Financial Statement Analysis for Campbell Soup Company

Running Head: Financial statement analysis
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Project Report; financial Statement analysis

Financial statement analysis
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Contents
Introduction...........................................................................................................................................3
Company overview................................................................................................................................3
Part 1: Using financial statement for equity valuation...........................................................................3
Earnings growth analysis...................................................................................................................3
Discounted cash flow.........................................................................................................................5
Recommendation...............................................................................................................................7
Conclusion.........................................................................................................................................7
Part 2: Using financial statement for credit risk analysis.......................................................................7
Financial statement ratios:................................................................................................................7
Credit quality of the firm...................................................................................................................9
Recommendation and Conclusion...................................................................................................10
References...........................................................................................................................................11
Appendix.............................................................................................................................................13

Financial statement analysis
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Introduction:
Identifying the total worth of an organization contain the more reviewing revenues
and assets figures. In finance, valuation is a procedure which is conducted by the companies
and the related parties of the company such as the investors, creditors, bank, stockholders,
shareholders, debtors etc of the company to evaluate the fair market value of an asset. Equity
valuation therefore explains about the process of identifying the fair value of equity securities
(Chandra, 2011). Equity valuation makes it easy for an organization and the other parties to
identify the worth of the comapny and the market position of the company. It offers a good
base to the stakeholders of the company to make better decision about the performance of the
company.
Financial statement analysis is a process which is done by the companies and the
related parties of the company such as the investors, creditors, bank, stockholders,
shareholders, debtors etc of the company to reach over different conclusion. The main motto
of financial statement analysis is to identify the worth of the company, total profit of the
comapny and turnover of the company, changes into the final structure of the company from
last year, financial position of the company, cash flow position of the comapny etc. the
financial stataement analysis could be done by the analyst and the managers through
numerous ways such as trend analysis, capital asset pricing model, vertical analysis, ratio
analysis etc (Madhura, 2011).
This report explains about the equity valuation and the financial statement analysis of
Campbell Soup Company. For identifying the equity valuation and the financial statement
evaluation of the company, final statement of the company of 2014 to 2016 has been
evaluated. The study explains about the performance of the company on various bases.
Company overview:
Campbell Soup Company is a food company which is situated in American market.
The company is a global food company which has registered in NYSE. The headquarter of
the company is in Camden, N.J. the organization prepares and produces the high quality
meals, sups, snack, beverages, packaged fresh food etc. It is inspired and driven by the main
goal of the company which is “Real food that matters for the life movement.” The customers
and the clients of the company are loyal to the company due to flavourful, authentic and
readily available food of the company (Home, 2018). The financial position and performance
of the company has been identified and it has been evaluated that the performance of the
company has been better from last few years. The company is performing well in the market
and it has diversified its market.
Part 1: Using financial statement for equity valuation:
Equity valuation explains about the process of identifying the fair value of equity
securities. Equity valuation makes it easy for an organization and the other parties to identify
the worth of the comapny and the market position of the company. It offers a good base to the
stakeholders of the company to make better decision about the performance of the company.
There are various ways on the basis of that equity valuation could be done. In the report, two
equity valuation techniques have been used to identify the worth of the company which are
DCF and Earnings growth analysis.
Earnings growth analysis:

Financial statement analysis
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Earnings growth analysis is a way to identify the total worth of equity of a company.
Equity valuation explains about the process of identifying the fair value of equity securities.
Equity valuation is a way for an organization and the other parties to identify the worth of the
comapny and the market position of the company. It offers a good base to the stakeholders of
the company to make better decision about the performance of the company. In earnings
growth analysis, historical earnings of an organization is collected and evaluated by the
company to identify the future worth of the equity of the company (Chandra, 2011).
Earnings growth analysis model is one of the most used methods to identify and
measure the equity valuation of a company. The various financial analysts expressed about
the method and said that it is one of the reliable methods to measure the performance of the
company. Earnings growth analysis method relies on the price of the stock, earnings per
share, dividend per share, P/E ratio etc. of a company which are considered to be a reliable
value and it also eliminates the subjective accounting policies. Though, Earnings growth
analysis is significantly influenced by non economical factors as well as the market
conditions (Décamps et al, 2011). It is particularly used by the analyst when there is less
confidence on the cash flow system of the company. Though, it involves one of the sensitive
assumptions and it involves predicting the future performance of the company.
In this process, earnings per share of the organization, dividend per share, roe, Price
earnings ratio, price of the company in last few years are collected and they are evaluated to
identify the trend in the market and the company. This process makes it easier for the analyst
and the company to evaluate and identify the reasons due to which the changes have taken
place into the performance of the company in last few years (Brigham and Daves, 2012).
Earnings growth model evaluates the total growth % in the company and on the basis of it; it
evaluates the equity price per share and the total worth of the company.
The earnings growth analysis table of the company is as follows:
Price P/E ratio
Year EPS DPS BVPS High Low High Low ROE
Payout
ratio
2011 1.08 0.96 1.00 39.87 34.58 36.92 32.02 108% 89%
2012 1.21 0.87 1.00 42.54 39.45 35.16 32.60 121% 72%
2013 1.35 1.085 1.00 44.68 42.85 33.10 31.74 135% 80%
2013 1.46 1.169 1.00 47.52 44.1 32.55 30.21 146% 80%
2014 2.61 1.245 1.00 46.23 41.51 17.71 15.90 261% 48%
25% 7% 0% 4% 5% 83% 84% 25% -14%
5 year average:
Return on equity 0.25
Payout ratio
-
0.14