FINANACE ASSIGNMENT

Finance Assignment

Finance Assignment

Introduction

Retail Food Group (Australia) Limited often abbreviated to RFGA or RFG (ASX: RFG) is the franchiser and owner of the Donut King, Brumby's Bakeries, bb's Cafe and Michel's Patisserie brands, based in Southport, Queensland. Retail Food Group Limited was incorporated in 2003 to act as the ultimate holding company of the fast growing RFG group of entities.

Time-Series Analysis of Retail Food Group Limited

Time-series analysis, a mathematical statistic helps to make financial-forecasts by measuring the financial-performance of Retail Food Group Limited over time (from one year to another). We analyse the group's Income-Statement, Cash-Flow Statement and Balance-Sheet for the same, to later develop an applicable ratio-analysis.

Income-Statement Analysis

A first at the income statement and it is clearly evident that Retail Food Group Limited currently lives in its glory-period. Starting in 2005 through 2007, Retail Food Group Limited's gross-profit grew 37% from $4630million in 2005 to $5400million in 2006 and $7700million in 2007 while it's operating-income increased by 50% from $1400miilion in 2005 to $2400million in 2006 and to $3100million in 2007. Net-income also improved considerable by 70% from $700million in 2005 to $1130million in 2006 to $2100million in 2007.



Graph 1: Retail Food Group Limited's Gross-Profit Growth in $1000millions



Graph 2: Retail Food Group Limited's Operating-Income Growth in $1000millions



Graph 3: Retail Food Group Limited's Net-Income Growth in $1000millions



Graph 4: Retail Food Group Limited's Interest-Expense/Income Growth in $1000millions



Graph 5: Retail Food Group Limited's Operating-Expenses Growth in $1000millions

On deeper insight, it's noticed that both operating-expenses interest and taxes has significantly grown. This supports the idea that Retail Food Group Limited focuses its strategy around growth. Operating-expenses grew 37% from nearly $2700million in 2005 to $3070million in 2006 to $4600miilion in 2007. A possible reason for this can be derived from increasing depreciation, witnessed in the Balance-sheet.



Graph 6: Retail Food Group Limited's Tax-Payment Growth in $1000millions

Furthermore, interest-expenses increased by 49% from $8million in 2005 to $15million in 2006 to $16million in 2007. Tax also increased by 44% from $911million to $1600million in 2006 and finally to $1800million in 2007.

The income statement analysis supports the idea of continuous growth in.

Cash-Flow Analysis



Graph 7: Retail Food Group Limited's Total Cash-Flow from Operating-Activities in $1000millions

Changes in cash may generate a pessimistic-picture. In 2007, Retail Food Group Limited did not generate a significant amount of cash . However, it earned $2,381million from its operations. The cash-flows from operations increased by 46% from $1,212million in 2005, to $1,626million in 2006 and to $2,38million1 in 2007.



Graph 8: Retail Food Group Limited's Capital-Expenditure in $1000millions

The group used $1,195million on investing-activities and paid $1,192million in financing cash-flows mainly for retirement of stocks and debts. These two figures have increased through 3 years.



Graph 9: Retail Food Group Limited's Total Cash from Investment-Activities in $1000millions

Cash used in investing-activities increased by 13% from 2005 to 2007. However, in 2006 major-assets were disposed which lowered the total figure of cash generated from investment activities to $62miilion. This reflects concentration on investment. Cash used in financing-activities also increased ...