the Farson they has been profitable in investing in
property and plants. But as compare to 2018 the ratio is been decreased by 6%. same as with
liability where Farson in 2016 trade and other payables are 27% which is been more decreased in
2017 by -5%. it has been analysed by horizontal analysis that Farson facing business crises. Total
equity and liabilities in 2016 was 9% which has been increased by 13% in 2017. In order to that,
it shows Farson increase their liabilities rapidly which is not a positive sign for the company
development. Basically, Farson only facing good sign in 2017 where they increased total assets
by 13%.
Vertical analysis of FARSON
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Interpretation: From the above conducted study of Farson company it has been critically
examined that, It has been critically examined by the vertical analysis of Farson that Property
plant equipment is highest in 2015 only. As compare to the years the highest number of
borrowing has been done in 2017 which was 95%. it has been analysis that in between the years
it has been shown many variance. It has been analyse that as compare to both vertical and
horizontal analysis. For the company vertical analysis is more profitable for the company to get
better results and which is also helpful to gain the company competitive gain in the competitive
market. Also, it analyses that total asset of the company is highest in 2018 which was 22%. also,
it has been measured how such financial data can helpful to measure the outcomes and leading
business target (Zhi-gang, 2017). Also, such matrix can helpful for the company to examine the
own status in the market. Basically, Vertical analysis is the better analysis for Farson than
Horizontal.
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Ratio Analysis
This is considered to be one of the effective tool which is useful in analysing the
operational efficiency, liquidity position and profitability of the company.
Ratio analysis of Heineken N.V.
Interpretation: From the above conducted study of Heineken N.V. company it has been
critically examined that, the profitability ratios of the company tends to evaluate the profit of the
company. The operating profit margin of the company has increased from 11% in the year 2015
to 15% in the year 2018. This in turn states that the profitability of the company is increasing
over a period. The return on equity of the company has increased from 13% in the year 2015 to
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15% in the year 2018. This in turn states that, how the management of the company will deploy
shareholder's equity. The current ratio of the company determine the current asset available for
the company to pay off its liabilities. The low current ratio states that current liability is
exceeding current assets of the company (Zhi-gang, 2017). The shareholder equity ratio states
the proportion of the equity required by the company in order to finance the capital of the
company. The negative working capital of the company states, that the current asset of the
Heineken N.V. Company is lower than its current liabilities.
Ratio analysis of Farsons
Interpretation: From the above conducted study of Farson company it has been critically
examined that, the net profit of the company is estimated to be 14% in the year 2015 but in the
year 2018 it was estimated to be 10. The revenue of the company has decreased because of the
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additional expenses incurred by the company. The debt to equity ratio tends to indicate the
proportion of debt and shareholders equity which is mainly used to finance the company. The
inventory days of the company has reduced from 52 in the year 2015 to 47 in the year 2018
which in turn states that the sales of the company has increased which leads to higher
profitability. The shareholder equity ratio states the proportion of the equity required by the
company in order to finance the capital of the company (Numan, 2019). The positive working
capital of the company states, that the current asset of the Farson company is more than its
current liabilities.
TASK 2
Importance of working capital
Working capital of the company helps in demonstrating the short term capability of the
company in order to meet its short term obligations (Xie, 2015, November).
 Useful in strengthening the solvency of the company.
 Helps in enhancing the goodwill of the company.
 Useful in facing crisis and leads to smooth operations of the business.
 Helpful in obtaining loan and mitigating short term liabilities.
TASK 3
CASH FLOW STATEMENTS
Cash flow statement is considered to be part of financial statements as it helps in showing
the amount of cash inflow and cash outflow into the business. This helps in breaking the analysis
into operating, financing and investing activity (Yang, and et.al., 2015, June). This is an effective
tool as it helps in summarizing the amount associated with the cash and cash equivalents. This is
also very useful in managing the cash position of the company.
14

15

Interpretation: From the above conducted study of Heineken N.V. company it has been
critically examined that, the cash flow from operating activity has increased from 3882 in the
year 2017 to 4388 in the year 2018. This in turn states that, the balance in the current asset has
decreased. This helps in improving the financial operations of the business (Xu, 2018, January).
The negative cash flow from investing activity tends to state that, company is investing a lot of
money in the future for higher sustainable growth. Heineken N.V. Company has negative cash
flow from financing activity. This in turn states that, the company is paying its long term debts,
paying dividend, paying shareholders, etc. The cash and cash equivalent of the company has
increased from 1177 in the year 2017 to 2248 in the year 2018.
CASH FLOW FOR FARSON
Interpretation: From the above conducted study of Farson company it has been critically
examined that, the cash flow from operating activity has increased from 13135 in the year 2017
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to 20893 in the year 2018. The cash flow from investing activity has deceased from (19714) in
the year 2017 to (21407) in the year 2018. The cash flow from financing activity has decreased
from 4091 in the year 2017 to (656) in the year 2018.
CONCLUSION
From the above conducted study, this study summarizes the vertical, horizontal and
financial ratio analysis of the company. This study helps in determining importance of working
capital and also analysis cash flow statement of company.
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REFERENCES
Books and Journals
Xu, J., 2018, January. Tax Adjustment and Analysis of Enterprise Investment Management
Business. In 2017 7th International Conference on Education and Management (ICEM
2017). Atlantis Press.
Yang, Y and et.al., 2015, June. Study on influencing factors of value improving for enterprise
groups’ finance shared service central. In 2015 International Conference on Management,
Education, Information and Control. Atlantis Press.
Xie, M., 2015, November. The Design of the Securities Enterprise Customer Relationship
Management System. In 2015 International Conference on Industrial Technology and
Management Science. Atlantis Press.
Numan, A.A., 2019. An In-Depth Analysis of the Small Enterprise Financing Division &
Performance Evaluation of IDLC Finance Limited.
Zhi-gang, Z., 2017. Analysis on Financial Management and Cost Control of Engineering Project
of Highway Construction Enterprise. Building Technology Development. (3). p.74.
Levytskyi, V., 2019. THE OPTIMIZATION OF SYSTEM FINANCIAL MANAGEMENT OF
ENTERPRISE BASED ON THE ANALYSIS OF INVESTMENTS IN ITS MARKETING
ACTIVITIES. Economic journal of Lesia Ukrainka Eastern European National
University.2(18).pp.101-108.
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