The document analyzes the financial performance of a chocolate manufacturing company over three years from 2021-2019. Key points from the analysis include: - The company's liquidity ratios were below 1 in 2021, showing liquidity problems, though there was some improvement from 2020. It relies heavily on debt to manage liquidity. - Solvency ratios also indicate too much reliance on loans, with financial independence below benchmarks. Coverage of long-term debt by cash flow was only 12% in 2021. - Profitability metrics were mixed, with recovering net profit margin and returns in 2021 but high leverage increasing bankruptcy risk long-term if reliance on debt continues.

1. Financial
Analysis
Assignment
Marcela Bertolini Dalfré
Salha Mohamed
Ipek Bostanci
Victor-Vivian Pascaru

2. Company Description
French:
Cacao Barry
Belgian:
Callebout
1996
• Listed 1998 on the SIX Swiss Exchange (BARN)
• Largest Manufacturer of Chocolate & cacoa products – HQ Switherland
• Strategy
"Our clear focus is on two key target groups: global & local food manufacturers and
artisans."
• B2B _ except their Callets, can be found at some Belgian retailers.
1842 1850

6. Impact of Covid 19
• Sales volume down –1.3% in the first 9 months,
due to COVID-19 third quarter sales volume
down –14.3%
• Sales revenue of CHF 5.2 billion, up +0.4% in
local currencies (–4.4% in CHF)
• Signs of sales volume recovery in June, as
lockdowns are easing

7. LIQUIDITY NET WORKING CAPITAL
2021 2020 2019
-65.927 -119.116 -92.719
 Insufficient funds available to pay for its current liabilities
 May be in danger of bankruptcy
 To be more precise, it should be tracked on a trend line over time.

8. LIQUIDITY NET WORKING CAPITAL NEED
2021 2020 2019
-21.055 -114.845 123.216
Net Working Capital Need = (current assets – cash and marketable)
– (current liabilities – financial debts <1y)
 The biggest drain affecting the working capital requirement is payment delays.
 The inventory, debtors and creditors situation is very similar in all 3 years.
 There is a NWC need in 2019, due to high financial debts.

9. LIQUIDITY NET TREASURY
2021 2020 2019
-44.871 -4.272 -215.935
 Should be minimum 0
 Liquidity problem: Company use financial debt to manage liquidity gap
Net Treasury = Cash + marketable securities – financial debts < 1y
Net Treasury = Net Working Capital – NWC Need

10. LIQUIDITY COLLECTION PERIOD DEBTORS
Accounts receivable collection period
2021 2020 2019
33 30 33
Accounts receivable turnover = Sales / Account receivable
Collection period debtors = 365 / Accounts receivable turnover
 Between Q1 and Q2, we are with the better half, it means we don’t wait too long to receive
 The company wait less than the other debtors to pay.
 It is important tool in measuring liquidity.
Q1 Q2 Q3

11. LIQUIDITY DAYS INVENTORY OUTSTANDING
2021 2020 2019
12,04 13,61 13,77
Inventory Turnover = Cost of goods sold / Inventory
Days inventory outstanding = 365 / Inventory Turnover
 Indicates the efficiency of the company in selling its product.
 Should be close the industry average, it is not preferred to have very high Days inventory on hand.

12. LIQUIDITY GLOBAL IMPRESSION OF THE LIQUIDTY
 Liquidity ratios <1
 There is an improvement on 2021 but still risky
 Should boost liquidity with: increase sales, reduce overhead and operating costs, improve invoice
collection, sell unnecessary assets, watch inventory

13. SOLVENCY
FINANCIAL INDEPENDENCE RATIO
Indicates the proportion of owner’s fund to total fund invested in the business
2021 2020 2019
10,12 6,55 9,24
→ Lower than Q1, the smallest value for the branch is 21,54
→ A 30% ratio is considered acceptable
→ The company depends too much on their loans and doesn't have enough funds of themselves.

14. TIMES INTEREST EARNED RATIO
It measures how many times a company could pay its current interest payment with its available earnings.
2021 2020 2019
3,46 -0,14 1,16
→ We see a recovery from 2020
→ According to our research, this ratio should be higher than 2,5

15. COVERAGE OF LONG-TERM DEBT BY CASH FLOW (%)
2021 2020 2019
12,53 -3,32 5,37
→ Recover in 2021 but not enough to pay their long-term debts since the coverage of only 12% and
the number should be as high as possible.
This ratio measures how much cash is available to pay for long term debts

16. OVERALL ANALISYS ON THE SOLVENCY
• They don't have ideal solvency ratios, if we look for example the
independence ratio, they depend too much on loans and this can be
very risky.
• The best case in the 3 years for the coverage of long-term debts by
cash flow is only 12%, and this number should be as high as possible.

17. PROFITABILITY
NET PROFIT MARGIN = (REVENUE-COST)/REVENUE
Measure on the firm’s operating efficiency – how well it control costs.
→For 2020, their operating charges were high because they have increased their renumeration, while
the sales did not increase that much.
→For the last year, the net profit margin is close to Q2, meaning that the company works on the basis of
high turnover and low margins.
• 201
2021 2020 2019
2,27 -0,83 1,69

18. ASSET TURNOVER = SALES/TOTAL ASSETS
→In the retail sector, an asset turnover ratio of 2.5 or more could be considered good.
→The company has a stable ratio which is also above the industry’s average. The company is
managing its current assets well over the last 3 years.
2021 2020 2019
4,24 4,36 4,23
This ratio shows how much sales the company is generating for every euro of investiment in assets.

19. RETURN ON INVESTMENT (ROI)
→For the last year, it was higher than the industry average
→The average for the last 3 years is 2,97, which is in the middle between Q1 and Q2
2021 2020 2019
6,03 -0,38 3,19
It indicates the degree of efficiency which management has used the assets.

20. RETURN ON EQUITY
→In 2020, the value is so low because they had to use their own funds or could not get any return, which
mean that the company had losses in the period.
→Good recover in 2021.
2021 2020 2019
41,02 -45,57 3,79
Indicates how the stockholders fared during the year. True bottom-line measure of performance.

21. FINANCIAL LEVERAGE
2021 2020 2019
7,02 N.A. 1,49
The degree to which the business is utilizing borrowed money. The more debt financing a company uses,
the higher its financial leverage.
→ Negative leverage in 2020, ROA, and ROE are both negative.
→ In 2021: positive financial leverage.

22. OVERALL ANALISYS ON THE PROFITABILITY
• During these years they were profitable because of their leverage, but
they are at a high risk of bankruptcy because they are too dependent
on their loans.

23. 2 MAIN RISKS OF THE COMPANY
• Low liquidity and very high dependence on loans, which makes their
independence ratio very bad. It's too risky to have so little control
over the company.
• Having a negative NWC can also lead to bankruptcy in the future.