Financial Statement And Ratio Analysis Case Study Solution

Case Study Solution And Analysis

Home >> Harvard >> Financial Statement And Ratio Analysis >>

Financial Statement And Ratio Analysis Case Study Solution

Business is currently one of the biggest food chains worldwide. It was founded by Henri Financial Statement And Ratio Analysis in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk to feed babies and decrease death rate.
Business is now a transnational business. Unlike other international business, it has senior executives from various countries and attempts to make choices considering the whole world. Financial Statement And Ratio Analysis presently has more than 500 factories around the world and a network spread throughout 86 countries.


The purpose of Business Corporation is to enhance the quality of life of individuals by playing its part and providing healthy food. While making sure that the business is being successful in the long run, that's how it plays its part for a much better and healthy future


Financial Statement And Ratio Analysis's vision is to supply its customers with food that is healthy, high in quality and safe to consume. It wants to be innovative and all at once understand the needs and requirements of its customers. Its vision is to grow quickly and offer items that would please the needs of each age. Financial Statement And Ratio Analysis imagines to develop a trained labor force which would help the company to grow


Financial Statement And Ratio Analysis's mission is that as presently, it is the leading business in the food industry, it thinks in 'Great Food, Excellent Life". Its mission is to offer its customers with a range of options that are healthy and finest in taste. It is concentrated on providing the very best food to its customers throughout the day and night.


Financial Statement And Ratio Analysis has a broad variety of items that it uses to its clients. In 2011, Business was noted as the most rewarding company.

Goals and Objectives

• Remembering the vision and mission of the corporation, the company has actually laid down its objectives and goals. These objectives and goals are listed below.
• One goal of the company is to reach zero landfill status. (Business, aboutus, 2017).
• Another objective of Financial Statement And Ratio Analysis is to lose minimum food throughout production. Most often, the food produced is wasted even before it reaches the clients.
• Another thing that Business is working on is to improve its packaging in such a way that it would help it to reduce the above-mentioned complications and would likewise guarantee the shipment of high quality of its products to its customers.
• Meet global standards of the environment.
• Develop a relationship based upon trust with its customers, company partners, employees, and federal government.

Critical Issues

Just Recently, Business Company is focusing more towards the method of NHW and investing more of its revenues on the R&D technology. The nation is investing more on acquisitions and mergers to support its NHW technique. The target of the business is not achieved as the sales were anticipated to grow greater at the rate of 10% per year and the operating margins to increase by 20%, provided in Exhibition H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The existing Business method is based on the concept of Nutritious, Health and Wellness (NHW). This method handles the idea to bringing change in the customer preferences about food and making the food things healthier worrying about the health concerns.
The vision of this strategy is based upon the secret method i.e. 60/40+ which just indicates that the items will have a score of 60% on the basis of taste and 40% is based on its nutritional value. The products will be manufactured with extra dietary value in contrast to all other products in market acquiring it a plus on its dietary material.
This strategy was embraced to bring more delicious plus healthy foods and beverages in market than ever. In competition with other business, with an objective of maintaining its trust over clients as Business Company has actually gotten more trusted by clients.

Quantitative Analysis.

R&D Spending as a portion of sales are declining with increasing actual amount of spending reveals that the sales are increasing at a higher rate than its R&D costs, and enable the business to more spend on R&D.
Net Earnings Margin is increasing while R&D as a portion of sales is declining. This indication also reveals a thumbs-up to the R&D costs, mergers and acquisitions.
Debt ratio of the company is increasing due to its costs on mergers, acquisitions and R&D development instead of payment of financial obligations. This increasing financial obligation ratio position a hazard of default of Business to its financiers and might lead a decreasing share rates. For that reason, in terms of increasing debt ratio, the company must not invest much on R&D and should pay its existing debts to reduce the risk for financiers.
The increasing threat of financiers with increasing debt ratio and decreasing share prices can be observed by big decrease of EPS of Financial Statement And Ratio Analysis stocks.
The sales development of company is also low as compare to its mergers and acquisitions due to slow understanding structure of customers. This sluggish growth also prevent business to more invest in its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of computations and Charts given in the Exhibitions D and E.

TWOS Analysis

2 analysis can be used to derive various techniques based on the SWOT Analysis offered above. A quick summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business needs to present more ingenious products by big amount of R&D Costs and mergers and acquisitions. It could increase the market share of Business and increase the profit margins for the business. It might also offer Business a long term competitive advantage over its rivals.
The worldwide expansion of Business need to be focused on market capturing of establishing countries by expansion, drawing in more customers through client's loyalty. As developing nations are more populated than developed countries, it could increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisFinancial Statement And Ratio Analysis must do cautious acquisition and merger of companies, as it might impact the client's and society's understandings about Business. It needs to get and combine with those companies which have a market reputation of healthy and healthy companies. It would improve the perceptions of consumers about Business.
Business needs to not only spend its R&D on innovation, rather than it must also focus on the R&D costs over examination of expense of various nutritious items. This would increase cost efficiency of its products, which will result in increasing its sales, due to decreasing rates, and margins.

Strategies to use strengths to overcome threats

Business needs to transfer to not only establishing but likewise to industrialized countries. It needs to broadens its geographical growth. This wide geographical expansion towards developing and established nations would minimize the danger of potential losses in times of instability in various countries. It must expand its circle to various countries like Unilever which operates in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Financial Statement And Ratio Analysis must sensibly manage its acquisitions to avoid the risk of mistaken belief from the customers about Business. It needs to acquire and merge with those nations having a goodwill of being a healthy business in the market. This would not just enhance the understanding of consumers about Business but would also increase the sales, earnings margins and market share of Business. It would likewise make it possible for the company to utilize its possible resources efficiently on its other operations instead of acquisitions of those organizations slowing the NHW technique growth.

Segmentation Analysis

Demographic Segmentation

The group segmentation of Business is based on four aspects; age, gender, income and profession. For instance, Business produces a number of products connected to infants i.e. Cerelac, Nido, and so on and related to adults i.e. confectionary items. Financial Statement And Ratio Analysis products are rather economical by nearly all levels, however its significant targeted clients, in regards to income level are middle and upper middle level customers.

Geographical Segmentation

Geographical segmentation of Business is composed of its presence in practically 86 countries. Its geographical segmentation is based upon two primary aspects i.e. typical income level of the consumer as well as the climate of the region. For instance, Singapore Business Business's segmentation is done on the basis of the weather of the area i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic division of Business is based upon the character and life style of the consumer. Business 3 in 1 Coffee target those clients whose life style is rather hectic and do not have much time.

Behavioral Segmentation

Financial Statement And Ratio Analysis behavioral segmentation is based upon the attitude knowledge and awareness of the consumer. Its extremely nutritious products target those clients who have a health mindful attitude towards their intakes.

Financial Statement And Ratio Analysis Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand, there are 2 options:
Alternative: 1
The Company ought to invest more on acquisitions than on the R&D.
1. Acquisitions would increase overall assets of the company, increasing the wealth of the business. Spending on R&D would be sunk expense.
2. The company can resell the acquired systems in the market, if it fails to execute its method. Nevertheless, quantity invest in the R&D could not be restored, and it will be thought about entirely sunk expense, if it do not provide possible results.
3. Investing in R&D offer sluggish growth in sales, as it takes long period of time to introduce an item. Nevertheless, acquisitions offer fast outcomes, as it provide the business currently established item, which can be marketed soon after the acquisition.
1. Acquisition of business's which do not fit with the company's worths like Kraftz foods can lead the company to face misunderstanding of customers about Business core values of healthy and nutritious items.
2 Big spending on acquisitions than R&D would send a signal of business's inefficiency of establishing ingenious items, and would lead to customer's discontentment also.
3. Large acquisitions than R&D would extend the line of product of the company by the products which are currently present in the market, making business not able to present new ingenious products.
Option: 2.
The Company needs to invest more on its R&D instead of acquisitions.
1. It would make it possible for the business to produce more innovative products.
2. It would supply the business a strong competitive position in the market.
3. It would make it possible for the company to increase its targeted clients by presenting those products which can be offered to a completely new market section.
4. Ingenious items will offer long term benefits and high market share in long term.
1. It would decrease the profit margins of the business.
2. In case of failure, the whole spending on R&D would be considered as sunk expense, and would affect the company at large. The risk is not in the case of acquisitions.
3. It would not increase the wealth of business, which could supply a negative signal to the investors, and might result I declining stock prices.
Alternative 3:
Continue its acquisitions and mergers with considerable spending on in R&D Program.
Vrio AnalysisPros:
1. It would permit the business to introduce new innovative items with less risk of converting the spending on R&D into sunk cost.
2. It would supply a favorable signal to the investors, as the overall assets of the business would increase with its substantial R&D costs.
3. It would not impact the profit margins of the business at a large rate as compare to alternative 2.
4. It would offer the company a strong long term market position in regards to the business's total wealth in addition to in regards to innovative products.
1. Risk of conversion of R&D spending into sunk cost, higher than option 1 lesser than alternative 2.
2. Risk of mistaken belief about the acquisitions, greater than alternative 2 and lower than option 1.
3. Intro of less variety of innovative items than alternative 2 and high variety of ingenious items than alternative 1.

Financial Statement And Ratio Analysis Conclusion

RecommendationsBusiness has stayed the top market gamer for more than a decade. It has institutionalised its techniques and culture to align itself with the market modifications and consumer behavior, which has ultimately allowed it to sustain its market share. Business has established considerable market share and brand name identity in the urban markets, it is suggested that the company ought to focus on the rural locations in terms of establishing brand commitment, awareness, and equity, such can be done by creating a particular brand allocation strategy through trade marketing strategies, that draw clear difference in between Financial Statement And Ratio Analysis products and other competitor items. Financial Statement And Ratio Analysis ought to take advantage of its brand name image of safe and healthy food in catering the rural markets and also to upscale the offerings in other categories such as nutrition. This will enable the company to establish brand name equity for freshly introduced and already produced items on a greater platform, making the reliable usage of resources and brand name image in the market.

Financial Statement And Ratio Analysis Exhibits

PESTEL Analysis
Governmental assistance

Transforming criteria of worldwide food.
Enhanced market share.
Altering perception in the direction of much healthier products
Improvements in R&D and QA departments.

Intro of E-marketing.
No such effect as it is good.
Issues over recycling.

Use resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible given that 8000
Greatest after Organisation with much less development than Service 9th Lowest
R&D Spending Highest possible because 2008 Highest after Organisation 6th Most affordable
Net Profit Margin Highest considering that 2004 with rapid growth from 2003 to 2013 As a result of sale of Alcon in 2018. Nearly equal to Kraft Foods Incorporation Nearly equal to Unilever N/A
Competitive Advantage Food with Nourishment and health factor Greatest number of brand names with lasting techniques Biggest confectionary as well as processed foods brand name on the planet Biggest dairy products and also bottled water brand name on the planet
Segmentation Middle and top center degree customers worldwide Private customers along with house team Every age as well as Income Client Groups Middle as well as upper middle degree customers worldwide
Number of Brands 8th 4th 3rd 5th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 87987 824877 533286 145224 248575
Net Profit Margin 8.29% 5.57% 86.96% 1.97% 57.76%
EPS (Earning Per Share) 87.37 5.99 1.47 7.68 11.93
Total Asset 943449 698619 842296 391272 57179
Total Debt 98895 22765 71384 86589 39133
Debt Ratio 67% 97% 96% 73% 44%
R&D Spending 5528 1451 3469 4644 8818
R&D Spending as % of Sales 8.51% 8.31% 2.93% 5.87% 5.26%

Financial Statement And Ratio Analysis Executive Summary Financial Statement And Ratio Analysis Swot Analysis Financial Statement And Ratio Analysis Vrio Analysis Financial Statement And Ratio Analysis Pestel Analysis
Financial Statement And Ratio Analysis Porters Analysis Financial Statement And Ratio Analysis Recommendations