Accounting and Finance: Financial Performance of Food Companies

This report provides a comprehensive financial analysis of three corporations listed on the London Stock Exchange: Greencore Group Plc, Hilton Food Plc, and Premier Foods Corp. The analysis is divided into two sections. Section A evaluates the strategic plans and financial performance of each company using financial and non-financial metrics, including current ratio, acid-test ratio, debt-to-assets ratio, return on capital employed, and others. Based on the evaluation, an investment potential scenario is established. Section B explores the sources of internal and external long-term financing available to these companies and includes a stakeholder analysis. The report highlights key financial indicators, compares the performance of the companies, and offers insights into their strategic approaches and investment potential.

Accounting and Finance
for Managers
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Contents
INTRODUCTION...........................................................................................................................3
Section A.........................................................................................................................................3
Strategic plans..............................................................................................................................3
Evaluation of financial performance...........................................................................................6
Investment in best performing company...................................................................................12
Section B........................................................................................................................................13
Sources of internal and external long-term finances.................................................................13
Stakeholder analysis..................................................................................................................15
References......................................................................................................................................16
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INTRODUCTION
Financial decision-making process is vital to the performance of the corporation. This
study is intending to determine the fiscal performance of the three corporations quoted on the
London Stock Exchange namely: Greencore Group Plc, Hilton Food Plc and the Premier Foods
Corp. The Greencore Company is an Irish corporation making and selling convenience foods as
well as ingredients. Hilton Foods Group is British corporation which operates as food retailing
packer. Business offers meat packing facilities to multinational grocery retailers. While
the Premier Food is British food producer and dealer trading in two divisions – foods and sweet
treats. There are two parts of this study (Beck, Frost and Jones, 2018). The very first part
provides review of the strategic planning and review of financial performance of three businesses
by contrasting financial as well as non-financials in order to establish a rating of their
actual performance. An investment potential scenario has been built on the basis of the
established rankings. While in second part, the funding options open to big corporations as well
as stakeholder impact analyses is covered.
Section A
Strategic plans
Strategic planning relates to the implementation of market-specific goals and initiatives
that are aligned with longer-term business priorities and objectives (Wahba, 2015).
Financial goals
Figure 1Financial KPI, Greencore Group Plc, 2020
Greencore Group Plc – Corporation operates with intention of living up to their aim of
ensuring every day tastes better. As a result of the effects of the Covid-19, company has
confronted a depressing outcome but has now concentrated all its priorities on establishing back
industry and consumer trust and returning profitability. The corporation's strategy is focused on
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three main pillars – growth, value and differentiation (Building back with confidence, 2020).
Business maintains that their capital investment model offers a solid base that allows it to create
resilience against uncertainties. Conversely, complexities in the business, such as the mysterious
existence of the Brexit contract, the potential effects of the disease outbreak, etc., are likely to
cause more instability. The business targets to boost their profit margin by adding new food
classes and increasing its manufacturing and delivery resources, as well as increasing its
potential in foods salads and chilled snacks this season, with the goal of taking the first entirely
recyclable sandwiches skillets by 2021.
Figure 2 Financial Highlights, 2019, Hilton Food Group Plc
Hilton Food Group Plc – Hilton plans to establish its brand by establishing it as a
consumer experience which offers shareholders with sustained value growths. They actively
widen their array of products and services, pursue advanced technological innovations and
reduce unit costs in order to increase profitability. Corporation has enforced a plan to broaden its
market offerings to expand. They are seeking ways to expand their cross-category enterprise in
both United Kingdom and foreign countries. Group prefers the alternative of joint partnerships,
mergers and purchases to expand. For instance, Dalco purchased a 50 percent investment as well
as 50 per cent investment options in 2024 to broaden into additional proteins with the goal of
extending its activities into faster-growing vegetarian sector. They were functional
throughout Covid-19 lock down process to meet home demands, although, they experienced a
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decline in cashflows. Corporation is still cautious of post-Brexit risks surrounding trade
arrangements and talks with EU (Strategic Report, 2019).
Figure 3 Operational Highlights, 2019-20, Premier Foods Plc
Premier Food Plc – Corporation has implemented a policy of cost containment &
productivity and money management to drive efficient and financially viable sales growth.
Corporation has recently undergone management adjustments, but the underlying principles of
Business Operationality have remained intact. Business seeks to reduce its net debts to EBITDA
ratio in order to boost its profits and cash generations. It stayed operational throughout the
Covid-19 lock-down, because as government permitted the food and beverage sector to be
critical, and also saw detrimental impacts over cash flows as well as profitability attributable to
enhanced costs. The review of its trade arrangements and treaties is still pending clarification on
the Brexit. It seeks to leverage its branded products by creating innovative contemporary items
focused on market intuition, establishing emotional links with its consumers through advertising
channels, and partnering actively with their retailing partners to create shared value. Business
expand the ranges of its items in order to attract new consumers to expand faster. For instance,
PLANTASTIC, a product line of the plant-based recipes, has been brought into line with market
pattern of plant-based foods (Strategic report, 2019-20).
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Evaluation of financial performance
In attempt to assess the financial results of firms, the study of ratio of businesses allows to
obtain useful insights. Here is the ratios evaluation/analysis of the three firms listed:
 Current ratio – It assesses the potential of the corporation's total current assets to offset
current obligations (Rodrigues and Rodrigues, 2018). (Rodrigues and Rodrigues, 2018).
The higher the percentage, the greater the capacity of the organization to fund its existing
obligations from overall current assets. Hilton has highest results among three in view of
its current ratio, because company has been managed to maintain short term
liquidity better than the others, whereas Greencore has reported the most volatility
(Esteban-Sanchez, de la Cuesta-Gonzalez and Paredes-Gazquez, 2017).
Current Ratio = Current Assets/ Current Liabilities
 Acid-test ratio – It assesses the potential of the corporation's quick reserves to offset
current liabilities/obligations. Among these three corporations, Hilton plc is most stable
in performance, whereas Greencore represents the most fluctuations in performance
owing to drastic shifts for its current assets.
Acid-test Ratio = (Current Assets – Inventories) / Current Liabilities
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 Debt-to-assets ratio – It indicates the strength of the overall assets of the corporation to
fulfil its debt obligations. Thus the, lower is good to evaluate the solvency position of the
corporation. Hilton has done best since it has steadily increased its percentage, whilst the
other two have had unfavourable variations (Rhou, Singal and Koh, 2016).
Debt-to-assets ratio = Total liabilities / Total Assets
 Return on capital employed – It evaluates the capacity of a business to produce profits
through the invested capital. Corporation Greencore has ranked highest in this ratio
result, whereas Hilton corporation is not much far behind in results.
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Return on Capital Employed = Earnings before interest and tax (EBIT) / Capital
Employed
 Net Profit margin - This ratio shows the productivity of a corporation in turning its
sales/turnover into profits. Corporation Greencore has the highest percentage, although
Hilton has the most consistent percentage.
Net profit margin = Net Profit / revenue
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 Cash flow / operating revenue – This ratio analyses the relationship among cash flows
including operating sales. Premier plc has shown more cash-flows with comparison to
their free cash flows, led by Greencore corporation.
Net Assets turnover – It evaluates the effectiveness of the corporation's total assets
against their net sales or revenues (Golovkova and Podkorytova, 2019). Hilton corporation more
efficient to make the maximum effective use of its assets as compare to others.
Net Asset turnover = Net sales value / Average of total assets
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 Interest Coverage Ratio – It evaluate the dependence of corporation over debt
funding. Comparatively, Greencore company has more effective capital structure with
decreased and lower interest coverage.
Interest Coverage Ratio = Operating income / interest expenses
 Stock Turnover Ratio – This corresponds to the number of days the company takes to
convert their inventory to sales within a specified period. Chart describes that the
Greencore is performing the most attractively in comparison to other to convert its
inventories into sales, followed by company Hilton.
Inventory turnover ratio = Costs of goods sold / Average Inventory
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 Collection period – This corresponds to the total numbers of days needed for debtors of
the corporation to convert to cash-funds. All businesses are committed to improving their
collection time and therefore all 3 are consistent and varied.
Average Collection period – 365 days / inventor turnover ratio
 Profit per employee : This relates to the percentage of profitability level in regard to the
overall no. of employees of business. This is non financial measure. Analysis shows that
Hilton is capable to achieve the comparatively most consistent ratio of profits per
employee.
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 Total assets per employee – It shows availability and utilization of overall assets in
reference to the overall number of workers in the corporation. Premier company is able to
distribute relatively more its assets to its workers.
Premised on the aforementioned financial as well as non-financial review, Hilton is ranked
first in terms of performance, just followed by the Greencore then Premier last.
Corporation Greencore has been performed quite well on almost all the above financial indices;
however, Hilton plc has shown lesser fluctuations in ratios. Hilton has reported favourable trend
in all of financial ratios and reported consistent financial results. This is followed very closely by
the Greencore's results, that has increased its gross margins and the net profits margins of past
years. Thus the, both firms could be stated to be prosperous and doing better in near-future.
Company Premier still performs well when tested in isolation however lags behind from results
relative to other two firms.
Investment in best performing company
From the aforementioned performance review and rankings established, Hilton company has
been rated highest in aspects of the performance as well as is best investment alternative to
assess. Hilton strives to boost their profitability and decrease their unit costs, and their efficiency
review demonstrates that they've been managing to stand up to standards, as their leverage levels
have steadily risen to free cash flows. However, the corporation does have its own shares of
fluctuations, because this has not been able to enhance its collection strategy, and Greencore
outstrips its efficiency in the usage of its stock. The effective inventory turnover percentage is
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