Business Finance- PowerPoint

B & G Foods (BGS) Company

Student’s Name

Institutional Affiliation

1. Background and Industry of the company

B & G Foods (BGS) is an American holding food company headquartered in Parsippany-Toy Hills, New Jersey, in the United States. The company was created in 1889 to sell pickles, condiments, and relish. It has multiple subsidiary branches both in North and South America. Currently, the company manufactures, markets, and distributes various portfolios of shelf-stable and frozen foods both in North and South America. Besides, the company deals with a variety of foodstuffs, including vegetables and cereals. B & G Foods (BGS) operates in the Packaged Foods Industry, where there is a large firm with huge capital based. However, the company is among the top-performing companies in the industry, with approximately an annual revenue of $ 1.7 billion (NYSE, 2019).

2. Common size analysis

B & G Foods, Inc. is an international company operating mainly between two continents of North and South America. B & G Foods, Inc is a medium-sized company 2,590 employees comprising of both casuals and full-time employees. It is a fast-growing company and has been reporting a tremendous growth in its annual revenues. For instance, in 2018, the company reported yearly revenue of $1.7 billion (NYSE, 2019). The amount was relatives higher compared to the total revenues earned in the previous years.

B & G Food Inc, possess strong entrepreneurial skills that enable the management to run all organizational activities more efficiently. Despite the size of the company, the management of B & G Foods ensures proper time management to ensure the smooth running of operations. The top management also engages in strategic thinking to identify various ways that can help in improving the efficiency and effectiveness of different activities in different departments (NYSE, 2019).

The managerial system of B & G Foods is relatively advanced compared to other firms in the same industry. The management of the company smoothly facilitates running the routine activities of the company regardless of external threats to ensure that each department achieves that expected goals. The latter has helped in promoting the overall growth of the firm because most of organizational goals and objectives are met as anticipated (NYSE, 2019).

Financial ability is another factor that is considered in the determination of the size of a company. B & G Food Company has a stream of revenues from sales of its products. Frequently cash inflows increase the company's capital base that making it have enough finances to run all organizational activities. Sale of manufactured products is the primary source of funds for B & G Foods Company (NYSE, 2019). Statistically, B & G Food's sales volumes have been increasing annually, which increases its financial ability to expand its operation to different parts of the world.

The availability of labor is another factor that determines the size of a firm. The size and quality of work a company can be used to assess its overall size. On the same note, B & G Foods has relative significant numbers of employees comprising of both casual and full-time employees. Currently, the company has 2,590 employees at its headquarter site who perform different activities (NYSE, 2019). The number of the company's employees is much higher than the number of employees in the same industry, which indicates that B & G Foods is a medium-sized company.

The size s of the market the company sells its products is relatively large compared to market size served by other firms in the same industry. It sells its products both in the North and South American countries, including Mexico, Canada, and the United States, among other countries. The size of this market it serves is prominent due to high demands from customers. Since the company still targets only the North and South American countries but no other markets from oversea countries, it is a medium-sized company.

3. Trend analysis of B & G Foods Company

Trend analysis refers to the process analysis business information of a firm for an extended period to identify consistency in performance. There are vital factors that are considered while performing a company's trend analysis. The key factors that are always considered while performing trend analysis of a firm include gross profit, cost of labor, sales volume turnover, debts production levels, and marketing, among other factors.

B & G Foods' general performance has improved over the past five years. The main reason for such positive results is because of an increase in net sales of the company for five years. For instance, since 2014, the company's net sales have increased from $ 837.3 million to $ 958.9 million in 2015, progressively to $ 1.7 billion in 2018 (NYSE, 2019).

Besides, the company's expenses have also been fluctuating for the past five years. The variation in net expenditures is attributed to the change in organizational operation and the influence of both internal and external factors. For instance, in 2014, the net expenses of the company were $ 22,821, in 2015 the value increased to $ 52, 149 but later reduced to $ (69,401) in 2017 and in 2018 the value was $ 49, 842 (NYSE, 2019). The fluctuation is caused by various factors the management can slightly control the.

Additionally, the company's human resource management has improved in the last five years. The improvement is caused by the rise of organizational activities over the years. For example, in 2014, the company had approximately 1600 employees; however, the number has been increasing steadily from 1600 employees to a current number of 2,590 employees (NASDAQ, 2019).

In general, the company's size and performance has increased over the last five years. Its annual revenues have been growing steadily since 2014. Also, the company has adopted the use of advanced technology components to help in performing different organizational activities to achieve the company's targets.

4. Financial ratio analysis of B & G Foods Inc

Financial ration analysis involves assessing the performance of various ratios. In this section, the key ratios that will be analyzed include liquidity ratios, profitability ratios, operating performance ratios, and return on investment ratios.

1. Liquidity ratios

Ratios/ Year	2014	2015	2016	2017	2018
Current ratio	2.12	3.43	2.63	4.40	2.27
Quick ratio	0.97	1.11	1.29	1.91	0.72
Net-working capital ratio	2.98	3.71	2.18	2.52	1.82

Analysis

Liquidity ratios are used to evaluate the capacity of a business to services its short term obligations. Current ratios assist investors and creditors in understanding if the company can pay all its current liabilities. A relative higher current ratio is constructive for a company than a lower ratio. Since 2014, B & G Foods Inc.'s current ratio has been fluctuating, and its value is above 2.0 (NASDAQ, 2019). The values imply that the company is capable of serving its short term liabilities using its current assets.

Besides, the company's quick ratios from 2014 to 2018 are slightly more than zero. The figures infer that the company has been able to slight pay for its short-term responsibilities using its quick assets. (NASDAQ, 2019) For instance, in 2014 and 2018, its quick ratio values were 0.97 and 0.72, respectively. The values imply that the company could not meet its short-term obligations using its quick assets.

Lastly, B & G Foods Inc.'s net working capital is relatively higher for the five years. Higher positive values of the ratio infer that the company is capable of settling its current liabilities using its existing assets.

2. Profitability ratios

Ratios/ Year	2014	2015	2016	2017	2018
Gross Profit Margin	29.25%	30.02%	31.27%	26.79%	20.52%
Operating Profit Margin	13.68%	17.91%	18.44%	14.46%	19.93%
Net Profit Margin	4.83%	8.12%	7.94%	13.24%	10.17%

Analysis

A profitability ratio is metrics utilized to evaluate the capability of a firm to make revenues relative to its operating costs, retained earnings, assets, and shareholders' equity. According to the values of gross profit margin, the company is capable of generating revenues from the sale of its inventories. The figure mirrors the excellent performance of the company since its margin has been more than 20.0 % (NASDAQ, 2019).

On the other hand, the operating profit margin is an expression of the percentage of the total revenue made up of total operating income. From the results of the company's operating profit margin, the values illustrate that B & G Foods Inc. has been making slightly reasonable profits from 2014 to 2018 (NYSE, 2019).

Lastly, the net profit margin has been low for the last five. The values of the ratio for five years implies that the company's net profit has been small for five years. A less net profit is likely to affect the company's activities besides building future investments.

3. Return on Investment ratios

Ratios/ Year	2014	2015	2016	2017	2018
Earning Power ratio	29.25%	30.02%	31.27%	26.79%	20.52%
ROA	2.51%	3.64%	3.98%	6.71%	5.21%
ROE	11.37%	16.18%	15.40%	26.82%	20.16%

Typically, the return on investment ratios is utilized to measure the value of profits that a corporation from investing its assets or shareholders' equity. According to the figures in the table above, B & G Foods Inc. has been earning a relatively reasonable amount from investing its assets and shareholders' equity.

In general, B & G Foods Inc. is liquid because it has been able to use its current assets to meet all its short-term obligations. However, some ratios are slightly low, which shows that the company is at risk of failing to meet some of its commitments in case the values continue to decline (NASDAQ, 2019). As such, if the management wants to improve the company's performance, they should reduce operating expenses and increase long term investments.

5. Evaluation of B & G Foods Return on Equity

Return on Equity = (Net income/ Shareholders) x 100 %

2016

Net income = $ 0.11 billion

Shareholders’ equity = $ 0.79 billion

Return on Equity = ($ 0.11 billion/$ 0.79 billion) x 100 %

Return on Equity = 15.40 %

2017

Net income = $ 0.22 billion

Shareholders’ equity = $ 0.88 billion

Return on Equity = ($ 0.22 billion/$ 0.88 billion) x 100 %

Return on Equity = 26.82 %

2018

Net income = $ 0.17 billion

Shareholders’ equity = $ 0.90 billion

Return on Equity = ($ 0.17 billion/$ 0.90 billion) x 100 %

Return on Equity = 20.16 %

Explanation

B & G Foods Inc. has had an increase in ROE. Statistically, the company’s return on shareholders’ equity has been increasing progressively annually. For example, in 2016, the value was 15.40 %, while in the subsequent year, that value rose to 26.82%. The increase in the return on equity illustrates a good performance. However, in 2016, the company's return on equity slightly reduced to 15.40 %, which implies that the company generated less amount of revenues for its investment (NASDAQ, 2019). Usually, a decrease in return on equity reduces the interest of shareholders to invest more in the company. As such, it is prudent for the management to identify the best investments that can regularly increase return on shareholders' equity.

According to NASDAQ (2019), B & G Foods Inc.'s return on equity tremendously increased in 2017 from 15.40% to 26.82% the increase shows that there was a general improvement in performance in 2017. The percentage increase in return on equity was attributed to the rise in the company's revenues from the investment of shareholders' equity. Usually, ROE is used to assess the value of yields that a company from investing its shareholders' equity. Therefore, the increase in ROE indicates that B & G Foods Inc. generated a large amount of money from investing its shareholders' equity in various activities. As such, it is imperative for the management of B & G Foods Inc to identify the best investment to venture shareholders' equity to maximize the profitability of the firm. The primary cause of the changes in Return on Equity is the rise in net income of the business. Besides, according to the industry analysis, B & G Foods has reported a high return on equity compared to some of its competitors.

6. Recommendations

Statistically, B & G Foods Company's financial performance is average. Its annual revenues have increased over the past five years. The increase is attributed to excellent management skills and entrepreneurial skills that assist in enhancing organizational activities. For the company to realize better performance in the future, the management should consider the following recommendation:

i. The management should adopt the used of advanced technology in the production of its products to improve the quality of its products. In doing so, it will be able to increase its sales volume as well as increasing its competitive advantage in the market.

ii. The management should also pay more attention to empowering employees by providing a conducive working environment to motivate them to remain loyal and committed to their duties.

iii. The company needs to properly manage its annual expenses to increase its revenues in the future.

iv. There is a need for the management to manage the company's both current and fixed assets. In doing so, the company will be able to service its short-term obligations by its assets.

v. The board of management of B & G Foods Inc. should increase the company’s retained earnings and use it to invest in profitable investments to improve the profitability of the company.

vi. For the company to improve its liquidity, the management should shift from short-term obligations to long-term debts. In doing so, the firm will realize an increase in its quick and current ratios. As a result, B & G Foods will be able properly to manage its obligations; thus, it will enable the company to have better financial performance in the future.

vii. Lastly, B & G Foods should get rid of unproductive assets.

7. Reflection

Generally, the financial ratios are useful in a business set up because they help in assessing the performance of a company. Some of the ratios used to evaluate organizational performance include profitability ratios, liquidity ratios, and Return on Investment ratios. Profitability ratios are to assess the ability of a firm to generate revenues relative to its operating costs, retained earnings, assets, and shareholders' equity. Liquidity ratios used to determine the capacity of a firm to services its short term obligations. While Return on Investment ratios are utilized to measure the value of returns that a firm from investing its assets or shareholders' equity. Therefore, the management of B & G Foods Inc. should properly handle these ratios to evaluate the performance of the company appropriately. The latter will help to get rid of unproductive assets and operations to improve the company's performance in the future.

References

NYSE (2019). B&G Foods, Inc. (BGS). Accessed from https://finance.yahoo.com/quote/BGS?p=BGS&.tsrc=fin-srch

NASDAQ (2019). B&G Foods, Inc. (BGS). Financial performance. Accessed from

https://www.nasdaq.com/articles/wall-street-eats-bg-foods-steady-financial-growth-2012-08-24

NYSE (2019). B&G Foods, Inc. (BGS). Profitability ratios. Retrieved from https://www.nyse.com/quote/XNYS:BGS