Kent Institute Australia Pty. Ltd. Assessment Brief XXXXXXXXXXABN XXXXXXXXXXCRICOS Code: 00161E RTO Code: 90458 Version 1: 22nd December, 2016 XXXXXXXXXXTEQSA Provider Number: PRV12051 ASSESSMENT...

BUSINESS ANALYSIS AND VALUATION
Business Analysis and Valuation
Student Name:
Unit: Bachelor of Business / Bachelor of Accounting
Unit Code: B01BAVA320
Professor:
September 17, 2019
Table of Contents
    S.No.
    Table of Contents
    Page No.
    
    Introduction
    2
    
    Brief of the Company
    2-3
    
    Financial Analysis: Vertical Analysis or Peer Analysis
    3-6
    
    Financial Analysis: Horizontal Analysis
    6-7
    
    Cash Flow Analysis
    8-9
    
    Liquidity
    9-10
    
    Income
    10-11
    
    Capital Structure
    12-13
    
    Coverage Ratios
    13
    
    Growth and Risk Analysis
    13-14
    
    Prospective Analysis
    14-16
    
    Conclusion
    17
    
    References
    18
Introduction
Every business has its own working and consists of several types of risk while it’s running. All of them need their own analysis, evaluation, budgeting, performance check and understanding it’s suitability. This project is undertaken to understand various aspects of business and its financial and risk analysis. The company chosen for business analysis and evaluation is Bellamy’s Organic, which deals in several types of baby food products being distributed all over the world. .
In this project firstly a
ief is given about company’s background, mission statement, markets, product range and raw material procurement. Then there is detailed financial analysis, both in the form of common size analysis (competitor analysis) and horizontal analysis is done. Competitor chosen for this is Bubs Organics who deals in the same market as Bellamy’s Organics, though market share of Bellamy’s is much more than Bubs Organic. After this, analysis of Company’s cash flows, profit Margins, Inventory Turnover has benn done. Different types of ratios for checking whether company is leveraged or not, its coverage ratios have been discussed in detail. Then Growth and risks of business were determined along with, understanding its Capital Structure and future prospective analysis. This will not only help in understanding past performance but also plan for future growth and contingencies.
Brief of the Company
Company Name: Bellamy’s Organic
Bellamy’s Organics is a company which makes certified, organic, nutritious baby food and formula in Australia. There is a team of experts who work upon creating high quality delicious organic baby food and formula milk. Their products are best to start feeding infants, as they are made from freshest, organic, high quality certified ingredients. The sourcing of ingredients is prefe
ed from Australia, but due to unavailability of organic ingredients sourcing is done from other places as well.
Product Range:
· Baby Formula
· Baby Food
· Cereal
· Pouch
· Pasta
· Rusks
· Snacks
Organic Farms
· Esperance Bay Apple Orchard in Dover Tasmania
· De Bondt Organic Dairy Farm
· More Organics farm Products
Company’s Background
The company was founded in 2004 by a Tasmanian mother. From the start the company has aimed not to compromise on: Certifies Organic, Made in Australia, No Artificial Preservatives, No Artificial Colors, No Artificial Flavors, No synthetic Pesticides, No GMO ingredients.
Mission Statement
To make simple, nutritious, organic food, free from all bad stuff. Also rightly said by founder, ”A pure start to life”.
FINANCIAL ANALYSIS
Common Size Analysis: Company’s Name: Bellamy’s Organics
Competitors Name: Bubs Organics
Vertical Competitor Analysis (figures in $million)
    Yea
    Competitors
    PPE Assets
    Intangibles
    Sales
    EBIT
    Net Income
    Net Worth
    2015
    BUB Organics
    0.044
    1.19
    1.82
    -0.36
    -0.34
    0.23
    
    Bellamy’s Organics
    0.62
    0.104
    125.30
    12.28
    8.9
    48.91
    2016
    BUB Organics
    0.089
    1.34
    3.65
    -1.108
    -1.28
    5.3
    
    Bellamy’s Organics
    1.10
    1.70
    244.58
    54.30
    38.32
    83.22
    2017
    BUB Organics
    0.066
    1.27
    3.94
    -5.09
    -5.05
    7.52
    
    Bellamy’s Organics
    1.01
    1.74
    240.8
    0.593
    -0.809
    91.25
    2018
    BUB Organics
    0.047
    32.99
    16.90
    -66.41
    -66.65
    72.51
    
    Bellamy’s Organics
    3.78
    40.07
    328.70
    60.26
    42.81
    207.35
    2019
    BUB Organics
    4.21
    91.78
    43.91
    -36.02
    -35.50
    105.65
    
    Bellamy’s Organics
    5.80
    39.70
    266.23
    29.6
    21.6
    232.29

Figure 1 Figure 2

Figure 3 Figure 4

Figure 5
In figure 1 showing sales of both the companies, it clearly indicates Bubs Organic had a steady growth rate as compared to Bellamy’s Organic. The reason of decline sale of Bellamy is decline in China’s demand impacted by regulatory change, lower birth rate and increased local competition. But the company targets to achieve $500Million revenue generation by FY21. In figure 2 and fig. 3 of EBIT and Net Income, Bellamy’s EBIT is better due to decreased long-term liabilities, as company has surplus cash and is free from such liabilities. Figure 4 shows Net Worth, as clearly indicated in the graph, both the companies have the same type of graph. In figure 5 shows robust growth in assets of both the companies, as both have heavily spend on capital expenditure to increase sales.
Horizontal Analysis
This type of analysis is generally done to determine the trends of the business. It helps in making strategic decisions based on data available.
Absolute Comparison of Bellamy’s Organics (figures in $million)
    Yea
    PPE Assets
    Intangibles
    Sales
    EBIT
    Net Income
    Net...