RATIOS AND ENVIRONMENTAL ACCOUNTING

Financial Accounting BM5004

Data Interpretation

Assignment one

16th March 2012

Finsbury Food Group Plc and Wessex Water

By:

Student number: Finsbury Food Group Plc

Introduction

Finsbury Foods is engaged in the manufacture and supply of cake, bread & morning foods together with “free from foods” in the United Kingdom and internationally. The Cake segment sells ambient cakes to the United Kingdom's multiple supermarkets. This segment primarily comprises the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd and Campbells Cake Company Ltd, and also includes Yum Yum's which are produced at United Central Bakeries. The bread & free from segment sells speciality bread and morning goods into the bakery sectors of the United Kingdom's supermarket chains. This segment is primarily made up of the operations of United Central Bakeries Ltd, Livwell Ltd and Nicholas & Harris Ltd (Finsbury Food Group, 2011).

Context

I designed this study in a way that focuses on the financial performance of Finsbury Food Group from 2007 to 2011 as it will you help in having clear understanding of the financial ratios. I designed this study for you (Peter) which will describe the importance of choosing the right strategy. Internal and external analysis of Finsbury Food Group is made in order to maintain their status as a low cost high quality innovative food manufacturer. It includes the model of the strategy in use. The strategic choice of Finsbury Food Group makes the company a leader in the industry. The company has become an example in strategic management because of its successful implementation of its strategies. Internal and external analysis of Finsbury Food Group shows the set of managerial decisions and actions that determine the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control (Anthony and Marcia, 2005).

Overview

The financial performance of Finsbury Food Group Plc shows that the major portion of the company's assets is comprised of liabilities; which are not a good indication for the company as the company's short term and the long-term debts are increasing. However, the company's equity seems good or satisfactory but it should be high as compared to the liabilities (Groppelli and Ehsan, 2006). In addition to this, the total assets per share and net assets per share reflect that the Finsbury Food Group Plc's assets structure is healthy which shows that the company can meet its financial obligations and its liabilities in case of a certain degree of financial loss occurs. In addition to this, past studies demonstrate that financial analysis using ratios are key in the process of determining whether liquidity problems exist or not, the study of profitability determines the evolution of the company and return on invested capital, management and analysis of related variables involved in the short-term financing, obtaining rotations and time of collection and payment means.

Key Financials

(In GBP as of 07/02/2011)

(Finsbury Food Group, 2011)

Income Statement

Revenue

190m

Net Income

4m

EPS - Net Income - Diluted

0.07

Revenue per Share

3.6

Balance Sheet

Total Assets

128m

Total Liabilities

84m

Shareholders' Equity

45m

Total Assets per Share

2.43

Net Assets per Share

0.84

Cash Flows

Cash from Operations

8m

Cash from Investing

-4m

Cash from Financing

-2m

Cash Flow ...