Accounting and Finance for Managers: Financial Performance Analysis and Financial Ratios

This article provides insights into financial performance analysis and financial ratios for accounting and finance managers. It analyzes the financial performance of three companies over a period of 3 years and provides insights into internal and external long-term sources of finance available to companies. The article also covers 10 appropriate financial ratios and their analysis. The subject is Accounting and Finance for Managers and the course code is not mentioned. The article is relevant for students pursuing courses in accounting and finance from any college or university.

Accounting and
Finance for Managers

Contents
INTRODUCTION......................................................................................................................... 3
SECTION A................................................................................................................................. 3
Analyze the financial performance of the three companies identified in this case study over a
period of 3 financial years........................................................................................................3
Select and analyse 10 appropriate financial ratios...................................................................4
Ranking to best performance company..................................................................................13
SECTION B............................................................................................................................... 13
Internal and external long-term sources of finance available to one of the three companies..13
Select one source of long term finance used by one of the company’s in the case study.......14
CONCLUSION........................................................................................................................... 15
REFERENCES.......................................................................................................................... 16

INTRODUCTION
Accountancy differs from money planning in that accountancy is the act of
collecting, managing, and presenting a corporation's economic finances in order to
reflect the business's accurate financial state, while money planning is the managing of
funds and investments. Managerial accounting could be used to make short - range and
long choices about a company’s financial position (Ong, Moroney and Xiao, 2021).
Accounting management aids management in determining effective decision aimed at
improving the particular project, as well as lengthy financial decisions.
SECTION A
Analyze the financial performance of the three companies identified in this case study
over a period of 3 financial years
BARR (A.G.) PLC: AG Barr plc (AGBarr) is a soft drink manufacturer and
distributor. Carbonated drinks, juice drinks, smoothies, energy bars, and mixers are
among the business and its products. AG Barr is based in Cumbernauld, North
Lanarkshire, United Kingdom. For the financial year ending January 2020 (FY2020), the
industry registered earnings of (British Pounds) GBP255.7 million, down 8.4 percent
from FY2019. A short-term trading plan was implemented that prioritized quantity
efficiency over quality. It aided the organisation in gaining a competitive advantage and
maintaining service standards. Additional lengthy plan was developed to renew the
company's price standing while lowering advertising activity.
Britvic plc: Britvic Plc (Britvic) is a soft drink distributor and maker. Sports drinks,
spring water, limestone’s, syrups, juice, squash, and sparking soda are all part of the
firm's product offering. With successful performance of initiatives, the industry is having
profitability in addition to increasing business and brand awareness in key areas.
Various products, such as Robinsons and Cordials, have been identified as luxury
brand categories that are taking market share. The EGalim legislation, which aims to
equalize business relationships with vendors and merchants in France, has had a
detrimental influence on supermarket sector revenues (Costa and Habib, 2021).

Coca Cola European partners Plc: Coca-Cola European Partners Plc (CCEP) is
a Coca-Cola manufacturing firm that operates independently. It obtains extracts,
drinking mixes, and flavorings from The Coca-Cola Company (TCCC), then
manufactures and supplies a variety of packed products to merchants and supply chain
strategies, who ultimately sell them to users. CCEP Plc is also looking to boost the
availability of small containers in designed to steer pricing and mix realization. It is also
developing a method to just provide good customer service by introducing My CCEP, an
online platform where people can order purchases. Coca-plastic Cola's bottles will be
constructed entirely of recyclable plastic by 2020, according to a sustainable marketing
policy (Ding, Ni and Xu, 2021).
Select and analyse 10 appropriate financial ratios
1. Return on Equity
Years BARR (AG) Plc BRITVIC CCEP
2017 32.89 10.29
2018 18.5 31.04 13.85
2019 17.06 19.64 17.71
2020 14.31
Figure 1

2017 2018 2019 2020
0
5
10
15
20
25
30
35 32.89
31.04
19.64
10.29
13.85
17.71
18.5
17.06
14.31
BARR (AG) Plc
BRITVIC
CCEP
Barr (A.G.) Plc's ratio is on the decline, falling from 18 percent to 14 percent between
2018 and 2020. The argument seems to be that the business's expansion is being
inhibited by an exterior danger. It's also possible that the corporation isn't making the
best use of its abilities to produce revenues. From fiscal year 2017 to 2019, Britvic Plc's
ROE has decreased from 32.8 percent to 19.6 percent. The principal motivation for a
decrease in ROE could be that the revenues are unpredictable or that it has an
enormous debt load. CCEP, on the other hand, has increased its ratio from 10% to
17.7% from fiscal year 2017 to fiscal year 2019. It signifies that the soft drink business is
earning enough gross margins to maximize economic a positive profit.
2. Profit Margin
years BARR (AG) Plc BRITVIC CCEP
2017 9.7 10.48
2018 17 9.7 10.46
2019 15.95 7.14 12.1
2020 14.52

2017 2018 2019 2020
0
5
10
15
20
25
30
35
40
9.7
9.7
7.14
10.48
10.46
12.1
17 15.95 14.52
CCEP
BRITVIC
BARR (AG) Plc
Barr (A.G.) Plc's profitability is likewise decreasing, falling from 17 percent to 14
percent, indicating that the business earnings are declining. Whether the company is
overcharging for its goods or its pricing policies is inadequate. In the instance of Britvic
Plc, however, it held steady for two years before beginning to decline in the third.
Furthermore, CCEP Plc's profit margin increased from 10.46% to 12.1%, indicates that
the firm is profitable.
3. Gross Margin
years BARR (AG) Plc BRITVIC CCEP
2017 57.97 43.21
2018 47.44 58.08 43.02
2019 47.06 56.79 43.22
2020 46.52

2017 2018 2019 2020
0
10
20
30
40
50
60 57.97 58.08 56.79
43.21 43.02 43.22
47.44 47.06 46.52
BARR (AG) Plc
BRITVIC
CCEP
Barr Plc's Gross Margin, which measures how well a corporation utilizes its assets to
produce earnings, is similarly declining from 47 percent to 46 percent between 2018
and 2020. In the case of Britvic Plc, the ratio increased from 2017 to 2018, but then fell
in 2019, indicates that the firm is not earning enough revenues to preserve its profit
margin. CCEP's operating margin, but in the other side, has been relatively steady and
over 3 years, with slight variations.
4. Stock Turnover
years BARR (AG) Plc BRITVIC CCEP
2017 9.75 17.02
2018 14.67 10.41 16.62
2019 13.68 10.12 16.62
2020 14.07

2017 2018 2019 2020
0
2
4
6
8
10
12
14
16
18
9.75 10.41 10.12
17.02 16.62 16.62
14.67 13.68 14.07
BARR (AG) Plc
BRITVIC
CCEP
The cost of sales is identical to the asset turnover calculation. It contains material cost,
straight multiplied by entire or typical storage to illustrate how often merchandise is
“transformed” or sold over tenure. The proportion can then be used to detect when
inventories rates are too high in comparison to revenues. Barr Plc's stock turnover ratio
is from 13 to 14 times, implying that the corporation converts 13 to 14 times its stockpile
into actual sales. Britvic Plc, and from the other side, transforms 9 to 10 times its
product availability in sales, whilst CEPP transforms its stock 17 to 16 times in
revenues.
5. Collection Period
years BARR (AG) Plc BRITVIC CCEP
2017 71 56
2018 73 75 52
2019 70 80 50
2020 77

2017 2018 2019 2020
0
20
40
60
80
100
120
140
160
180
200
71
75 80
56
52 50
73 70 77
CCEP
BRITVIC
BARR (AG) Plc
The average collection period is the number of time it requires a takes to finance its
collections on normal. It shows how efficient the previously carried is, and the smaller it
is, the quicker the company's cash conversion cycle is, that has a favorable effect on
the profitability. Barr Plc's three-year cash cycle runs from 73 to 77 days, implying that it
takes roughly 73 to 77 days to recover account receivables. Britvic Plc is retaining its
dues for a longer period of time than Barr Plc, ranging from 70 to 80 days. CCEP, but in
the other extreme, collects debts from borrowers in 52 to 56 days.
6. Credit Period
years BARR (AG) Plc BRITVIC CCEP
2017 61 34
2018 24 64 35
2019 26 68 34
2020 20

2017 2018 2019 2020
0
10
20
30
40
50
60
70 61 64
68
34 35 34
24 26
20
BARR (AG) Plc
BRITVIC
CCEP
Barr Plc pays its bills in 20 to 26 straight days over the last 3 years of 2018 to 2020,
according to the credit terms. Britvic Plc, from the other extreme, takes 61 to 68 days to
satisfy its debts with lenders. It takes CCEP 34 to 35 days to pay its debts with lenders
and vendors.
7. Current Ratio
years BARR (AG) Plc BRITVIC CCEP
2017 0.93 1.01
2018 1.52 0.93 0.79
2019 1.62 0.81 0.75
2020 1.44

2017 2018 2019 2020
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
0.93 0.93
0.81
1.01
0.79 0.75
1.52
1.62
1.44
BARR (AG) Plc
BRITVIC
CCEP
Barr Plc's current ratio rises one year before falling the following, i.e., it was 1.52 in
2018 and rose to 1.62 in 2019 before falling to 1.44 in 2020. Britvic Plc, on either
extreme, has seen its ratio fall from 0.93 to 0.81 during the last two years, indicating that
the firm does not have enough current assets to satisfy its short-term dues on time.
From 2017 to 2019, CCEP's ratio fell from 1.01 to 0.75, indicates that the firm has only
0.75 resources for every 1 liabilities and just need outside help to fulfil its 0.25 liabilities.
8. Interest Cover
years BARR (AG) Plc BRITVIC CCEP
2017 5.94 8.51
2018 44.8 8.12 9.29
2019 76.67 8.43 10.68
2020 65

2017 2018 2019 2020
0
10
20
30
40
50
60
70
80
90
100
5.94
8.12
8.43
8.51
9.29
10.68
44.8
76.67
65
CCEP
BRITVIC
BARR (AG) Plc
The capability of a corporation to meet its interest expenses on mortgages and liabilities
in a given time is determined by interest cover percentages. Barr Plc's ratio fluctuates
with time, from 44.8 times in 2018 to 65 times in 2020. From 2017 to 2019, it increased
by 5 to 8 occasions in Britvic Plc and 8 to 10 times in CEPP Plc.
9. Profit Per Employee
years BARR (AG) Plc BRITVIC CCEP
2017 29 44
2018 46 30 46
2019 46 23 53
2020 39

2017 2018 2019 2020
0
10
20
30
40
50
60
29 30
23
44 46
53
46 46
39
BARR (AG) Plc
BRITVIC
CCEP
Revenue per worker examines the organizational excellence of firms by describing how
much money every individual contributes in over a financial year. From 2018 to 2020,
Barr Plc's revenue per worker would drop from £46000 to £39000. It indicates that staff
productivity is declining so they're not functioning efficiently to achieve corporate
objectives. From 2017 to 2019, Britvic Plc made £23000 to £30000 profit per staff,
whereas CEPP made £44000 to £53000 profit per worker.
10. Average Cost Of Employee
years BARR (AG) Plc BRITVIC CCEP
2017 41 65
2018 50 44 68
2019 56 45 65
2020 49

2017 2018 2019 2020
0
20
40
60
80
100
120
140
160
180
41
44 4565
68 65
50 56 49
CCEP
BRITVIC
BARR (AG) Plc
From 2018 to 2020, Barr Plc's estimated price per person varies from £49000 to
£56000, while Britvic Plc's estimated price per person varies from £41000 to £45000.
CEPP Plc, on the other hand, spent roughly £65000 to £68000 between 2017 and 2018.
When the financial results among all selected firms are compared, CEPP Plc comes out
on top, following after Britvic Plc, and Barr Plc in third place.
Ranking to best performance company
Coca-Cola European Partners Plc is the greatest place to invest in since the return
on capital employed has been improving from 2017 to 2019, which is a promising
indicator of the firm’s success. An entrepreneur wants to ensure that the resources he
invests yield contain data on a regular schedule. Likewise, Coca-Cola European
Partners Plc's operating income is increasing, indicates that the firm is making enough
money to pay all expenditure and deliver huge profits. To produce profits, the company
is producing acceptable sales (Elbashir and et.al, 2021).
SECTION B
Internal and external long-term sources of finance available to one of the three
companies
Internal sources: Internal sources of funding in organization because whereas to our
asset value and the quantity we gather on a frequent basis. Its goal is to raise the

amount generated by business activity. Planning, cost evaluation, and management are
regarded to be the most important and necessary aspects of this fundamental goal.
Clients' credit terms are checked to ensure that the money obtained is kept up to date.
 Owner’s capital: The amount invested by a company's founder is referred to as
founder’s capital. This is frequently sourced through their private money. A
startup's savings are funds set aside for his or her own use. Since there are no
interest payments, this form of funding is free to the company (Liu and Tian,
2021).
 Retained profit: Whenever a company produces a profit, it can keep some of that
revenue in the company and spend it to grow. This type of financing does not
levy interests or demand cash dividends, making it a preferable option.
External sources: External sources of funding are monies produced from cash gathered
from third party sources, regardless of location. External investment is when profit is
made coming from external methods to help a company grow. A funding source from
outside the company this external entity originates from the organisation, even as name
implies. Lengthy source and brief resources are indeed the two basic types. They are
backed by foreign investors.
 Loan capital: Lending from a bank is by far the most usual method. It can be in
the form of a loan or an overrun. It is calculated based over an amount of time. It
could be for a short period of time (2-3 years), a moderate period of time (3-5
years), or a long period of time (5+ years). The mortgage will have an interest
rate, which will be constant or adjustable. A security will be required by the lender
as safety in the event that the payment is not made (Duong and Truong, 2021).
 New partner: Whenever an extra person or group is recruited into the company
as a fresh strategic partner, this is referred to as different partners. This implies
that they might contribute funds in exchange for a stake in the company.
 Share issues: A business can sell more of its share capital to fundraise through a
share issuance. Purchasing shares provides the purchaser a portion of the
company and, as a result, specific privileges, like the ability to vote on regard to
the company.

Select one source of long term finance used by one of the company’s in the case study
These are some of the long-term financing options available to Coca-Cola
European Partnership Plc in order to achieve a lengthy competitive market position.
Based on the analysis of information available about CCEP, it can be concluded that the
organisation is supported by the owners' money, which relates to the quantity of equity.
CCEP receives a number of advantages as a result of adopting this revenue source.
There are mentioned different sources of long term that help to company to achieve
their set goals in right time:
Equity capital: Common shareholders, often referred as equity shares, reflect a
product - market capital. The lawful proprietors of the corporation are the buyers of such
shares. Shareholders have unfettered claims on the business earnings and resources,
as well as complete voting authority. In reality, a government's primary aim is to
optimize the price of its share capital. They face the possibility of possession because
they are the industry's proprietors. Following receiving the distributable cash, they are
eligible to dividend payouts. The yield on such shares is not set and is determined by
the existence of divided earnings and the managers' desire (Huang, 2021).
In 2017, the value of stock was $5,933,697, indicating that this technique
generates practically all of the funds needed to accomplish the company's long-term
goals. The equity for the years 2018 and 2019 is 5920040 and 5270472,
correspondingly. Based on the facts provided, it can be concluded that the firm's equity
is decreasing in compare to the past year. This is a warning indicator of a corporation's
economic difficulty, as it shows a downward tendency. Investors are getting bored in the
direction of the business, as evidenced by the declining investment vehicle. It may have
an impact on the firm's organizational effectiveness and well from, which may impact
creditors' willingness to lend money to the organisation (Taki, Ali Ahmadi and
Aghabeikzadeh, 2021).
CONCLUSION
It may be inferred from the foregoing research that accounting is essential for
making sound financial decisions. The current report includes a strategic plan for
achieving major financial objectives by focusing on ratios. The economic results of all 3

companies listed have been discussed in this study. The main objective of the current
research study is on presenting specifics about different sources. CCEP uses common
equity money to achieve its organizational goal.

REFERENCES
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