Financial Analysis of Accounting and Finance for Managers Report

This report provides a detailed financial analysis of A.G. Barr Plc, BRITVIC Plc, and COCA-COLA EUROPEAN PARTNERS Plc. It evaluates their financial goals, success indicators, and decision-making strategies, using financial ratios to assess their performance. The report examines profitability, operational, and structural ratios, identifying strengths and weaknesses of each company. Furthermore, it explores investment opportunities based on the analysis and discusses internal and external sources of financing available to these organizations, considering their impact on stakeholders. The conclusion highlights key findings and recommendations based on the financial assessments.

Accounting
And Finance
For Managers
Contents

INTRODUCTION...............................................................................................................5
Section 1............................................................................................................................5
Evaluation of Success indicators, financial goals and decision-making in respect of
respective organisations...........................................................................................5
Evaluation of organisational performance with help of provided ratios....................8
Investment opportunity in chosen best performing organisation............................14
Section 2..........................................................................................................................14
Different Sources of Financing................................................................................14
Long term financing affecting interests of stakeholders............................................2
CONCLUSION...................................................................................................................3
REFERENCES..................................................................................................................4

INTRODUCTION
Financial statements plays crucial role in growth and development of an
organisation. There are various forms of financial statements which need to be prepared
so that organisational performance and profitability can be identified for long lasting
period. In this respect, financial goals, sustainability and decision-making of A.G. Barr
Plc, BRITVIC Plc and COCA-COLA EUROPEAN PARTNERS Plc is discussed in this
report with help of different financial ratios and performance analysis. Also internal and
external sources of financing available to a company is been analysed in order to
identify which source is most suitable to respective organisations for their future growth
prospects.
Section 1
Evaluation of Success indicators, financial goals and decision-making in respect of
respective organisations
BARR (A.G.) PLC
A.G. Barr PLC is one of soft drinks manufacturer which was founded in 1875 by
Sir Robert Barr (Ali, 2017). Its product ranges are carbonated soft drinks, fruit
drinks, cocktails, energy drinks and juices.
Financial goals
The company earned GBP255.7 million pounds in 2020 which is decreased by
8.4% from 2019 financial year. Also its operating profits have been decreased as
compared to 2019 by 1.3% and respective net margins have also declined by 1.1%. It
can be seen that its financial performance is not meeting its targeted goals. It has
implemented long term sustainable delivering plan where it has prioritized connecting
with customers, developing relationships with customers and driving efficiency in order
to cope with deviation in its actual performance and targeted goals (Our strategy, 2020).
Success indicators
Financial growth: In recent time, it is determined that the company has faced
decline in net profits due to increased cost of goods sold which has reduced
existing income generation capacity of such organisation (Basfirinci and Uk,
2017).

Financial sustainability: By making adequate improvement in financial structure
and operations of the company, it is determined that respective organisation
needs to implement long term financial sustainability policies in order to compete
in competitive environment of the company.
Financial performance: During the financial year 2020, A.G. Barr Plc has
performed in declining trend which has caused it loss of revenue and increased
cost of goods sold. Total revenue earned by company was 8.4% lower than its
previous year revenue (Boesen, Bey and Niero, 2019).
Decision-making strategy
As per the above analysis, it is identified that organisation needs to implement
long term and short term decision-making in order to identify its future growth prospects.
Such as increasing market share, new investments and so on.
BRITVIC PLC
It is one of the most stable soft drinks manufacturer based in UK which has been
established in 1845 in order to grow at wider level in respective industry. It has various
operating segments which are GB stills, GB carbs, International and Ireland.
Financial goals
The company has been aimed at maintaining its revenues in order to promote
long term market share retention (Caivano and et. al., 2017). In order to grow in upward
direction, it is necessary to earn adequate amount of profits so that it can promote
healthy business environment. In it is analysed at organisation has faced declined trend
of operating profits and net margins by 2.6% and 2.6% respectively. Therefore it needs
to manage its operations in effective manner so as to reduce operational based costs
and promotion of profits in this respect.
Success indicators
Financial growth: There is reportedly downward movement in financial position
of the company. It is analysed that the earning per share is decreased from 2018
to 2019. It reported 0.44 earnings per share in 2018 whereas in 2019 it was
decline to 0.30. Also dividend per share has risen in 2019 which has reduced
total earnings of the company. It suggested that the company needs to manage
its policies in appropriate manner.

Financial sustainability: The given company has adopted strategies such as
building local favourites & worldwide quality products, healthy food items in order
to promote healthier people and healthier world and innovative creation of new
spaces in order to create long term sustainability and efficiency.
Financial performance: By making adequate rectification in current form of
financial structure, it will enable use of most effective and advanced level of
operational effective techniques so that more performance can be improved
(Dennis, Rhodes and Harris, 2020).
Decision-making strategy
In order to manage its expenditure ranging in huge amount as compared to
previous years, it is required to attract maximum investors so that new investments can
be made in organisation which will be helpful for long term.
COCA-COLA EUROPEAN PARTNERS PLC
It is one of world's largest operating and independent unit of bottler of coca-cola
which is dedicated for production, marketing and distribution of various products of coca
cola another drinks. It was established in the year 2016 and currently having around
23300 numbers of employees.
Financial goals
The company is already a profit making in nature and therefore should
emphasize over expansion of its units in other markets so that more recognition and
market share can be earned.
Success indicators
Financial growth: In order to grow further in financial terms, organisation needs
to implement cost effective and technological advancement tools so that it will
become easier to deal with relevant competition.
Financial sustainability: By implementation of sustainable and organic drinks,
relevant chances of financial growth will be increased in order to achieve relevant
market position (Di Sebastiano and et. al., 2021). As it is observed that customer
are becoming aware about eco-friendly resources in order to maintain healthy
environment.

Financial performance: The Company is performing in effective manner as its
revenue, operating profits and profit margins have increasing trend which will
create more favourable market conditions and healthy holding of investors and
shareholders.
Decision-making strategy
In order to survive in the long term basis, it is required to implement long term
sustainability structure which will involve production of organic and healthy drinks so
that adequate number of customers will be attracted in this reference.
Evaluation of organisational performance with help of provided ratios
BARR (A.G.) PLC

Profitability ratios: Probability ratios are described as tool which is used to evaluate
profit earning capacity of an organisation through selling operations. In given
organisation, it is identified that the company has being facing downfall in return on
equity, profit margin and operating revenue. The company is required to make certain
changes in regard to increase its profit earning capacity by decreasing its financial
expenses.
Operational ratios: It is described as operating expense to revenue ratio which is used
to identify revenue generation in order to identify operational efficiency. Here various
ratios are being used in reference to company such as asset turnover ratio and interest
cover ratio which is said to be one of most significant form of ratio analysis in order to
identify efficiency of an organisation (Gertner and Rifkin 2018). Here given organisation
has low asset turnover ratio but interest coverage ratio indicates optimistic results which
is good for organisational long term stability. The company has reflected 65 times
interest coverage ratio which is considered as positive sign for organisational revenue
earning capacity.
Structure ratios: These ratios signify that the company has low liquidity as current ratio
and liquid ratios are having decreasing movement which needs to be modified by the
company. Through application of revenue retention and reduction in loans and debts,
company can easily manage its funds in more effective manner.
Per employee ratios: In respect to above company, it is identified that organisation
needs to amend its operations in order to earn more revenue and promote productivity
through employees in effective manner. It includes various ratios such as profit per
employee, operating revenue per employee, cost of employees, etc. In reference to A.G
Barr Plc, these ratio are been evaluated above and shows that the company need to
improvise it’s per employee earning capacity in order to promote efficiency in long term.

BRITVIC PLC

Profitability ratios: In reference to Britvic Plc, it is observed that organisation has
declining form of earning in terms of profits which is not good for long term survival. In
the year 2017 it has earned profit margin of 9.7 which remain stable in 2018 but in 2019
it was declined to 7.14 which is not good for overall growth of the company.
Operational ratios: In above scenario, organisational study has reflected that its
operational based earning is appropriate as it has interest coverage ratio of 8.43 in 2019
which is higher than previous year ratios which is one of the most significant as it
suggests that organisation has effective earning in order to pay back its interest or
debts.
Structure ratios: By analysing above structure ratios, it is determined that organisation
has fluctuating flow of earning in term of current ratio and liquid ratio (Greenhalgh,
2019). Whereas shareholders liquidity ratio shows incremental trend that means
owner’s capital is in adequate liquid form which can be used for further business
investments.
Per employee ratios: Given organisation has optimum trend of employee ratio which
suggests that it has healthy relations with its respective workforce.

COCA-COLA EUROPEAN PARTNERS PLC

Profitability ratios: Profitability ratios are of financial in nature and are used to study
business ability to generate revenue. This ratio takes help of operating cost, balance
sheet assets, or shareholder equity and takes this data for specific period of time.
According to given ratios, it is analysed that company is good performer and profit
generating company.
Operational ratios: It shows how good a company's management is at while
generating revenue and at same time keeping cost down (Lloyd, 2017). The smaller the
ratio, the company is more likely to become efficient in generating total expenses versus
revenue. It is also a percentage of revenue. Though some of ratios are fluctuating, yet
organisation is having sound operational structure.
Structure ratios: Structure ratios is that ratio which helps us to measure whether the
firm has sufficient resources to make sure that it meet short term obligation.
Per employee ratios: It is a non-financial ratio which determines the revenue
generated by each and every employee on an average. It is basically equals to average
number of employee divided by total revenue of company (Notta, Vlachvei and
Grigoriou, 2018). In above analysis, it is identified that coca cola is meeting goals of
productivity and growth by managing employee relations in proper manner.
Investment opportunity in chosen best performing organisation
As per analysis of various ratios of above organisations, it is concluded that
COCA-COLA European Partners Plc is best performing organisation as it has optimum
liquidity, sound earning capacity, asset turnover and effective employee based ratios.
Also it has wide range of operations which are being carried over different worldwide
locations.
Section 2
Different Sources of Financing

Internal financing
Internal source is defined as the capital which is arranged from inside the
business itself. There are various internal methods of finance which can be used by the
businesses. Some of the internal finances are explained below:
Owner’s capital: It is the kind of capital which is invested by the owner itself in
the business, this kind of capital mostly paid by the owner from his own savings
(Sconyers, 2017). Owner’s capital plays an important role in an organisation as return
on their investment is not paid on fixed basis.
Cost: It is required to pay return on equity in order to hold good amount of shareholders.
For instance, if company is earning revenue of 255.55 million pounds and return on
equity is 5% then organisation needs to make adequate earnings so that such cost can
be paid.
Risk: For example, if organisation is a loss making entity it may lose adequate number
of shareholders which can create huge impact over its operations.
Impact on cash flow and working capital: Through owner’s equity there will no such
impact on working capital but cash flows will be improved by making efficient
operations.
Retained Earnings: Other type of internal financing is named as retained
earnings. It is a profit earned by the business and business man leaves part of his profit
so that it can be reinvested to expand their business. It is an important source of finance
as there is no need to pay dividends (Shi, Xie and Han, 2018).
Cost: It is required to manage cost being incurred to hold such amount in order to make
effective investments in this regard.
Risk: As this amount is reinvested in investments there is risk of return in terms of
money.
Impact on cash flow and working capital: Retained earnings have impact over cash
inflows and outflows by way of return on investment in order to attain good financial
conditions.
External financing
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External source of financing is defined the money which is arranged from outside
a business (Sisti, Mezzacca, Anekwe and Farley, 2020). There are various external
methods that can be used by the business. Some of the external financing factors are
as follow:
Debt funding: It is the money which borrowed by the company which can be
paid back in the future with interest. Debt funds are in the form of mutual funds invested
in the fixed income securities like for example in bonds. There return on investment is
paid on the fixed basis (Vieira and et. al., 2020).
Cost: Such kind of funding is costly as rate of interest are being fixed and need to be
paid even at time of losses.
Risk: It is considered as risky source of funding as there is requirement of interest
payment.
Impact on cash flow and working capital: Debt financing is a type of funding where cash
flows are being affected.
Term loan: A term loan is defined as the money borrowed from any bank by a
person or business in order to satisfy their financial needs, it is repaid with fixed interest
rate with a specified period of time (Tzatzarakis and et. al., 2017).
Cost: This source includes cost of interest to be paid within specified time period to
creditors.
Risk: In this financing, risk is involved in terms of insolvency and other unfavourable
conditions in which organisation are unable to repay debts.
Impact on cash flow and working capital: It has wide impact over cash flows and
working capital.
Long term financing affecting interests of stakeholders
From above mentioned source of financing, Owner’s capital is believed as best
source of financing as there is no certain risk and cost being charged over such source.
This may advance investment capacity of an organisation and will promote healthy
business decisions in long term. Therefore it is one of most effective type of long term
financing.
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CONCLUSION
On the basis of above report, it is concluded that financial performance of a
company is major aspect for overall development and growth of an organisation in a
long term period. It is important to analyse financial stability of an organisation so that
more efficiency can be achieved by respective organisations. In this report, it has been
identified that financial conditions of soft drink organisations based in UK has been
facing fluctuations which is not good for their long term market retention. Therefore,
adequate market analysis is required in order to identify needs of customers so that
adequate customers can be retained and also other factors are required proper
attention by which it will become easier for companies to rectify their errors or
arrangements as per requirement of the market place.
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REFERENCES
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university students. Young Consumers.
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packaging: Is there a gap between Danish consumers' perception and learnings
from life cycle assessment?. Journal of cleaner production, 210, pp.1193-1206.
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consumption of ultra-processed foods and the effects on the health of the
brazilian population/Conflitos de interesses nas estrategias da industria
alimenticia para aumento do consumo de alimentos ultraprocessados e os
efeitos sobre a saude da populacao brasileira. Demetra: Food, Nutrition &
Health, 12(2), pp.349-361.
Dennis, F., Rhodes, T. and Harris, M., 2020. More-than-harm reduction: Engaging with
alternative ontologies of ‘movement’in UK drug services. International Journal
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initiative: changing the beverage landscape on a large post-secondary
campus. Public Health Nutrition, 24(1), pp.125-135.
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epidemic. Thunderbird International Business Review, 60(2), pp.161-173.
Greenhalgh, S., 2019. Making China safe for Coke: how Coca-Cola shaped obesity
science and policy in China. Bmj, 364.
Lloyd, I., 2017. IT Law in the United Kingdom after Brexit. Computer law & security
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Notta, O., Vlachvei, A. and Grigoriou, E., 2018, July. Effects of the Greek financial crisis
to the food manufacturing firms. In International Conference on Applied
Economics (pp. 547-560). Springer, Cham.
Sconyers, A., 2017. Corporations, social media, & advertising: Deceptive, profitable, or
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Shi, Y., Xie, C. and Han, R., 2018. An exploratory study of fresh food e-commerce in
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Sisti, J.S., Mezzacca, T.A., Anekwe, A. and Farley, S.M., 2020. Examining trends in
beverage sales in New York City during comprehensive efforts to reduce
sugary drink consumption, 2010–2015. Journal of Community Health, pp.1-9.
Tzatzarakis and et. al., 2017. Bisphenol A in soft drinks and canned foods and data
evaluation. Food Additives & Contaminants: Part B, 10(2), pp.85-90.
Vieira and et. al., 2020. Otolith increment width-based chronologies disclose
temperature and density-dependent effects on demersal fish growth. ICES
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Online
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Our strategy, 2020 [online] available through <https://www.agbarr.co.uk/about-us/our-
strategy/>
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