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Stage 1: Company Background and Stakeholder
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Introduction: Financial And Economic Interpretation And Communication Of Bega Cheese Limited
The financial and economic interpretation and correspondence of Bega Cheese Limited, an ASX-recorded company. This report aims to provide insights into the company's financial performance and economic impact. Bega Cheese Limited is a main Australian dairy company, famous for its great dairy products. With a great history tracing all the way back to 1899, the company has practical experience in making cheese and other dairy-related products. Bega Cheese Limited works across the world with its supply chain, from milk assortment and handling to circulation, taking care of homegrown and global business sectors. This report will explore the company's financial information and economic importance, revealing insight into its vital drivers and cutthroat position.
Stakeholders and purpose of the report
The stakeholders of this report are the company's board of directors, executive management, and investors. The purpose of this report is to provide a comprehensive analysis of Bega Cheese Limited's financial and economic performance, empowering the stakeholders to go with informed choices (Cosby et al. 2022, p.366). By introducing key financial metrics, market patterns, and serious situating, this report aims to work with key preparation, recognize exceptional learning experiences, and survey likely dangers. Moreover, the report will act as a communication tool, encouraging transparency and responsibility between the company and its stakeholders, hence advancing certainty and assurance in Bega Cheese Limited's tasks and financial growth.
Stage 2: Financial and Non-Financial Analysis
Financial analysis
Analysis of trend and financial results for the past three years
Figure 1: Horizontal Analysis of Income Statement
(Self-calculated in MS Excel)
Throughout recent years, Bega Cheese Limited has shown predictable development in its financial results. The company's revenue raised from $1.49 billion in 2020 to $2.07 billion in 2021, and further to $2.98 billion in 2022, addressing surprising year-on-year increments of 38.85% and 44.01%, separately (Van Caenegem et al. 2020, pp.632-657). Notwithstanding confronting increasing costs, Bega Cheese figured out how to keep a consistent gross profit, which was $289 million in 2020, $465 million in 2021, and $665 million in 2022.
Figure 2: Graph of the income statement's changing %
(Self-made in MS Excel)
The company's EBITDA additionally showed development, with 2022 recording $180 million contrasted with $141 million in 2021 and $102 million in 2020. In general, the financial trend features Bega Cheese Limited's powerful performance and profitability over the examined period.
Figure 3: Horizontal Analysis of Balance Sheet
(Self-calculated in MS Excel)
In the recent 3 years, Bega Cheese Limited's balance sheet reflects blended trends. Total assets diminished from $1.42 billion in 2020 to $2.51 billion in 2021 however at that point declined to $2.36 billion in 2022, demonstrating a 76.13% development in 2021 followed by a - 5.92% change in 2022. Both current and non-current assets varied during this period.
Figure 4: Graph of the Balance Sheet's changing %
(Self-made in MS Excel)
On the liabilities side, total liabilities expanded from $609 million in 2020 to $1.24 billion in 2021 and afterwards diminished to $1.10 billion in 2022. The company's net assets remained somewhat stable at $814 million in 2020, $1.27 billion in 2021, and $1.26 billion in 2022. Notwithstanding the vacillations, Bega Cheese Limited kept areas of strength for a situation during the examined period.
Description and analysis of the financial performance of Bega Cheese Ltd.
Bega Cheese Ltd. displayed great financial performance throughout recent years. The company accomplished noteworthy revenue development, with a 44.01% expansion in 2022 contrasted with 2021 and a significant 38.85% raise from 2020 to 2021 (Sorrentino, 2019). In spite of increasing costs, Bega Cheese figured out how to keep a consistent gross profit, exhibiting compelling cost management. The EBITDA likewise showed positive development, coming to $180 million in 2022. The balance sheet showed blended trends in with total assets seeing a huge expansion in 2021, trailed by a slight decrease in 2022.
Ratio analysis
Profitability ratio
Figure 5: Profitability Ratio of Bega Cheese Ltd.
(Source: MS Excel)
Liquidity ratio
Figure 6: Liquidity Ratio of Bega Cheese Ltd.
(Source: MS Excel)
Stability ratio
Figure 7: Stability Ratio of Bega Cheese Ltd.
(Source: MS Excel)
Market share ratio
Figure 8: Market Share Ratio of Bega Cheese Ltd.
(Source: MS Excel)
Interpretation of financial ratios and recommendations
Figure 9: Graph of Profitability Ratio
(Source: MS Excel)
The profitability ratio estimates the effectiveness of Bega Cheese Ltd. in creating profit compared with its revenue. Throughout the course of recent years, the company's profitability ratio showed a declining trend, diminishing from 2.14 in 2020 to 1.91 in 2021, and further to 1.55 in 2022.
Figure 10: Graph of Liquidity Ratio
(Source: MS Excel)
The liquidity ratio evaluates Bega Cheese Ltd.'s capacity to meet short-term financial obligations involving its ongoing assets according to current liabilities (Zhao, 2023). Throughout recent years, the company's liquidity ratio remained somewhat steady, with upsides of 1.34 in 2020, 1.21 in 2021, and 1.21 in 2022. A liquidity ratio of 1.21 shows that the company had $1.21 in current assets to cover every dollar of current liabilities.
Figure 11: Graph of Stability Ratio
(Source: MS Excel)
The debt-equity ratio evaluates Bega Cheese Ltd.'s financial stability by contrasting its total debt with total equity. Throughout recent years, the company's debt-equity ratio has shown a declining trend, diminishing from 0.32 in 2020 to 0.27 in 2021, and further to 0.25 in 2022. A lower debt-equity ratio demonstrates that the company depends less on debt funding and has a more grounded financial position, as it is supporting a more modest piece of its operations through debt contrasted with equity.
Figure 12: Graph of Market Share Ratio
(Source: MS Excel)
The price-to-earnings (P/E) ratio assesses the market's view of Bega Cheese Ltd.'s future earnings potential by contrasting the share price with the earnings per share (EPS). Throughout recent years, the company's P/E ratio has shown fluctuating trends, with upsides of 0.44 in 2020, 0.20 in 2021, and 0.48 in 2022. A lower P/E ratio might show that the company's stock is undervalued or that investors have lower development assumptions. On the other hand, a higher P/E ratio recommends higher development assumptions.
Non-financial Analysis
Analysis of the non-financial performance of the company
Bega Cheese has been effectively engaged with supportability drives, zeroing in on decreasing its ecological impact and advancing dependable obtaining rehearses. The company's obligation to product quality and security has reinforced its standing and customer trust (Zaw, 2019). Moreover, Bega Cheese has made progress in corporate social obligation, participating in local area improvement and altruistic undertakings.
Non-financial data presentation
Bega Cheese Ltd.'s non-financial data highlights its commitment to sustainability, quality, and social responsibility. The organization reduced its carbon impression by 15% more than three years through energy-productive practices and sustainable power reception (Van Caenegem and Nakano, 2020). Bega Cheese's exceptional dairy products have reliably acquired industry acknowledgement for their prevalent quality and taste. The organization's moral obtaining endeavours guaranteed that 90% of natural substances are dependably and privately secured.
Other Non-financial aspects
Ethical aspects of the company's activities
Bega Cheese Ltd. puts a solid accentuation on ethical practices all throughout its tasks. The organization sticks to fair exchange standards, guaranteeing mindful obtaining of unrefined substances and keeping up with straightforward store network processes.
SWOT analysis
- Strengths: Strong Brand Reputation, High-Quality Dairy Products.
- Weaknesses: Fluctuation in Prices, Market competition.
- Opportunities: Product Innovations, Expansion in New Markets.
- Threats: Global Economic Uncertainty, Changing Customer Demand.
The company's business strategy and competitors
Bega Cheese Ltd.'s business strategy spins around being a main player in the dairy business, zeroing in on item development, venturing into new markets, and key acquisitions to upgrade its item contributions and market presence (Watson et al. 2022). Key competitors incorporate other significant dairy organizations, like Fonterra Co-employable groups, Saputo Inc., and Murray Goulburn Co-usable Co. Ltd., which posture difficulties as far as market share and competitive pricing.
References
Journals
- Atz, U., Van Holt, T., Liu, Z.Z. and Bruno, C.C., 2023. Does sustainability generate better financial performance? review, meta-analysis, and propositions. Journal of Sustainable Finance & Investment, 13(1), pp.802-825.
- Bratoveanu, B.D., Zungun, D. and Stanciu, S., 2020. Agro-Food Brands–Survival and Success on Romanian Market. In IBIMA 2018, Proceedings of The 32 IBIMA Conference: Vision (pp. 8104-8113).
- Cosby, A., Lawson, A., Gudde, J. and Fogarty, E.S., 2022. Connecting Nature: The Potential of Australian Dairy Initiatives in Collaborative Biodiversity Governance. Agronomy, 12(2), p.366.
- Cunningham, R., Jacobs, B. and Measham, T.G., 2021. Uncovering engagement networks for adaptation in three regional communities: empirical examples from New South Wales, Australia. Climate, 9(2), p.21.
- Meller, G., de Lourenço, W.M., Gabriel, E., de Lima, R.C.A. and da Paixão, D.X., 2023. Financial viability of horizontal sealing elements with different acoustic performance ratings. E&S Engineering and Science, 12(1), pp.7-18.
- Ramli, M.S.A., Misbah, M.S. and Ali, N.D.D., 2023. Naturalife Inc.: an areca vegan cheese manufacturer.
- Sorrentino, R., 2019. Corporate governance analysis and financial valuation of food industry in Europe, Australia and Japan.
- Van Caenegem, W. and Nakano, K., 2020. Standard trade marks, geographical indications and provenance branding in Australia: What we can learn from King Island. The Journal of World Intellectual Property, 23(5-6), pp.632-657.
- Watson, S., ESG, I. and Saleeba, J., 2022. About the Investor Group on Climate Change.
- Zaw, P., 2019. Planned manufactured capital investment disclosures in annual and integrated reports: Evidence from New Zealand and Australian organisations.
- Zhao, C., 2023. Non-IFRS earnings reporting in highlights of annual reports: evidence from Australia (Doctoral dissertation, Universität St. Gallen).
