Comprehensive Financial Analysis of Farsons and Heiniken Companies

This report presents a comprehensive financial analysis of Farsons and Heiniken, two companies in the beer manufacturing industry. It begins with an introduction to financial analysis and its importance in evaluating a company's financial position, including liquidity, profitability, and efficiency. The report then provides an overview of both companies, detailing their products and market presence. The core of the analysis involves a detailed examination of their financial performance using vertical, horizontal, and ratio analyses. Vertical analysis assesses the proportion of income statement and balance sheet items, while horizontal analysis examines trends over time. Ratio analysis, including net profit, gross profit, and current ratios, provides insights into profitability, efficiency, and liquidity. The report also includes an evaluation of working capital and cash flow statements, culminating in an overall assessment of the companies' financial health and a final conclusion summarizing the findings. The analysis uses data from the companies' annual reports and financial statements, providing a comparative view of their performance and financial positions.

Financial Analysis
Management
Enterprise

INTRODUCTION...........................................................................................................................2
TASK...............................................................................................................................................2
Evaluation of the financial performance and financial position of Farsons and Heiniken:.. .4
Evaluation of the Working Capital:...................................................................................9
Assessment of the Cash Flow:..............................................................................................10
Overall assessment:..............................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
APPENDIX....................................................................................................................................14

INTRODUCTION
Financial analyses refer to the process where organization measure financial information
in order to evaluate the financial position of the company. It helps the business to analyse the
liquidity, profitability, efficiency etc. Managers of the company evaluate all the information to
make future decisions which helps in achieving organizational goals (Blum and Dacorogna,
2014). Financial analysis helps in analysing liquidity, profitability of the company which make
them able to evaluate overall performance. This report based on Farsons and Heiniken Company
that is beer manufacturing company. This project report covers various topics such as vertical,
horizontal or financial analysis. In addition, it includes the working capital and cash flows
statement of the organizations.
TASK
Overview of Companies:
Farsons: Farsons group based in Malta and company manufacture, sale or distribute
quality products such as beers and other beverage. Company sell their products to the wholesale
or retail items of beverages such as spirits, wines and other related products. They offer various
products such as Blue Label Ale, Kinnie range of soft drinks, Hopleaf Pale Ale, San Michel table
water, Cisk Lager etc. It is non -banking or Private Sector Company that listed in Malta Stock
Exchange.
Heiniken: It is the Dutch company which produce the beer and distribute all over the
world. They approximately deal in 300 global, local and speciality ciders and beers. There are
total 85000 people employed in the overall manufacturing unite. Company currently deals in 70
nation and capture major market (Bragg, 2012). Main agenda of the company is to generate
value for the customer or innovate something in order tri make their brand global. Through
focusing core competencies of the business management have to maximise overall performance.

Evaluation of the financial performance and financial position of Farsons and Heiniken:
Vertical analysis: This analysis based on the income statements of the company where
they evaluate the overall proportional of the income statement’s items. Evaluation will be based
on the percentage form such as sales increased by (%) percentage form. On the other hand,
income statements will be consider as percentage of aggregate gross sales or revenue and balance
sheet item present in the value of percentage as aggregate assets. Vertical analyses based on the
following organizations are mentioned below:
Heiniken:
Income Statement:
With the help of vertical analysis, Heiniken Plc able to evaluate their income statement
where proportion of gross profits reduces in 2018 to 51.29% after that gross profit continuously
increases for the period of 2015 to 2017. On the other hand, proportion of net profit was 4.67%
in 2015 which reduces in 2016 to 3.75% and it further reached at the level of 4.46% and 4.28%
in year 2017 and 2018 respectively (Annual Report of Heiniken. 2019).
Statement of financial position:
Vertical analysis shows the non-current assets of the company was 84.32%, 79.31%,
79.90% and 78.38% of total assets from the duration of 2015 to 2018. It further represents that
non-current assets of the company reduce. In organbizational context, cash proportion of the
company regularly increases from 2018 that is 6.92%, 2017 it was 2.23% , 2015, was 7.72% and
in 2016 it was and 5.95%. Current assets of the company are 15.68%, 20.69%, 20.10% and
21.62% of the period of 2015, 2016, 2017 and 2018 respectively.
Shareholder's funds of the company stay 17.06% of total assets in year 2018 which
reduces from 17.90%, 16.78% and 16.16% for the period of 2015 to 2017 respectively. Current
liability’s proportion of the business decreases from 26.44% to 24.91% during the period of 2016
to 2018 (Cucchiella, D’Adamo and Gastaldi, 2015). Percentage of proportion of non-current
liabilities reduces from 59.52% to 58.03% from the duration of 2015 to 2018.
Farsons:
Income Statement:
Vertical analysis of Farsons company, where income statement has been evaluated where
gross profit in proportion of aggregate sales was 37.97% in year 2015. It further raises 38.82% in
2016 and reached at 38.64% and 38.95% for the period of 2017 and 2018 respectively. Net

income of the company was 14.74% of total sales in 2018 and remaining 10.13%, 12.94% and
13.64% for the period of 2015, 2016 and 2017. It represent that income generations capacity of
the company increases which further helps in maximizing productivity as well as profitability.
Statement of Financial Position:
Verticals analysis of balance sheet represent that shareholder's equity was 67.11% of total
assets in 2015 and it will moved to 66.87%, 67.21% and 59.88% in 2016, 2017 and 2018
respectively. Liability of the company was 20.37% in 2018 and 32.79%, 32.52% and 32.89% in
the duration of 2015, 2016 and 2017 respectively (Annual Report of Farsons. 2019).
With the help of evaluation it has been observed that non - current assets reduces 77.16%
in 2018 of total assets. In 2015, it was 78.52%, 79.14% in 2016 and 81.42% in 2017.Proportaion
of current asset increases from 18.58% to 22.22% which was 21.48% and 20.25% in year 2015
and 2016 respectively.
Horizontal Analysis:
This analysis based on previous information or data which used in monitoring periods or
ratios evaluated from these financials information.it is used to analyze the trend of the income
statement over the period of time. It is beneficial for the business to formulate strategy in order to
evaluate the performance. Company identifies the gap or makes necessary steps to fulfill it.
Calculation of figures will be represented in forms of percentage or proportion of overall
performance (El Kasmioui and Ceulemans, 2012). Organization face the issues regarding change
in the financial statement’s over the period. This analysis includes the sales, expenditures, assets
or obligations of the company which impact the overall performance. Following are the analysis
of selected company:
Heiniken:
Income Statement:
Income statement of Heiniken's represent that increase in the sales in the period of 2017
was 5.27% and 2.66% in 2018. Gross profit of the company decreased in 2018 by 2.08% on the
other side it was increases and remain 6.04% in 2017. In addition, this analysis includes the
proportion of net profits reduced by 1.64% in 2018 in comparisons to 2017. In 2017, net profit of
the company increased by 25.42% and it reduces of 18.60% in year 2016. Decline in the net
profit indicates the profitability of the company or position in the market.
Statement of financial position:

With the help of horizontal analysis of Heiniken Company, they evaluate the financial
report and identify that shareholder funds of the company in 2018 was 7.91% and before that it
was -2.25% and 0.53% for the period of 2016 and 2017 respectively. Non -current liabilities of
the company increased by 1.69% in 2018, 7.24% in 2017 and it is decreases by -0.08% in 2018,
22.09% and 0.59% for the period of 2016 and 2017.
Funds of the company increased by 268.33% in 2016 and it also reduces by 19.54%in
2018 but there was an increase of 18.88% has been reported. Current assets of the company
increased by 37.59%, 1.36% and 9.97% in year 2016, 2017 and 2018 respectively. Along with
this, non-current assets was increased by 0.31% in 2018, 5.14% in 2017 and reduces 1.94% in
2016.
Farsons:
Income Statement:
Revenue of Farsons Company has been increased by 7.95% in 2018 and it increases by
3.53% and 7.59% in 2017 and 2018. Gross profit of the company also increases 8.82% in 2018
and 10% & 3.03% in 2016 or 2017 respectively. Horizontal analyses of the company represent
that, net profits increase to 16.67% in 2018. In 2016 and 2017 it was 37.50% and 9.09%
respectively (García, Martínez-Cutillas and Romero, 2012). With the help of these analysis
managers able to make decisions in order to maximize organizational performance or
productivity.
Statement of financial Position:
By using horizontal analysis, it is observed that shareholder’s funds of Farsons company
reduces by 21.14% in 2018 and in 2016 & 2017 it was increase to 9% and 12.84%. Non -current
liabilities of the business rise by 11.67% in 2018, 13.21% in 2017 and 8.16% in 2016. In
addition, current liabilities of Farsons increased by 33.33% in 2018. In 2017, there are no
changes in the current liability of the company. Assets value reduces to 11.48% in 2018 and
increased in 2017 was 12.27% and 9.40% in 2016. Along with this, non- current assets are
reduces to 16.11% which last increased by 15.50% in 2017 and 10.26% in 2016. At the end,
current assets of the company increased by 5.88%, 3.03% and 3.13% for the period of 2018,
2017 and 2016 respectively.
Ratio Analysis:

Ratio analysis is known as a systematic formula which is mainly based on the comparison
between the various important financial information or figure which are basically stated in an
organisations financial statements (Palepu and Healy, 2013). This is mainly used by the top level
managements or analyst in order to find out the various elements and aspects responsible for an
organisations overall performance such as profitability, liquidity and solvency.
Net Profit Ratio:
This proportion basically shows extent between total compensation earned by organization
in the wake of giving every one of it's costs and friends' net total income. It present
organization's abilities to give net profit to investors. Following formula is used to find out the
net profit ratio of an organisation
Net Profit Ratio = Net profit after tax / Net sales X 100
Following is the table which states the net profit ratio for both companies, Farsons and
Heiniken:
Farsons Heiniken
2015 2016 2017 2018 2015 2016 2017 2018
Net
Margin 10.11% 13.22% 13.77% 14.49% 4.67% 3.75% 4.46% 4.28%
From the above table it can be analysed that Farsons organization's net benefit proportion
ceaselessly expanded during 2015 to 2018, structure 10.11% to 14.49%. While Heiniken's net-
overall revenue has been declined in 2018 (4.46% to 4.28%). Organization's net-overall revenue
was 4.67%, 3.75% and 4.46% during 2015,2016 and 2017. Relative investigation shows that
Heiniken is increasingly skilled to produce benefit as contrast with Farsons. Additionally
Heiniken's net-overall revenue has been declined which shows that organization's productivity to
give benefits has been seen a fall.
Gross Profit Ratio:
Gross profit ratio is the ratio which is used by the companies to find out the ratio between
its gross profit and net sales occurred during a financial year. Basically it is an indicator which
shows working adequacy of organization's as in this proportion net benefit is utilized (Post and
Byron, 2015). Net benefit is salary of organization subsequent to deducting every single direct

cost identified with organization's production departments in this cost includes all direct cost
which is directly related to the production of a final product.
Farsons Heiniken
2015 2016 2017 2018 2015 2016 2017 2018
Gross
Margin 37.97% 38.82% 38.64% 38.95% 52.75 53.39 53.77 51.29
From the above table it can be stated that Farsons' gross net revenue has been expanded
to 38.95% with a minor diminishing in year 2017. Though Heiniken net benefit proportion has
been diminished 53.77% in 2017 to 51.29% in year 2018 showing that organization's adequacy
to give return structure center business tasks has been declined. Generally speaking correlation
display that even a decrease in net productivity proportion Heiniken's proportion is more than
Farson' which brings up that Heiniken is progressively ready to create salary through its center
business exercises.
Current Ratio:
The primary point of this proportion is to exhibit enterprise's present liquidity position. It
essentially estimated by extent between current resources and all out current liabilities (Sheikhi,
Ranjbar and Oraee, 2012). It shows how proficient organization is to pay its everything current
liabilities applying current resources. Current proportion 2:1 is most worthy proportion
underneath this criteria show that organization is monetarily not sound. Following tables shows
the current ratio analysis of both organisations.
Farsons Heiniken
2015 2016 2017 2018 2015 2016 2017 2018
Current
Ratio 1.72 1.39 1.39 1.12 0.69 0.78 0.79 0.87
From the above table it can be concluded that both the organizations have current
proportion under 2:1 yet Farsons organization's proportion is progressively proper as contrast
with other organization. Table shows that Farsons current proportion has been declined from
1.72 to 1.12 during 2015 to 2018. On other hand, Heiniken's present proportions during same

period are 0.69, 0.78, 0.79 and 0.87. In the two organizations there is decrease in year 2018
however Farsons liquidity position in increasingly satisfactory.
Return of Equity (RoE):
Return of Equity in mainly used by the finance depart. It is an estimation of a business '
effectiveness comparative with obligation, likewise perceived as net resources or resources less
liabilities. ROE is marker of how viably speculations are utilized by a company to accomplish
development in salary
Farsons Heiniken
2015 2016 2017 2018 2015 2016 2017 2018
Return
on Equity 12.52% 10.43% 10.70% 8.19% 14.87% 11.67% 14.77% 13.94%
Farsons proportion of ROE has been declined from 10.70% in year 2017 to 8.19% in year
2018. During 2015 and 2016 this proportion was 12.52% and 10.43%. On another side
Heiniken's ROE has been diminished 14.77% in 2017 to 13.94% in year 2018. During 2015 and
2016, ROE was 14.87% and 11.67%. Total relative investigation shows that Heiniken with
13.94% ROE is progressively productive to create return of utilized value in business.
Evaluation of the Working Capital:
Working capital, likewise named as net-working capital or NWC infers to straightforward
contrast between enterprise's total current resources (which incorporates money balance, records
of sales various inventories balance and other momentary fluid speculation) and partnership's
present liabilities (which incorporates parity of records payable and other transient commitment).
It go about as pointer of company's liquidity position. In straightforward word it is a total or
reserve which is utilized by organizations to work their everyday tasks. Assessment of working
capital gives insights concerning adequately organization is working and ready to work business.
Farsons Heiniken
(EUR in
Million) 2015 2016 2017 2018 2015 2016 2017 2018
Current
Assets 32 33 34 36 5914 8137 8248 9070

Current
Liabilties 18 24 24 32 8516 10397 10458 10450
Working
Capital 14 9 10 4 -2602 -2260 -2210 -1380
Heiniken: Company has announced absolute current resources of 5914, 8137, 8248 and
9070 million in year 2015, 2016, 2017 and 2018 separately. While organization's present
liabilities are 8516, 10397, 10458 and 10450 during same period which is more than
organization's present resources' figures. Because of which organization's working capital is
negative during each of the four years. Anyway there is decrease in negative working capital
structure 2015 to 2018. As in 2015 WC was - 2602 in year 2005 which further goes to - 2260 in
year 2016, - 2210 out of 2017 and - 1380 of every 2018.
Farsons: Company's present resources during 2015 to 2018 were 32, 33, 34 and 36
individually though current liabilities during same period were 18, 24, 24 and 32. From these
figures of current resources and current liabilities organization's evaluated working capital are
14, 9, 10 and 4 million in year 2015,2016,2017 and 2018 individually. Organization has positive
working capital anyway organization's working capital has been diminished.
From assessment it has been established that organization Farsons is progressively
effective to organization subsidize its business tasks and in making interest in future business
exercises. While for Heiniken it is prudent to keep up positive WC as nonstop negative WC
shows that organization's liquidity position in not great or may go into liquidation.
Assessment of the Cash Flow:
The income explanation shows how well a business goes through cash (money supports
outpourings) and where a business gathers its cash (money surges). Income articulation fuses all
money in streams achieved by partnership through its on-going exchanging tasks and outside
wellsprings of contributing, and all money out-lays paid for business association's exercises over
a predetermined time period (Williams and Dobelman, 2017). Following is assessment of
incomes as connected in addendum, of chose organizations, as pursues:
Heiniken: Company Heiniken's incomes from operational exercises during year
2015,2016,2017 and 2018 are 3489 million, 3718 million, 3882 million and 4388 million
separately. Heiniken's out streams structure contributing exercises are 2064 million, 2,007

million, 2965 million and 2355 million during same period individually. While outpourings
structure financing exercises are 1,173 million, 672 million, 966 million and 967 million in year
2015, 2016, 2017 and 2018 separately. Generally speaking free incomes of organization are
1,759 million, 1,852 million, 2,049 million and 2,333 during period 2015 to 2018 separately.
During each of the four years organization has positive net income which shows that
organization is monetarily solid and can meet its everything obligations.
Farsons: Company has announced net incomes structure its working exercises of
measuring 16 million, 16 million, 13 million and 21 million in year 2015, 2016, 2017 and 2018
separately, which shows that organization's working in effective way. While organization's
money outpourings structure contributing exercises are 7 million, 18 million, 20 million and 21
million during year 2015, 2016, 2017 and 2018 separately. Through financing exercises
organization money inflows and surges are -4 million, - 2 million, 4 million and - 1 million in
2015, 2016, 2017 and 2018 individually. Organization's free incomes are 9 million, - 1 million, -
6 million and 7 million during same period responsively. It shows that organization has
improved their income after 2016 and ready to subsidize their key business tasks.
Above assessment says that it has been broke down that Company Heiniken is
increasingly proficient to keep up incomes as in each of the 4 years organization's incomes are
sure while Farsons' free incomes contains negative figure in year 2016 and 2017.
Overall assessment:
From the above various evaluation it has been verbalized that Heininken is increasingly
effective to give return on value and furthermore having gross net revenue more prominent than
the proportion of Farsons. In any case, organization additionally has been battling with negative
working capital even with a positive income. On opposite side Farsons is demonstrating
increasingly net-net revenue and has detailed positive working capital. Organization's present
proportion is likewise increasingly adequate as in examination with Heininken. Farsons is
working at littler level when contrasted with Heininken, however monetarily appears to be
progressively solid.

CONCLUSION
From above discussion it has been concluded that, with the help of vertical or horizontal
analysis business able to measure the change in the income statement and balance sheet. Along
with this, ratio analysis helps the business to identify their liquidity position, profitability or
efficiency which makes them capable to business goals & objectives. These analyses provide the
different perspectives which help the managers to make their decisions in respect of the
company.