MN5441 Financial Accounting Information and Analysis
Our group decided to give a detailed analysis of Cadbury Plc due to the interesting market situation of Cadbury and after the split of Cadbury Schweppes into Cadbury Plc, the new holding company of the worldwide confectionery operations and the Australian beverages business; and Dr Pepper Snapple Group (DPS), the new holding company of the Americas beverages business. This situation gives us the possibility to check how the company’s performance evolved over the last two financial years with a different focus on their operations.
A second reason for our company choice is the hostile bid from US based Kraft Foods Inc. The group decided to write out of the perspective of a Kraft Foods shareholder. This is particularly interesting, as we want to find out if Cadbury is a good target company in terms of financial strength from a Kraft Foods point of view. In addition this report is going to show if the consortium Ferrero and Hershey’s might be in a better position to takeover Cadbury’s operations after a possible hostile bid or even if they can play the role of a white knight, rescuing Cadbury from a takeover.
This report begins with giving a brief company overview of Cadbury Plc and a timeline of the
takeover efforts from Kraft Foods Inc. After this the accounts of Cadbury are analyzed based on the interpretation of the key financial ratios chosen by the group. Subsequent to this section the report deals with the competitive landscape and some major competitors of Cadbury. The buyout analysis gives an idea which company is in the best position to take over Cadbury’s operations if a hostile bid is successful by analyzing liabilities, available cash and specific advantages.
Company Overview and Business Description，实验设备管理系统
The Cadbury Schweppes Company was actually founded in 1969 by the merger of Schweppes and Cadbury Group. Over the time, the business was expanded through numerous acquisitions all over the world combined with organic growth. The focus of the acquisitions was clearly on beverages. In the 1990s, after Cadbury Schweppes strengthen their portfolio they acquired the US based soda company Dr Pepper/7 UP and later on the Snapple Beverage Group in 2000. In addition to the increase in the beverage business, Cadbury Schweppes invested some GBP 40 million at the Birmingham based factory for Cadbury Dairy Milk products to meet the growing demand.
In 2007 the company announced to split the business into two separate companies focusing on chocolate and confectionery on the one hand and the US soft drinks on the other. Finally in May
2008 the demerger was completed and the business was split into Cadbury Plc and Dr Pepper
Snapple Group.
Today Cadbury Plc is one of the leading global confectionery companies with a lot of products out of a portfolio of chocolate, gum and candy brands. Cadbury operates through for business segments: Britain, Ireland, Middle East and Africa (BIMA), Americas, Europe, and Asia Pacific. The chocolate business represents the biggest business segment of the company and the regional focus is according to the taste of the consumers in each market.
One of the strength of the company is its presence in emerging markets (60% of overall revenue growth), the highest amongst all key competitors. This wide geographic presence helps the company to diversify the operations and it results in a higher revenue growth.
Since 2008 companies in the confectionary market try to increase market share and product
portfolios through M&A transactions. The five biggest companies only account for around 42% of the overall market; the intense competition imposes pricing pressure and reduces margins.
Ratio Analysis
C语言课程设计报告_图的遍历的演示
The following analysis of key ratios of Cadbury is based on the definitions given by Perks 2004. The group wants to give an idea of Cadbury’s operational and financial performance over the last years. After that a comparison between Cadbury and its key competitors is made.
Cadbury’s key ratiosCurrent ratio
Current ratio=current assets / current liabilities
2009: 2,302/2,509=1:1.1
2008: 2,635/3,388=1:1.3
2007: 2,600/4,614=1:1.8
The ratio is mainly used to measure the company's ability to pay back its current liabilities (such as trade payables and short-term overdrafts) with its current assets (such as cash, inventories, and trade-receivables). The above three figures reveal an increase in current ratio, mainly due to the decrease in current liabilities from 4,614M to 2,509M, the current ratio, however, is still on the lower end. Usually, the ideal current ratio should be 2:1. While in the case of Food Industry, the average current ratio is 1.3: 1. If the current ratio is too high, it might imply a waste of current assets. However, the current ratio of Cadbury is less than 1 point, suggesting the company would have big problem to pay off its obligations if they came due at that point. While it is definitely not a good sign since it indicates the company is not in good financial health, it does not mean that Cadbury will go bankrupt - as Cadbury is changing its way to access financing. If we take a further look at the current liabilities, we may find that short-term borrowings and overdrafts have reduced by 54% from 2007 to
2008, which is a good sign.，2614
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