Financial Analysis: Freedom Food Group Limited vs Bega Cheese Limited

This project report provides a comprehensive financial statement analysis of Freedom Food Group Limited and Bega Cheese Limited, both Australian companies operating in the food and beverage industry. The analysis includes an introduction to financial statement analysis, followed by an overview of each company's business operations and market segments. The report compares key financial aspects such as operating assets, liquidity, profitability, and growth, using reformulated financial statements, profitability and growth analysis, trend analysis, and cost of capital analysis. It identifies both similarities and differences in their financial performance, including variations in profit levels, growth rates, and stock valuations. The report concludes with an assessment of each company's performance and offers investment insights based on the findings. References to financial data sources are also included.

Running Head: Financial statement Analysis
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Project Report: Financial statement Analysis

Financial statement Analysis
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Contents
Introduction.......................................................................................................................3
Freedom food group limited.............................................................................................3
Bega cheese limited..........................................................................................................3
Similarities........................................................................................................................3
Differences........................................................................................................................4
Conclusion........................................................................................................................5
References.........................................................................................................................6

Financial statement Analysis
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Introduction:
Financial statement analysis is a procedure which reviews and analyzes all the
financial statement of an organization in order to evaluate the performance and make better
economical decision for the betterment of the business. The financial statement of an
organization includes income statement, balance sheet and cash flow statement of the
company which measures the overall financial and non financial performance of the company
(Gibson, 2011). Financial statement analysis is of various types which are used by the analyst
according to the current need and the requirement of the business.
In this report, the financial statement of freedom food group limited has been
evaluated to forecast the financial performance and position of the company in next 5 years.
Further, the overall performance of the company has been compared with the competitor,
Bega cheese limited of the company so that the industrial position of the company could also
be measured.
Freedom food group limited:
Freedom food group limited is an Australian company which mainly manufactures,
marketing, distributes and sales the plant and dairy based food and beverages in the
Australian market. The company has diversified its market at international level as well. The
main segment of the company includes cereal and snacking, dairy beverages, plant based
beverages, nutritionals and seafood (Bloomberg, 2018). The main focus of the company is to
offer the quality product and food to the customers of the company and improve the market
performance of the business.
Bega cheese limited:
Bega cheese is also an Australian company which operates its business under the
Australian dairy industry. The company has been founded in the year of 1899. The company
offers huge beverages and food choices to its customers of Australian market. The study
represents that the company is one of the largest dairy companies in the Australian market
(Reuters, 2018). The Bega cheese limited has been chosen as a competitive company of
freedom food group limited to measure the overall performance of the company in the
industry.
Similarities:

Financial statement Analysis
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On the basis of the calculations over the financial statement of both the companies,
reformat financial statement, profitability and growth analysis, trend analysis, cost of capital
analysis and the forecasting level of the business, it has been found that there are various
factors which are quite similar in both the companies and affect the level of the company at
similar level. The study represents that the below are few similarities in the financial
performance and position of the company:
 The study on the reformulated income statement and balance sheet of both the
companies define that the level of operating assets, financing assets etc are improving
at a better extent and the liquidity position of both the companies are also in the
favour of the company (Morningstar, 2018).
 The profitability and growth analysis approach on both the companies represent that
there would be positive changes in the financial performance and position of both the
companies in upcoming years (Reuters, 2018).
 Systematic approach defines that the changes in the financial position of the company
in last 3 years are quite improving and it would help both the companies to maintain
better market and financial position in the industry (Morningstar, 2018).
 Vertical analysis approach depicts that the changes have occurred into both the
businesses because of few internal changes and the external changes. The table
represents that the changes are almost similar in the current year (Brigham & Daves,
2012).
 Sensitivity analysis approach on both the companies depict that the changes are
almost similar in the stock value of the company because of the same optimistic and
pessimistic % of the company (Morningstar, 2018).
 The cost of capital of the companies has been studied further and it has been
recognized that in both the case, the cost of equity of the companies are higher than
the total cost of debt of the business.
Differences:
On the basis of the calculations over the financial statement of both the companies,
reformat financial statement, profitability and growth analysis, trend analysis, cost of capital
analysis and the forecasting level of the business, it has been found that there are various

Financial statement Analysis
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factors which are quite different in both the companies and affect the level of the company at
different level. The study represents that the below are few differences among the financial
performance and position of the company:
 The financial statement evaluation depicts that the profitability level of Freedom food
group limited is improving continuously whereas the Bega cheese limited has faced
the reduction in the profit level in the year of 2018 because of few internal changes
(Morningstar, 2018).
 the profitability and growth analysis approach on both the companies represent that
the current growth level of both the companies are quite different and it would affect
the performance of both the companies in upcoming years at different level (Chandra,
2011).
 Horizontal analysis approach depicts that the changes have occurred into both the
businesses because of few internal changes and the external changes. The table
represents that the changes are quite different from each other. The % depicts about
totally different result for both of the companies (Morningstar, 2018).
 On the basis of the valuation approach on both the companies, it has been recognized
that the stock price of freedom food group limited is undervalued and the bega cheese
stock value is overvalued in the market which represents that the investors should
invest into the freedom food group limited and divest the amount from the bega
cheese to improve the overall performance of the company (Reuters, 2018).
Conclusion:
To conclude, it has been measured that the similarities and differences of both the
companies are quite higher from each other and it also explains that few measurement on the
internal and external process and factors must be applied by the managers of the company to
manage the performance of the business and improve the overall level of the company.

Financial statement Analysis
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References:
Bloomberg. (2018). Freedom food group limited. (online). Retrieved from:
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=4481417
Brigham, E., & Daves, P. (2012). Intermediate financial management. Nelson Education.
Chandra, P. (2011). Financial management. Tata McGraw-Hill Education.
Gibson, C. H. (2011). Financial reporting and analysis. South-Western Cengage Learning.
Home. (2018). Bega Cheese limited. (online). Retrieved from
https://www.begacheese.com.au/
Morningstar. (2018). Bega Cheese limited. (online). Retrieved from:
https://www.morningstar.com/stocks/xasx/bga/quote.html
Morningstar. (2018). Freedom food group limited. (online). Retrieved from:
https://www.morningstar.com/stocks/XASX/FNP/quote.html
Reuters. (2018). Bega Cheese limited. (online). Retrieved from:
https://www.reuters.com/finance/stocks/overview/BGA.AX
Reuters. (2018). Freedom food group limited. (online). Retrieved from:
https://www.reuters.com/finance/stocks/overview/FNP.AX