Financial Analysis of a Company

This assignment requires you to critically analyze the financial performance of a company using its income statement, balance sheet, and other provided ratios. You will need to calculate key financial metrics such as gross profit margin, operating profit margin, return on capital employed (ROCE), and current ratio. Additionally, you'll interpret these results to assess the company's profitability, liquidity, and efficiency over several years.

Running Head: Accounting
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Project Report: Accounting

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Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
Financial ratio analysis.....................................................................................................3
Profitability ratio...........................................................................................................3
Profit, earning & dividends...........................................................................................5
Financial stability and liquidity....................................................................................7
Critical Reflection.............................................................................................................8
Corporate governance.......................................................................................................8
Assets value per share.....................................................................................................10
Current market and share price.......................................................................................11
Investment opportunity...................................................................................................11
References.......................................................................................................................13
Yahoo finance. 2017.......................................................................................................14
Appendix.........................................................................................................................15

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Introduction:
Investors plays a crucial role in every company as they provides the fund to the
company to invest into various proposals and projects and enhance the revenue of the
company, in consideration, company offers some proportion of the profit to the investors in
terms of dividends. This dividend % is depending upon the profit and performance of the
company. Investors must look over various factors of the company and the economical
condition before investing the amount of the company as it would help them to get more
dividend amount. Investors could analyze the financial ratio, governance policy of the
company and the assets value, share price current value etc. for this report, Barr, A.G. has
been taken into the context.
Company overview:
A.G. Barr plc is also known as Barr’s. This company is a drink manufacturing
company. Headquarter of the company is Cumbernauld, Scotland. Popular Scottish drink is
manufactured by this company. This company has listed itself in LSX (London stock
exchange). This company has been founded in 1875. According to the annual report of the
company, revenue of the company is £257.1 million. And currently, the number of employees
is 1032. Further, it has been found that the performance of the company is enhancing
gradually (A. G. Barr, 2017)
Financial ratio analysis:
For analyzing the performance of the company, financial ratio analysis of the
company of last 5 years have been analyzed (Borio, 2014). For analyzing the financial ratio,
annual report of the company has been analyzed.
Profitability ratio:

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2017 2016 2015 2014 2013
Gross Profit Margin 47.08% 46.72% 45.98% 45.28% 45.38%
Operating profit
Margin
16.73% 16.22% 14.56% 13.78% 13.45%
Return on capital
employed (ROCE)
16.44% 14.98% 15.08% 15.38% 16.15%
(morning star, 2017)
According to the above table, the ratio of gross profit margin of the company is
47.08%, 46.72%, 45.98%, 45.28% and 45.38% in 2017, 2016, 2015, 2014 and 2013
respectively. Through these rates, it has been found that the gross profit rate of the company
is stable from last 5 years. The gross profit of the company is GBP 121 million in 2017 which
is enhancing rapidly and depicts about the good performance of the company. The gross
profit rate of the company depict about the gross profit of the company in terms of total
revenue (Brealey, Myers and Marcus, 2007). From last 5 years, the revenue of the company
is quite constant and consequently, the cost of revenue is also constant and thus the gross
profit margin rate is almost similar in last 5 years. this depict that in near future, the gross
profit rate of the company would be similar and would offer high return to the investors as
there are less chances of the company to face any financial risk.
Further, operating profit margin and the ROCE of the company has also been
analyzed to identify the financial performance and profitability of the company. The
operating profit margin of the company is 16.73%, 16.22%, 14.56%, 13.78% and 13.75% in
2017, 2016, 2015, 2014 and 2013 respectively (De and Amtenbrink, 2011). Through these
rates, it has been found that the operating profit rate of the company is enhancing rapidly
from last 5 years. The operating profit of the company is GBP 43 million in 2017 which is

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enhancing rapidly and depicts about the good performance of the company. The operating
profit rate of the company depict about the operating profit of the company in terms of total
revenue. From last 5 years, the revenue of the company is quite constant and consequently,
the operating expenses of the company have been lowered and thus the operating profit
margin rate of the company has been enhanced in last 5 years. this depict that in near future,
the operating profit rate of the company would be enhanced and would offer high return to
the investors as there are less chances of the company to face any financial risk (Deegan,
2013).
Lastly, the ROCE of the company has been analyzed which is 16.44%, 14.98%,
15.08%, 15.38% and 16.15% in 2017, 2016, 2015, 2014 and 2013 respectively. Through
these rates, it has been found that the ROCE of the company is enhancing rapidly from last 5
years. The ROCE of the company depict about the positive performance of the company and
it is enhancing rapidly (Brigham and Ehrhardt, 2013). The ROCE of the company depict
about the net profit of the company in terms of total assets minus current liabilities of the
company. From last 5 years, the revenue of the company is quite constant and consequently,
the total assets and total current liabilities are also almost similar in last 5 years. this depict
that in near future, the company would offer high return to the investors as there are less
chances of the company to face any financial risk.
Thus it has been analyzed that the profitability position and the performance of the
company is quite positive and it is expressing about a good future position of company.
Profit, earning & dividends:
2017 2016 2015 2014 2013
Earnings per share
Basic ( Pence)
0.31 0.3 0.26 0.24 0.22

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Dividend Cover 51.61 46.67 50.00 12.50 86.36
Dividend Yield 0.088 0.078 0.083 0.019 0.145
(Yahoo Finance, 2017)
According to the above table, the ratio of EPS of the company is 0.31, 0.3, 0.26, 0.24
and 0.22 in 2017, 2016, 2015, 2014 and 2013 respectively. Through these rates, it has been
found that the earnings per share of the company is enhancing rapidly from last 5 years. The
earnings per share of the company are enhancing rapidly and depicts about the good
performance of the company. The earnings per share of the company depict about the total
earnings of the company in terms of total profit. From last 5 years, the net profit of the
company is quite constant and consequently, the total profit of the company in terms of total
number of shares (Davies and Crawford, 2011). This depict that in near future, the earnings
per share of the company would be enhanced rapidly and would offer high return to the
investors as there are less chances of the company to face any financial risk.
Further, Dividend cover and the dividend yield of the company have also been
analyzed to identify the financial performance and profitability of the company. The
Dividend cover of the company is 51.61, 46.67, 50, 12.5 and 86.36 in 2017, 2016, 2015, 2014
and 2013 respectively. Through these rates, it has been found that the dividend cover of the
company is enhancing rapidly from last 5 years. The dividend cover of the company is
enhancing rapidly and depicts about the good performance of the company. The dividend
cover of the company depict about the dividend of the company in terms of total earnings per
share of the company (CORREIA et al., 2013). From last 5 years, the dividend cover of the
company is quite constant and consequently, the dividend cover of the company has been
lowered and thus the dividend cover of the company has been enhanced in last 5 years.

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Lastly, the dividend yield of the company has been analyzed which is 0.088, 0.078,
0.083, 0.019 and 0.145 in 2017, 2016, 2015, 2014 and 2013 respectively. Through these
rates, it has been found that the dividend yield of the company is enhancing rapidly from last
5 years. The dividend yield of the company depicts about the positive performance of the
company and it is enhancing rapidly. this depict that in near future, the company would offer
high return to the investors as there are less chances of the company to face any financial risk
(Brigham and Ehrhardt, 2013).
Thus it has been analyzed that the profitability position and the performance of the
company is quite positive and it is expressing about a good future position of company.
Financial stability and liquidity:
Lastly, financial stability of the company has been analyzed.
2017 2016 2015 2014 2013
Current Assets 80 1522.6 1590.4 1785.3 1848.7
Current liabilities 57 1637.9 1347.1 1432 1504
Current ratio 1.40:1 0.93:1 1.18:1 1.25:1 1.23:1
Acid-test ratio 1.11:1 0.92:1 1.17:1 1.24:1 1.22:1
The above table depict that the current ratio and quick ratio of the company is quite
competitive. The ratio of current assets and current liabilities has been set by the company in
such a manner that entire current debt of the company could be repaid by the company easily.
Further, it has been found that the current ratio of the company is 1.40:1, 0.93:1, 1.18:1,
1.25:1 and 1.23:1 in 2017, 2016, 2015, 2014 and 2013 respectively (Du and Girma, 2009).
Through these ratio, it has been found that the company has managed the current assets and

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current liabilities has in such a manner that entire current debt of the company could be
repaid by the company easily.
Critical Reflection:
The annual report of the company and the market condition of the company has been
analyzed of last 5 years. Through these calculations, it has been found that the performance
of the company is enhancing rapidly and so the dividend offered by the company would also
be enhanced and further, it has been found that the position of the company in terms of
stability and managing the factors of the company are according to the industry position of
the company (A. G. Barr, 2017). The MD and CEO of the company depict that the equity
funds would be enhanced by the company and through it the diversification would be done in
the company’s market. From last few years’ performance of the company, it has been
analyzed that it is a good opportunity for the investors to invest their amount in this company.
The revenue and other performance of the company are either constant or enhancing.
Corporate governance:
-ii
(Elmuti & Kathawala, 2001)
The board
sdfsdfdfdfd
sfHealth
and Safety
Health and Safety
committee
Remuneration
committee
Nomination
committee
Audit
committee

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According to the study over Barr AG governance structure, it has been found that four groups
are there of committee which have different functions that provides the similar reason to
support the board of the company.
Audit Committee: this committee has at least three members that are all non – executive
self-governing directors. The major functions of this audit committee are:
• To observe the honesty of annual report and financial statement and various announcement
done by the company in concern of financial position.
• To re-evaluate the corporation’s internal financial managing activities and the
arrangement of risk management and internal control (FIRER et al., 2012).
• To observe and re-evaluate the efficiency of the corporation through internal audit
purpose.
• To preserve a suitable relations along with external auditors so that the review over
the company could be done with freedom, impartiality and efficiency of the audit procedure.
Nomination committee: It would be selected by the company’s board and at least
three members must be there. The people of this nomination committee must be chosen from
non-executive self – governing directors of the firm. The chief function of this committee is
to investigate over the activity of the company in terms of legal activities. This committee
looks over the financial performance and position and statement of the company and makes a
judgement accordingly (Fulin, 2011).
Remuneration committee: This committee is composed as a group of directors of
the board. It has the entrust power of the corporate governance board and might subordinate
or allot all of its power or any of its power and influence without boundaries. The main role

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of this remuneration committee is to support the board to complete its accountability to
investor to make sure that remuneration strategies and preparations of the corporation reward
responsibly and fairly, with an obvious link to company and personal performance which
have a regard over the regulatory and statutory requirements of the company.
Health and safety committee: this committee uses the capital and other assets of the
company to manage the health trends and safety of the manpower of the company. It is
required for every company to make sure corporation’s health and safety presentation as it
helps the company to remains on the leading position in the industry (Lacalle, 2017).
Further, it has been analyzed that the performance of the company is increasing
rapidly and the board committee of the company is performing their work with honesty and
as well as with the responsibility and thus the investors could rely over the annual reports of
the company and could also relay that there power would not be diluted.
Assets value per share:
2017 2016 2015 2014 2013
Total assets 276 269 255 227 215
(morning star, 2017)
Further, assets value per share of the company has been analyzed. According to the
above table, the total assets of the company is 276, 269, 255, 227 and 215 in 2017, 2016,
2015, 2014 and 2013 respectively. Through these rates, it has been found that the total assets
of the company is enhancing rapidly from last 5 years. The total assets of the company are
enhancing rapidly and depicts about the good performance of the company. The total assets
of the company depict about the few financial and asset ratios which are expressing a good
health of the company in terms of total profit. From last 5 years, the total assets of the
company are rapidly enhancing and consequently, the total profit of the company in terms of

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total assets of the company is also constant. This depict that in near future, the total assets and
total net profit of the company would be enhanced rapidly and would offer high return to the
investors as there are less chances of the company to face any financial risk.
Current market and share price:
(Yahoo Finance, 2017)
The above graph of the AG Barr depict about the current market share of the company
and the performance of the company in terms of share price of last 5 years. Through this
graph report, it has been found that the current market share price is average from last 5 years
and according to the trend, in future, the share price of the company would enhance.
Currently the share price of the company is $ 616.5.
Investment opportunity:
Through the above analysis over the A. G. Barr, it has been found that the financial
performance, financial position and the financial stability of the company are quite stable and
depicting about the good performance of the company. Through the analysis, it has been

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found that the company has managed the financial figures in such a manner that entire
performance, position and stability of the company in terms of finance could offer high return
to the company and according to the dividend policy of the company, high dividend is offered
by the company to its investors. Thus according to the analysis, it has been found that this
company is a good option to invest the amount and enhance the worth of the amount with
concern of high dividends.
So it is suggested to the investors to invest into this company for a short term as well
as long term as the share price of the company is also enhancing rapidly and the dividend
offered by the company is also stunning.

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References:
A. G. Barr. 2017. Home. Reterived from http://www.agbarr.co.uk/ as on 26- Sept 2017.
Borio, C., 2014. The financial cycle and macroeconomics: What have we learnt?. Journal of
Banking & Finance, 45, pp.182-198.
Brealey, R., Myers, S.C. and Marcus, A.J., 2007. FundamentalsofCorporate Finance. Mc
Graw Hill, New York.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
CORREIA, C. et al. 2013. Financial Management. 7th Edition. Cape Town: Juta
andCompany Ltd.2.
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
De Haan, J. and Amtenbrink, F., 2011. Credit rating agencies.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Du, J. and Girma, S., 2009. Source of finance, growth and firm size: evidence from China
(No. 2009.03). Research paper/UNU-WIDER.
Elmuti, D. & Kathawala, Y. 2001. “An overview of strategic alliances”. Management
Decision, vol. 39, no. 3, pp. 205-217.
FIRER, C. et al. 2012. Fundamentals of Corporate Finance. 5th Edition.Berkshire.McGraw-
Hill Companies, Inc.

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Fulin, S. 2011. Preface by SHANG Fulin. Corporate Governance of Listed Companies in
China, 9-10.
Lacalle, D., Credit‐rating agencies. Life in the Financial Markets: How they really work and
why they matter to you, pp.95-98.
Morningstar. 2017. A. G. Barr. Reterived from
http://financials.morningstar.com/cash-flow/cf.html?t=BAG&region=gbr&culture=en-US as
on 26- Sept 2017.
Yahoo finance. 2017. A. G. Barr. Reterived from https://finance.yahoo.com/quote/BAG.L?
p=BAG.L as on 26- Sept 2017.

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Appendix:
INCOME STATEMENT
Fiscal year ends in January. GBP in millions except per
share data.
2017-
01
2016-
01
2015-
01
2014-
01
2013-
01
Revenue 257 259 261 254 238
Cost of revenue 136 138 140 139 130
Gross profit 121 121 120 115 108
Operating expenses
Sales, General and administrative 78 78 73
Restructuring, merger and acquisition 4 3
Other operating expenses -5 79 82 3 0
Total operating expenses 78 79 82 80 76
Operating income 43 42 38 35 32
Interest Expense 0 0 0 0 0
Other income (expense) 0 -1 1 0 0
Income before taxes 43 41 39 34 32
Provision for income taxes 8 7 9 6 6
Net income from continuing operations 36 34 30 28 26
Net income 36 34 30 28 26
Net income available to common shareholders 36 34 30 28 26
Earnings per share
Basic 0.31 0.3 0.26 0.24 0.22
Diluted 0.31 0.3 0.26 0.24 0.22
Weighted average shares outstanding
Basic 116 116 115 115 116
Diluted 116 116 116 116 116
EBITDA 52 50 46 41 39
BALANCE SHEET
Fiscal year ends in January. GBP in millions except per
share data.
2017-
01
2016-
01
2015-
01
2014-
01
2013-
01
Assets
Current assets
Cash
Cash and cash equivalents 10 7 25 13 1
Short-term investments 0 1 0 1
Total cash 10 8 26 13 2
Receivables 48 50 49 45 42
Inventories 17 16 17 16 21
Prepaid expenses 3 3 3 2 6

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Other current assets 1 0 0 0
Total current assets 80 76 94 76 71
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 157 148 138 130 119
Accumulated Depreciation -68 -63 -59 -53 -49
Net property, plant and equipment 89 85 80 76 69
Goodwill 39 39 23 23 23
Intangible assets 67 69 58 51 51
Total non-current assets 195 193 161 150 144
Total assets 276 269 255 227 215
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 0 1 0 11
Capital leases 0 0
Accounts payable 16 8 18 9 13
Taxes payable 8 9 8 7 6
Other current liabilities 33 24 31 29 24
Total current liabilities 57 42 56 45 54
Non-current liabilities
Long-term debt 18 15 15 15
Capital leases 0
Deferred taxes liabilities 10 12 9 11 12
Other long-term liabilities 27 17 18 0 3
Total non-current liabilities 37 47 42 26 30
Total liabilities 94 89 98 72 84
Stockholders' equity
Common stock 5 5
Additional paid-in capital 1 1 1 1 1
Retained earnings 174 172 149 148 122
Accumulated other comprehensive income 2 7 7 6 3
Total stockholders' equity 182 180 157 155 131
Total liabilities and stockholders' equity 276 269 255 227 215
Statement of CASH FLOW
Fiscal year ends in January. GBP in millions except per
share data.
2017-
01
2016-
01
2015-
01
2014-
01
2013-
01
Cash Flows From Operating Activities
Depreciation & amortization 9 8 7 7 7
Stock based compensation 1 0 1 1 1

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Inventory -2 2 -1 5 -2
Other working capital 12 -16 6 3 -6
Other non-cash items 29 35 32 27 22
Net cash provided by operating activities 49 29 45 42 22
Cash Flows From Investing Activities
Investments in property, plant, and equipment -12 -15 -11 -13 -21
Property, plant, and equipment reductions 0 1 1 0 0
Acquisitions, net -16
Purchases of intangibles -5 -7
Other investing activities 0 0 0 0
Net cash used for investing activities -12 -34 -18 -13 -21
Cash Flows From Financing Activities
Debt issued 26 34 15 10 25
Debt repayment -43 -32 -15 -20 -15
Common stock issued 1
Common stock repurchased -1 -5 -2 -2 -3
Dividend paid -16 -14 -13 -3 -19
Other financing activities 0 3 1 1 2
Net cash provided by (used for) financing activities -33 -14 -14 -15 -10
Net change in cash 4 -19 12 14 -9
Cash at beginning of period 6 25 13 -1 8
Cash at end of period 10 6 25 13 -1
Free Cash Flow
Operating cash flow 49 29 45 42 22
Capital expenditure -12 -20 -19 -13 -21
Free cash flow 36 10 26 28 1
Profitbaility ratio:
2017 2016 2015 2014 2013
Grass Profit Margin 47.08% 46.72% 45.98% 45.28% 45.38%
Operating profit Margin 16.73% 16.22% 14.56% 13.78% 13.45%
Return on capital
employed (ROCE)
16.44% 14.98% 15.08% 15.38% 16.15%
2017 2016 2015 2014 2013
Earnings per share Basic (
Pence)
0.31 0.3 0.26 0.24 0.22
Dividend Cover 51.61 46.67 50.00 12.50 86.36
Dividend Yield 0.088 0.078 0.083 0.019 0.145

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2017 2016 2015 2014 2013
Current Assets 80 1522.6 1590.4 1785.3 1848.7
Current liabilities 57 1637.9 1347.1 1432 1504
Current ratio 1.40:1 0.93:1 1.18:1 1.25:1 1.23:1
Acid-test ratio 1.11:1 0.92:1 1.17:1 1.24:1 1.22:1
2017 2016 2015 2014 2013
Total assets 276 269 255 227 215