Britvic Plc Financial Analysis
5065 words 21 pagesAlexandra-Gabriela Sirbu
Business and Management, year 2, University of Salford
Table of contents:
1 .Aim pg. 2
2. Company overview pg. 2
3. Short-term assets management pg. 3
4. Liquidity pg. 4
5. Profitability pg. 5
6. Financial structure and cost of capital pg.7
7. Share price behaviour pg. 8
8. Portfolio effect pg. 10
9. Concluding remarks pg 12
10. Bibliography pg 13
Britvic PLC –financial analysis-
The aim of the following report is to assess the financial activity of Britvic PLC over a sixty months period, from January 2005 until December 2009, in order to make recommendations for a future investment in the company. 2. Company overview
Britvic PLC was founded in 1938, in …show more content…
The figures in the three ratios analysed above resulted in a negative operating cash cycle, which means that Britvic PLC is holding cash in hand in between transactions. The business receives money from its debtors long before paying its creditors, creting a time window in which the company may use the money for other puposes, such as to serve their expasionist policy.
In order to examine the company’s liquidity, two solvency ratios are to be examined: the current ratio and the quick ratio. The current ratio measures the current assets against the current liabilities, while the quick ratio measures only the liquid assets, cash in hand and all belongings quickly convertible into cash, against the current liabilities.
Britvic PLC’s current ratio had a stable value over the past five years, the average revolving around 0.9, value that falls behind the ideal figure of 2 set by most authors, including Atrill and McLaney. The average for the quick ratio has as well a smaller value than the ideal unitary figure, the mean of the ratio during the five years period been of 0.72.
When assessing a company’s solvency, it is wisely to take into considerations the conditions set by the industry in which it is operating. As previously said, Britvic PLC is operating in an industry with a medium velocity of generating cash and, consequently, its quick ratio should have a value no smaller than one in order