Running head: BOND & STOCK PERFORMANCE ANALYSIS 1 BOND & STOCK PERFORMANCE ANALYSIS 11 FINC 300 Business Finance Project #2:BGS Foods Company Bonds and Stocks Analysis Background and industry B&GS Foods Inc. is a company that offers high-quality branded frozen and shelf-stable food and household products across Canada, Puerto Rico, and the United States (Reuters, 2019). BGS’s headquarters are Parsippany, New Jersey, United States. Some of the brands include Mrs. Dash, Cream of Wheat, and Vermont Maid Pancake syrup. Its competitors include Hormel Foods, The Kraft Heinz Co, and General Mills Inc. The current market capitalization stands at $1,079.59 million, and its P/E ratio is 6.63 (Morningstar, 2019). Financial Leverage The financial leverage is the extent to which fixed income securities and preferred stock are used in a firm’s capital structure (Robinson et al. 2012). The leverage ratios act as authentic tools to assess the ability of the firm to fulfill its financial obligations. Some of the financial leverage ratios encompass debt to assets, debt to equity, and interest coverage ratio.  Fiscal Year 2018 2017 2016 2015 2014 Debt to Asset Ratio 0.54 0.62 0.57 0.68 0.62 Debt to Equity Ratio 1.82 2.52 2.20 3.78 3.04 Interest Coverage 1.51 2.61 3.47 3.37 3.05 Debt to asset Ratio Debt to asset ratio is a leverage ratio that shows the percentage of assets that have been financed with debt (Drake & Fabozzi,2012). A high debt to asset ratio shows a degree of leverage and high financial risk. Creditors use this to identify the amount of debt in a particular company, the ability of BGS to repay debt, and if loans can be extended to the firm((Drake & Fabozzi,2012). The debt to asset ratio of the B&Gs Foods company was 0.62, 0.68, 0.57, 0.62, and 0.54 in the years 2014, 2015, 2016, 2017, and 2018, respectively. Over the five accounting years, the ratio fluctuates between 0.54 and 068. The ratio increased from 2014 to 2015, slightly declined from the years 2015 to 2016, and then rose from 2016 to 2017 before decreasing again from 2017 to 2018. Over the fiscal years, the B&GS’ debt to asset ratio is more than 50 %, which shows that more than 50% of assets are financed with debt. For instance, in 2018, 54% of the assets are financed with debt. Debt to Equity Ratio The debt to equity ratio measures the degree to which a firm can finance its operations using its financing options, debt financing, and equity financing. A high debt to equity, usually more than one, indicates that a company has been financing its operations using more debt financing than equity financing. A ratio of 1.0 means that the debt and equity, which equivalently indicates 50 percent of debt to equity financing. The B&GS’ debt to equity ratio was 3.04, 3.78, 2.20, 2.52, and 1.82 in the fiscal years 2014, 2015, 2016, 2017, and 2018, respectively. Throughout five years, there are no consistent patterns as the ratio fluctuates between 1.82 and 3.78, with the high ...

1. Running head: BOND & STOCK PERFORMANCE ANALYSIS
1
BOND & STOCK PERFORMANCE ANALYSIS
11
FINC 300 Business Finance Project #2:BGS Foods Company
Bonds and Stocks Analysis
Background and industry
B&GS Foods Inc. is a company that offers high-quality branded
frozen and shelf-stable food and household products across
Canada, Puerto Rico, and the United States (Reuters, 2019).
BGS’s headquarters are Parsippany, New Jersey, United States.
Some of the brands include Mrs. Dash, Cream of Wheat, and
Vermont Maid Pancake syrup. Its competitors include Hormel
Foods, The Kraft Heinz Co, and General Mills Inc. The current
market capitalization stands at $1,079.59 million, and its P/E
ratio is 6.63 (Morningstar, 2019).

2. Financial Leverage
The financial leverage is the extent to which fixed income
securities and preferred stock are used in a firm’s capital
structure (Robinson et al. 2012). The leverage ratios act as
authentic tools to assess the ability of the firm to fulfill its
financial obligations. Some of the financial leverage ratios
encompass debt to assets, debt to equity, and interest coverage
ratio.
Fiscal Year
2018
2017
2016
2015
2014
Debt to Asset Ratio
0.54
0.62
0.57
0.68
0.62
Debt to Equity Ratio
1.82
2.52
2.20
3.78
3.04
Interest Coverage
1.51
2.61
3.47
3.37
3.05
Debt to asset Ratio
Debt to asset ratio is a leverage ratio that shows the percentage

3. of assets that have been financed with debt (Drake &
Fabozzi,2012). A high debt to asset ratio shows a degree of
leverage and high financial risk. Creditors use this to identify
the amount of debt in a particular company, the ability of BGS
to repay debt, and if loans can be extended to the firm((Drake &
Fabozzi,2012). The debt to asset ratio of the B&Gs Foods
company was 0.62, 0.68, 0.57, 0.62, and 0.54 in the years 2014,
2015, 2016, 2017, and 2018, respectively. Over the five
accounting years, the ratio fluctuates between 0.54 and 068. The
ratio increased from 2014 to 2015, slightly declined from the
years 2015 to 2016, and then rose from 2016 to 2017 before
decreasing again from 2017 to 2018. Over the fiscal years, the
B&GS’ debt to asset ratio is more than 50 %, which shows that
more than 50% of assets are financed with debt. For instance, in
2018, 54% of the assets are financed with debt.
Debt to Equity Ratio
The debt to equity ratio measures the degree to which a firm can
finance its operations using its financing options, debt
financing, and equity financing. A high debt to equity, usually
more than one, indicates that a company has been financing its
operations using more debt financing than equity financing. A
ratio of 1.0 means that the debt and equity, which equivalently
indicates 50 percent of debt to equity financing. The B&GS’
debt to equity ratio was 3.04, 3.78, 2.20, 2.52, and 1.82 in the
fiscal years 2014, 2015, 2016, 2017, and 2018, respectively.
Throughout five years, there are no consistent patterns as the
ratio fluctuates between 1.82 and 3.78, with the highest ratio in
2015, and the lowest in 2018. Worth noting, all the company’s
debt to equity ratios are significantly higher than one, which
reveals that the BGS’s liability is higher than equity. This is a
big concern to creditors, and the management as B&GS
Company seems to be highly leveraged less solvent and may
have difficulty in fulfilling its long-term liabilities. A high debt
to equity ratio indicates weaker solvency ((Drake, & Fabozzi,
2012)
Interest Coverage

4. The interest coverage ratio or time interest earned measures
how many times a firm’s earnings before interest and taxes
(EBIT) can cover its interest and lease payments (Drake &
Fabozzi, 2012). If the interest coverage is higher, the more
solvent a firm is. Solvency indicates the firm’s ability to pay
the debt from operating income. The interest coverage of B&GS
Company was 3.05, 3.37, 3.47, 2.61, and 1.51 for the years
ended 2014, 2015, 2016, 2017, and 2018, respectively. The
BGS’ company has a higher coverage ratio, which reveals
stronger solvency; hence, this offers a greater assurance to its
creditors that it can service its debt from its operating income
(Robinson et al. 2012).
Evaluating B&GS’ Bond Performance
1) Two - Bonds Issued by
B&Gs Company issued one of its two corporate bonds on April
3rd, 2017. This corporate offers an annual coupon rate of
5.2500%, and its issue number is US05508RAE62 (Market
Insider, 2019). The maturity date of this bond is March 4th,
2025, which depicts that it is an 8-year maturity bond. The
number of coupon payments of this corporate bond will be made
at 2per year, whereby the coupon start date was on of October
1st, 2017, and the final coupon date will be 31st March 2025.
According to the Market Insider (2019), the issue price of BGS’
bond issue price was $100.00, and the expected yield is 5.10%.
The reported issue volume 500 million (B+G FOODS
INC.(NEW)2025)The BG’S. Bond was issued on 5/3/2013 with
an amount of $5,500 million (USD APPLE INC.DL-NOTES
2013(13/23) (Markets Insider, 2019).
The second corporate bond issued by BGS Company is
referenced with an issue number US05508WAB19 and with a
name B+G FOODS 19/27(Market Insider, 2019). A 550 million
of this corporate bond were issued on September 26th, 2019,
whereby the reported issue price was $100.00.The maturity date
is March 15th, 2027. The coupon rate at of 5.2500% and the
expected yield is 5.68% (Market Insider, 2019). The number of

5. coupon payments per year will also be two twice-yearly, with
the initial payment being due March 15th, 2020. The final
coupon date is on 14th September 2027. Notably, both corporate
bonds have no floater, which means that the coupon rate
remains the same regardless of the prevailing economic
conditions.
2) Last Price of the Bond if we assume that the Par Value of the
Bond is $1,000.
Par value is the amount of the money that issuers approve to
pay back the bond’s investors at maturity. The par value of a
bond is critical in determining the magnitude of coupon
payments as well as the maturity value. The settlement date for
the first corporate bond was on 4/3/2017 with a par value of
$1,000.00, issued for a redemption value of $100.00, and with a
maturity date of 4/1/2025. The associated annual coupon rate
and market yields are 5.2500% and 5.10%, respectively. From
the computation, the corporate bond will be priced at $404.94
annually. It is vague that BGS’s last price of the bond issued on
4/3/2017 is $270.40
The second corporate bond with the settlement date is
9/26/2019, with an 8- year maturity date that falls on 9/15/2027,
a coupon rate of 5.250 %, and a market yield of 5.68%, its price
was $100.00. The bond’s last price would be $396.76 annually
Semi-Annual Coupon/Interest Payments if the Par Value is
$1,000.
The par value of a bond is critical in determining the magnitude
of coupon payments (Both the first and the second corporate
bonds have a coupon rate of 5.2500%. The coupon rate payment
is computed by multiplying the par value with the coupon rate;
Coupon payment = Par value * coupon rate. Therefore, the
coupon payments for each bond is $52.50 (5.25%*$1000).
Current Yield of the Bonds if the Par Value is $1,000.
The current yield of a bond is computed by dividing the annual
coupon payment by the bond’s current market value (Boyte-

6. White, 2018). To calculate the current return of the first and
second B&GS’ corporate, plug in the value of coupon payment
and the market value. For the first bond, the market value is
$404.94, while that of the second one is $461.17. The current
yield of the first corporate bond is 7.71%, ($404.94/ $52.5
=7.71). The current return of the second corporate bond is
8.78%, ($461.17/ $52.5 =8.78). The yield represents the
effective interest rate on B&G’s bond. This number can be
reflected off the profitability of a bond relative to other bonds
in the market like Alphabet Inc.
Analysis of B&Gs Foods Issued Bonds
From my study, I would choose the first corporate bond since it
has a low-interest rate. Intuitively, a low-interest rate is
inversely related to the bond prices, and as a result, the first
bond is considerably higher priced than the second. The lower
the bond interest rate, the higher the price, as well as the higher
return. In this scenario, the lower the yield to maturity rate, the
less likely it the bond B&G issued is of high quality.
On the other hand, a callable bond is a bond that is redeemable
before its maturity. For both bonds, they have a fixed interest
rate regardless of the prevailing market conditions. The interest
rates will never decline. Markedly, both bonds may are
redeemable. The benefits that may be reaped will be due to the
resurgence of bond prices but not increased interest rates.
Stock Performance
The stock price of B&Gs Food Company has recently and
slightly dropped to a low of $16.87 on December 6, 2019. Its
primary competitor, Hormel Food Corporation (NASDAQ:
HRL) have a higher stock price with a low of $45.33 and with
fewer fluctuations, and as a result, the market has exhibited
positive sentiments towards Hormel’s growth.
The chart above was retrieved from
https://www.reuters.com/companies/BGS.N on 12/06/2019

7. Market Ratios
These are ratios that are used to determine the market valuation
of stock regarding myriad measures of a firm’s fundamentals
such as book value, cash flows, dividends, and earnings. These
ratios are regarded as needed tools by investors as they depict
the features of stock and change as the price of stock changes
(Robinson et al. 2012).
B&GS Foods
Hormel Foods
2018
2017
2016
Oct-18
Oct-19
P/E Ratio
11.08
10.78
25.17
23.34
22.72
PB Ratio
2.12
2.65
3.49
4.13
3.68
Dividend Yield (DY)
6.54
5.29
3.94
1.72
0.00
Dividend Payout
0.73

8. 0.57
1.00
0.40
0.47
Book Value Per Share
13.65
13.25
12.54
10.56
11.1
Dividend Per share
$1.89
$1.86
$1.73
$0.75
$0.84
PEG Ratio
2.03
1.35
3.18
2.61
5.19
The price per earnings ratio (P/E) shows the market price of a
share relative to the earnings (Staff, 2016). P/E is the dollar
amount an investor has to pay for each dollar of profits made by
the company for the ordinary shareholder. Investors apply the
P/E ratio in assessing the stock’s fair market value and forecasts
future earnings of shares. A high P/E ratio depicts that investors
anticipate high earnings while low P/E shows the firm’s stock is
undervalued. Markedly, the B&Gs’ P/E has depicted a
decreasing trend over the past three years. For the fiscal year
2018, the B&Gs’ P/E ratio was 11.08, while that of Hormel
Corporation was 23.34. An investor has a higher expectation of
high earnings in investing in Hormel than in B&Gs Company

9. According to Guru Focus( 2019), the B&G’ P/E is ranked higher
than 89.40% of its competitors and higher than the industry
average for over ten years.
For the year of 2018, B&G Foods Company had a higher book
value per share, dividend payout, and dividend yield than
Hormel Foods. B&G’s shareholders reaped higher dividend
income concerning the share price. Also, B&G had a higher
stockholder’s equity against its outstanding shares than Hormel.
Over the past three years, B&G’s dividend yield, dividend per
share, and book value per share have consistently increased.
Increased dividend yield and increased profit per share depict
an increased dividend income for investors. On the other hand,
over the past three years, the company’s price to book ratio has
significantly declined, which indicates that the company
continually been undervalued. Usually, a low book to price ratio
signifies that the company’s stock is undervalued.
CAPM
The CAPM pricing model is used to depict the linear
relationship between the required return of investment, and the
systematic risk, investment (Hawawini & Viallet,2011). The
formula for expected return is; Expected return= Risk-Free
rate+(Market risk premium) *beta. The market risk premium is
the difference between market return and risk-free rate)-risk-
free rate. B&G’s beta is 0.46 (Yahoo Finance, 2019). The beta
measures the volatility or the systematic risk of security
concerning exposure of market movements as opposed to
idiosyncratic factors (Hawawini & Viallet,2011). The low
B&G’S beta depicts that the firm’s stock is less risky to invest
in.
Mathematically; Expected return = 5.2500% + 0.46 * (11.44%-
5.25%) = 8.0974%. This signifies that the larger the expected
return rate, the larger the amount of risk. Investors who
purchase the B&G’s stocks would be anticipating at least
8.0974% % returns on their investment.
Sustainable Growth

10. A sustainable growth rate is the highest rate of growth rate that
a business organization can sustain to finance its expansion and
growth without getting more debt financing or equity financing.
It is calculated using the formula; sustainable growth rate (g) =
ROE *(1- Dividend payout ratio). The company’s sustainable
growth rate increased in from 2016 to 2017, and then
significantly dropped in 2018. The high sustainable growth rate
in 2017 means that the company grew fast, however, it may
have siphoned a lot of cash in the expansion, and therefore there
was no adequate cash to invest in prospective projects.
2018
2017
2016
Dividend Payout
0.73
0.57
1.00
ROE
19.37%
26.10%
17.60%
Expected growth
5.23%
11.22%
0.00%
Client Recommendation
B & G Food’s financial and stock performance shows that they
have enough strength to guarantee to enter into long– term
investment either in bonds or stock. According to the data, the
company’s stock performance indicates that B & G Food would
be at low risk if the customer decided to invest in the current
bond.

11. The interest rate is low, which means investors are at a lower
risk. CAPM and Dividend Payout ratio is at a good percentage
showing that when investors invest will get a greater return on
their investment. B & G Food financial leverage ratio shows a
healthy future and greater confidence in investors. Overall,
B&G’s offers an incredibly cheap and profitable investment for
any investor.
Recommendation for B & G Food’s management team
B & G Food has to ensure their innovation is strong by
investing more funds into research and development to gain a
competitive edge in the market. B&G needs to adopt aggressive
strategies to steer, spark growth, and to have a strong foot in
intensive competitive market and industry. Hormel Foods
Corporation is more attractive to investors than investors, and
it's market capitalization, and revenues are more than five folds
of B&G Foods. Some of the ways that B&G Foods company can
increase its efficiency and enhance its competitive edge is
through increasing the P/E ratio, reducing the cost of sales, full
utilization of affordable debt, rising interest coverage ratio,
lowering debt to equity ratio, and increasing the book per share.
Reflection of assignment
After analysis B & G Food’s financial performance, it was easy
to predict whether stock or bonds were worth to be invested in
long-term investment depending on the stock performance in
their current market. In the five years, B & G Food’s net sales,
working capital, and total asset have risen. Investing in B & G
Food could be of a benefit than the cost incurred, although
investors should review the interest rate of bond every day to
get full potential benefit from the investment. B&G Foods had a
rough couple of years and needs to take more aggressive
marketing tactics to outshine their competitors. Overall, it is an
excellent long term investment and can be expected to have
steady, albeit slow growth over the next 12 months.

12. References
Robinson, T., Henry, E., Pirie, W.,& Broihahn, M.A.
(2012).International Financial Statement
Analysis( 2 nd ed.). Hoboken, N.J.: John Wiley & Sons, Inc.
Drake, P., & Fabozzi, F.(2012). Analysis of financial statements
(3rd ed.). Hoboken, N.J.: John
Wiley & Sons, Inc.
Hawawini, G., & Viallet C.(2011). Finance for Executives:
Managing for Value Creation.
(4th ed.). New York, NY. Cengage Learning
Morningstar( 2019). B&G Foods Inc.Retrieved March 1, 2019,
from
https://www.morningstar.com/search?query=B%26G%20FOOD
Yahoo Finance( 2019). B&G Foods Inc.financials, key metrics,
charts, and ratios. Retrieved from on 6th December 2019
https://finance.yahoo.com/quote/BGS?p=BGS
Markets Inside (2019).B&G Foods Inc.; Corporate Bond.
Retrieved on December 6th
December 2019, from
https://markets.businessinsider.com/bonds/b_g_foods_incnewdl-
notes_201919-27-bond-2027-us05508wab19
Markets Inside (2019).B&G Foods Inc.; Corporate Bond.
Retrieved on December 6th
December 2019, from
https://markets.businessinsider.com/bonds/b_g_foods_incnewdl-
notes_201717-25-bond-2025-us05508rae62

13. Capital Asset Pricing Model - CAPM. (2018, September 19).
Retrieved 6th December 2019, from
https://www.investopedia.com/terms/c/capm.asp
CNBC. (2019). US10Y: U.S. 10 Year Treasury - Stock Quote
and News. Retrieved 6th December 2019, from
https://www.cnbc.com/quotes/?symbol=US10Y
Davis, M. (2018, February 13). Corporate Bond Basics: Learn to
Invest. Retrieved 6th December 2019, from
https://www.investopedia.com/financial-edge/0612/how-to-
invest-in-corporate-bonds.aspx
Debt to Asset Ratio - How to Calculate this Important Leverage
Ratio. (n.d.). Retrieved 6th December 2019 from
https://corporatefinanceinstitute.com/resources/knowledge/finan
ce/debt-to-asset-ratio/
Financial Concepts: Capital Asset Pricing Model (CAPM).
(2017, December 05). Retrieved March 4, 2019, from
https://www.investopedia.com/university/concepts/concepts8.as
p
Interest Coverage Ratio. (2017, November 30). Retrieved 6th
December 2019, from
https://www.investopedia.com/terms/i/interestcoverageratio.asp
Staff, M. F. (2016, March 06). What Is Earnings Per Share?
Retrieved 6th December 2019, from
https://www.fool.com/knowledge-center/earnings-per-share.aspx
Corporate Finance Institute( 2019). Sustainable Growth Rate -
Definition, Example, How to Calculate. (n.d.). Retrieved
December 6, 2019, from
https://corporatefinanceinstitute.com/resources/knowledge/finan
ce/sustainable-growth-rate/
What is the difference between stocks and bonds? |
AccountingCoach. (n.d.). Retrieved March 2, 2019, from
https://www.accountingcoach.com/blog/stocks-bonds
Zucchi, C. K. (2018, October 03). Why the 10-Year U.S.
Treasury Yield Matters. Retrieved March 2, 2019, from
https://www.investopedia.com/articles/investing/100814/why-

14. 10-year-us-treasury-rates-matter.asp
Reuters( 2019). B&G Foods Inc. Retrieved, on 6th December
2019, from
Guru Focus( 2019).B&G Food Inc.
https://www.gurufocus.com/stock/BGS/summary
Market ratio
B & GS Foods Price / Earnings ratio (P/E) Price / Book
Value Ratio (P/BV) Dividend Yield (DY) Dividend Payout
Book Value Per Share Dividend Per share PEG Ratio
11.08 2.12 6.54 0.73 13.65 1.89
2.0299999999999998 Hormel Foods Price / Earnings
ratio (P/E) Price / Book Value Ratio (P/BV) Dividend
Yield (DY) Dividend Payout Book Value Per Share
Dividend Per share PEG Ratio 23.34 4.13 1.72
0.4 10.56 0.75 2.61
Financial Leverage ratios
Debt to Asset Ratio 2018 2017 2016 2015 2014 0.54 0.62
0.56999999999999995 0.68 0.62 Debt to Equity Ratio
2018 2017 2016 2015 2014 1.82 2.52 2.2000000000000002
3.78 3.04 Interest Coverage 2018 2017 2016 2015 2014
1.51 2.61 3.47 3.37 3.05
Years
Ratios

15. Sheet1MAGDEPTH0.707.20.742.20.6413.90.3915.50.703.02.20
16.21.9814.40.645.71.226.10.209.11.6417.21.328.72.9517.90.90
12.31.767.41.017.01.2617.10.008.80.656.01.4619.11.2214.31.83
4.70.998.61.566.00.4014.61.284.90.8319.11.349.90.5416.11.254
.60.924.91.0016.10.7914.00.794.21.445.91.005.42.2415.62.5011
.12.2415.41.2516.41.494.90.848.11.427.51.0014.11.2511.11.421
6.01.355.50.937.30.403.11.396.0
Sheet2
Sheet3
Deliverable 6 - Analysis with Correlation and Regression
Competency
Determine and interpret the linear correlation coefficient, and
use linear regression to find a best fit line for a scatter plot of
the data and make predictions.
Scenario
According to the U.S. Geological Survey (USGS), the
probability of a magnitude 6.7 or greater earthquake in the
Greater Bay Area is 63%, about 2 out of 3, in the next 30 years.
In April 2008, scientists and engineers released a new
earthquake forecast for the State of California called the
Uniform California Earthquake Rupture Forecast (UCERF).
As a junior analyst at the USGS, you are tasked to determine
whether there is sufficient evidence to support the claim of a
linear correlation between the magnitudes and depths from the
earthquakes. Your deliverables will be a PowerPoint
presentation you will create summarizing your findings and an
excel document to show your work.
Concept being Studied
· Correlation and regression
· Creating scatterplots

16. · Constructing and interpreting a Hypothesis Test for
Correlation using r as the test statistic
You are given a spreadsheet that contains the following
information:
· Magnitude measured on the Richter scale
· Depth in km
Using the spreadsheet, you will answer the problems below in a
PowerPoint presentation.
What to Submit
The PowerPoint presentation should answer and explain the
following questions based on the spreadsheet provided above.
· Slide 1: Title slide
· Slide 2: Introduce your scenario and data set including the
variables provided.
· Slide 3: Construct a scatterplot of the two variables provided
in the spreadsheet. Include a description of what you see in the
scatterplot.
· Slide 4: Find the value of the linear correlation coefficient r
and the critical value of r using α = 0.05. Include an explanation
on how you found those values.
· Slide 5: Determine whether there is sufficient evidence to
support the claim of a linear correlation between the magnitudes
and the depths from the earthquakes. Explain.
· Slide 6: Find the regression equation. Let the predictor (x)
variable be the magnitude. Identify the slope and the y-intercept
within your regression equation.
· Slide 7: Is the equation a good model? Explain. What would
be the best predicted depth of an earthquake with a magnitude
of 2.0? Include the correct units.
· Slide 8: Conclude by recapping your ideas by summarizing the
information presented in context of the scenario.
Along with your PowerPoint presentation, you should include
your Excel document which shows all calculations.