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Introduction

Financial analysis relates to application of financial monetary information for detailed assessment of a corporation's performance in all terms and provide effective recommendations for improving performance. Financial analysis is a method by which organization's expenditures and other monetary transactions are evaluated to assess their relevancy and appropriateness. Financial analysis is usually employed to determine whether an enterprise is effectively operating, solvent, having favourable liquidity position, or competitive to justify any investment in capital (Williams and Dobelman, 2017). This study involves critical evaluation of fiscal performance and financial condition of organisation Farsons and Heiniken. Both companies are leading beer and soft drink manufacturing companies. Study also contains comparative analysis of working capital and cash flows of respective companies.

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Overview of Companies

Farsons: Simonds Farsons Cisk plc or Farsons group is situated in Mediterranean, Malta. Company is engaged in production, brewing, sales and distribution of premium quality beers and other beverages. Company also selling wholesale as well as retail items of beverages and foods including spirits, wines and other related products. With wider range of food and beverage product items, company is leading brand in industry. Company's famous beers and beverage brands are Blue Label Ale, Kinnie range of soft drinks, Hopleaf Pale Ale, San Michel table water, Cisk Lager etc. Company is first non-banking and private sector company which is listed on Malta Stock Exchange, where corporation's shares are recognised as SFC for trading purpose.

Heiniken: It is a Dutch company and leading producer and seller of superior quality beer and cider. Company has approx above 300 global, local and speciality ciders and beers. Comapny has globally diversified, skilled and entrepreneurial team of approximately more-than 85000 operate breweries, workers and employees. Company is currently operating in approx 70 nation and coving a major part in global market. Company has large history in production of beer and well known for innovation in industry. Value creation is main agenda of company which is strength of company and core of success in industry.

Evaluation of the financial performance and financial position of Farsons and Heiniken

Vertical analysis: Vertical analysis refers to financial statement's proportional evaluation, in which each presented item on company's financial statement is described as a (%)proportion of another key item (Palepu and Healy, 2013). It simply means that each presented item in Income Statement is recognized as specific percentage of aggregate gross sales/revenue, whereas each item of balance sheet is presented as specific percentage of value of aggregate assets. Following is vertical analysis of financial position of selected companies, as shown below:

Heiniken

Income Statement:

Form above vertical analysis of income statement of Heiniken Plc it has been analyzed that company's gross profits in proportion to sales has been declined in year 2018 to 51.29% after a continuous improvement during period year 2015 to 2017. While company's net profit proportion which was 4.67% in 2015 has been declined in year 2016 to 3.75% which further reached at 4.46% and 4.28% in year 2017 and 2018 respectively (Annual Report of Heiniken. 2019).

Statement of financial position


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