MANAGEMENT ACCOUNTING

Management Accounting

Management Accounting

Overview

The financial performance of Heartland Food Corporation shows that the major portion of the company's assets is comprised of liabilities, which is not a good indication for the company as the company's short term and the long term debts are increasing. However, the company's equity seems good or satisfactory but it should be high as compare to the liabilities. In addition to this, the total assets per share and net assets per share reflect that the Premier Foods plc's assets structure is in good shape which shows that the company can meet its financial obligations that is liabilities is some sort of financial loss occur. In addition to this, past studies states that the financial analysis are to determine whether there are liquidity problems, the study of profitability determines the evolution of the company and return on invested capital, management and analysis of related variables involved in the short term financing, obtaining rotations and time of collection and payment means.

Ratios Analysis of Premier Foods PLC

As it is known that the most important factors in the well being of a business, is to see that it operates at a profit and to organize it in order to be able to meet its liabilities at appropriate times. If either of these points is not covered efficiently it could mean that the business might have to be closed down. This is the reason why we choose to calculate profitability and liquidity ratios which are the most important and reliable guides. In addition, various past studies states that we decide to calculate activity ratios in order to see how efficiently the company like Heartland Food Corporation has managed its debt management ratios, asset management ratios and per share values to commend upon the Premier Foods plc's sources of finance and whether a risk arises from increased debt.

Profitability Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

ROA % (Net)

(2.76)

0.65

(10.81)

(2.29)

4.11

ROE % (Net)

(9.67)

2.45

(36.1)

(6.59)

21.26

ROI % (Operating)

3.94

6.73

(1.37)

3.61

11.63

EBITDA Margin %

(4.03)

1.75

(15.51)

(3.27)

6.06

Calculated Tax Rate %

EBT<0

14.56

EBT<0

EBT<0

18.93

Liquidity Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

Quick Ratio

0.33

0.4

0.33

0.47

0.54

Current Ratio

0.9

0.67

0.71

0.8

0.92

Net Current Assets % TA

(2.71)

(7.68)

(7.57)

(3.77)

(1.77)

Debt Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

LT Debt to Equity

1.1

1.16

1.65

1.05

1.12

Total Debt to Equity

1.3

1.3

1.82

1.12

1.41

Interest Coverage

12.16

23.06

-

9.94

12.75

Asset Management

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

Total Asset Turnover

0.68

0.68

0.63

0.81

0.84

Receivables Turnover

7.44

8.29

8.03

8.99

6.25

Inventory Turnover

9.68

8.23

8.15

9.56

6.61

Accounts Payable Turnover

6.21

6.51

-

-

-

Accrued Expenses Turnover

59.98

38.57

59.48

270.8

336.63

Property Plant & Equip Turnover

4.15

4.18

4.17

5.21

4.25

Cash & Equivalents Turnover

228.92

88.7

80.51

141.8

88.02

Per Share

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

Cash Flow per Share

0.08

0.03

0.1

0.35

0.11

Book Value per Share

0.41

0.44

1.17

1.73

0.93

Profitability Ratios

The profitability of Premier Foods is unsatisfactory as the trends of the company from 2007 to 2011 shows that the company has been losing its profits. This statement can be endorsed by the evaluation of the profitability ratios. The return on assets of Premier Foods from 2007 to 2011 is reflecting that profitability structure of the company declined from 4.11 to -2.76. In addition to this, return on equity also shows decline over the years. As the return, on equity was 21.26 in 2007, and -9.67 is in 2011. In addition to this, return on investment and operating profit margin is also showing the same decrease in the profitability structure of Premier Foods. Furthermore, the operating profit margin shows decline over the years after the absorption of the one off payment of Safeway integration cost conversion, this; however, turned around in 2007 as the ...