Financial Information for Decision Making (ACC10007)

Group Assignment – Bega Group Limited

Semester 2, 2023

Name of tutor: - Dina Lahanis

Time and day of tutorial: - 12:30-14:30, Monday

Group number: - MON1230_2

Student Name Student I. D

Pryavrat Garg 104503244
Somil Verma 104511522
Yash Sharma 104694290
Babanpreet Singh 104524151

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items
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visual form, including electronic data and oral presentations. Plagiarism occurs
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Signatures:
Pryavrat Garg
Somil Verma
Yash Sharma
Babanpreet Singh

Group Contribution Table

Group Member Level of Contribution (0- Comments
Name 100%)

Pryavrat Garg 100% Good

Somil Verma 100% Good
Yash Sharma 100% Good
Babanpreet Singh 100% Good

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 Table of Contents
S.No
Item Page Number
.
1. Executive Summary 4
2. Company and Industry Background 4
3. Ratio Calculations and Analysis and Interpretation of
6
Financial Ratios
4. Analysis and Interpretation of Cash Flow Statements 21
5. Assessment of the other relevant information 23
6. Summary and Conclusion 23
7. Recommendations 24
8. References 25

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 Executive Summary for Bega Cheese Limited’s

For Bega Cheese Limited's shareholders, this financial ratio analysis report has been created.
The goal of this report is to use the profitability, efficiency, liquidity, and financial gearing
statistics to shed light on the company's performance between 2021 and 2023.
Certain tendencies need to be reassessed and changed for the business to continue growing
and succeeding, according to an analysis of the business's performance and a review of the
financial statements from the years 2021 to 2023.
Almost all Australian dairy enterprises' trading has suffered because of the worldwide crisis
in dairy commodities that began in 2021 and continued into subsequent years. Bega had the
good fortune to recover from poor results and losses in 2023.
Following analysis of the data, numerous troubling trends that need correction were
identified, and the following suggestions have been made:
• Examine the accounts receivable settlement term and try to shorten the period before money
must be reimbursed so that there are always more assets in the bank.
• As the inventory turnover period has decreased over time, which suggests that consumers
are buying more than was created in prior years, increase the amount of inventory generated
in accordance with what is in high demand.
• Reduce the company's borrowings and liabilities to ensure that it will be able to pay off
obligations in the event of a market downturn was to go another crisis.

Company and Industry Background

Australia's largest company, Bega Cheese Limited, specialises in making cheese.

This report's objective is to assess the annual reports from June 30, 2021, to June 30, 2023,
considering any changes to the business's profitability, efficiency, liquidity, and financial
stability. Any concerns that are present or could arise will be found using these reports, and
remedies will be explored.
This repot was created to identify any existing or future potential issues that have or may
arise within the Bega cheese limited.
This report was created to identify any existing or future potential issues that have or may
arise within the Bega Cheese Limited. This report will be a mixture of different ratio analysis
including profitability, efficiency, liquidity, and gearing ratios, to determine the course of
action Bega Cheese Limited is required to take in reaction to the following 3-year period. The

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report is set out in different sections including ratio analysis, figures and calculations that are
included and found in the appendices. Bega Cheese Limited started off in 1899, when their
first butter factory was established in a small rural town called Bega, New South Wales,
Australia. The factory was officially opened in 1900 and since then has expanded to include
different dairy products, this report however is focused solely on Bega Cheese Limited. The
company has grown exponentially since 1998 from employing merely 80 people to 500
people within a small timeframe of 3 years; and now has currently 1,700 under their
employment.
Bega Cheese is classified as an agriculture cooperative (also known as farmer’s co-op) and is
owned by their dairy suppliers. Since 19th August 2011 it has been listed on the Australian
Securities Exchange as a public listed company and is owned by shareholders. It is known as
an Australian made product that is aimed at the domestic market and within the past financial
year, Bega has helped the Australian economy by selling approximately $113 million worth
of exports during the 2017 Financial year. Bega Cheese operates within the dairy industry,
and currently holds “15.7% of the Australian retail cheese market”. (Wikipedia 2018) They
provide products to the retail and food markets within Australian and overseas. The dairy
industry is one of Australia’s most important agricultural industries, generating up to $13.7
billion and employing approximately 38,000 people – either through dairy farms or
manufacturing. Exports are valued to around $2.7 billion a year and 40% of national milk
production. The main countries Australia export to are Japan, China, South East Asia and the
Middle East.
Since being listed, Bega Cheese has obtained 25% stake of Capital Chilled Foods (Australia)
Pty Ltd, is distributed and advertised by New Zealand dairy giant Fonterra under a Product
Supply agreement that was put in place since 2001 but signed on 15th November 2012. With
the most recent and extensive expansion for Bega Cheese was on 19th January 2017, when
Bega Cheese agreed to purchase most of US food giant Mondelez International’s Australia
and New Zealand grocery and cheese business for $460 million. This deal saw that Vegemite,
Bonox, Dairylea, Snack bouts and Kraft branded cheese & peanut butter return under
Australian ownership.
Bega produces several different products, however under their Cheese section, they specialise
in cheddars, mozzarella, and other cheese products. Bega Cheese also produce milk
powders/infant formulas/Whey protein products. The following are Bega Bio nutrients,
Bellamy’s Australia Limited and Blackmores.
The major competitors for Bega Cheese are Fonterra Co-operative Group Limited, Devondale
Murray Goulburn Co-operative Co Limited, Lion National Foods (now known as Lions Pty
Ltd), Warrnambool Cheese and Butter Factory Company Holdings Limited and newcomer to
the Australian market Saputo Inc. New competitors to Bega Cheese are Bellamy’s Organic,
Bemore (partnered with Blackmores) and a2 Milk Company.

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 Ratio Calculations and Analysis and Interpretation
of Financial Ratios

Profitability ratio
a) Return on equity: - Net Profit After Tax /Average Shareholders’ Equity *100

2021: (72.2M/1260.7) *100=5.72%

2022: (24.2.M/1262.4) *100=1.92%
2023: (-229.9/1003.7) *100=-22.91%

2021-2022 2022-2023
Increase/Decrease 5.72%to1.92% 1.92%to (-22.87%)
= -3.8% = -24.79%

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 Chart Title
0
5.72%to1.92% 1.92%to (-22.87%)
2021-2022 2022-2023
-0.05

-0.1

-0.15

-0.2

-0.25

-0.3

The percentage fell from 5.72% to 1.92% between 2021 and 2022, representing a 3.8% fall.
The percentage did, however, considerably decline from 2022 to 2023, going from 1.92% to -
22.91%, a fall of 24.79%. Although there were decreases in both periods, the second year's
fall was noticeably larger, which made the performance poorer.

B) Return in assets: - Net Profit Before Tax /Average Total Assets*100

2021: (72.2M/2486.1) *100=2.90%
2022: (24.2M/2358.8) *100=1.03%
2023: (-229.9/2153.1) *100 =-10.68%

2021-2022 2022-2023
Increase/Decrease 2.90%To1.03% 1.03%to-10.68%
= 1.87% = 11.71%

Chart Title
0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
2.90%To1.03% 1.03%to-10.68%
2021-2022 2022-2023

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These ROA trends suggest a decline in the company's profitability and asset efficiency, with
the 2022-2023 period being particularly challenging. Further analysis is needed to understand
the underlying reasons for these changes and to formulate strategies to improve the
company's financial performance.

C) Gross Profit Margin: - gross profit/revenue *100

2021: (465.2M/2073.4) *100=22.45%

2022: (689.4/3009.9) *100=22.89%

2023: (656.4/3376) *100=19.47%

2021-2022 2022-2023
Increase/Decrease 22.45%to22.89% 22.89%to19.47%

=0.44% = -3.42%

Chart Title
0.0044

22.45%to22.89% 22.89%to19.47%
2021-2022 2022-2023

-0.0342

Series1 Series2

The gross profit margin climbed from 22.45% to 22.89% between 2021 and 2022,
demonstrating the company's improved ability to turn a profit from its sales. It demonstrates a
promising pattern where the business was successful in increasing its profitability throughout
this time. However, the gross profit margin dropped from 22.89% to 19.47% between 2022
and 2023, indicating a drop in profitability. This shows that throughout this time, the
company's capacity to convert income into profit declined. The increase in gross profit
margin from 2021 to 2022 is therefore preferable to the drop from 2022 to 2023 when
comparing the two periods since it demonstrates a good trend in profitability, whereas the
later period shows a loss in profitability.

D) Net Profit Margin: - net profit before interest tax/sale *100%

2021: (72.2M/2073.4) *100=3.48%

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 2022: (24.2M/3009.9) *100=0.80%

2023: (-229.9M/3376) *100=-6.82%

2021-2022 2022-2023
Increase/Decrease 3.48%to0.80% 0.80%to-6.82%

-2.68% 7.62%

Chart Title
0.1

0.08

0.06

0.04

0.02

0
3.48%to0.80% 0.80%to-6.82%
-0.02 2021-2022 2022-2023

-0.04

Series1 Series2

In contrast, the reduction in profit margin from 2022 to 2023 was more severe and had a
bigger negative percentage change than the decline from 2021 to 2022. This shows that the
latter period's financial performance declined, making the first year's profit margin
significantly greater.

E) Cash Flow to Sales = (Net Cash Flow from Operating Activities / Revenue) x 100*

*The revenue is being assumed to be half because of 50% credit purchase

2021: (1148.1/2073.4) *100=55.34%

2022: (1663.15/3009.9) *100 =55.29%

2023: (1696.2/3376) *100 = 50.31%

2021-2022 2022-2023
55.34to55.29 55.29to50.31

=0.05% =4.98%

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 Chart Title
0.06

0.05

0.04

0.03

0.02

0.01

0
55.34to55.29 55.29to50.31
2021-2022 2022-2023

Series1 Series2

Profit margin decreased in both times, although the second one from 2022 to 2023 showed a
more pronounced reduction. This means that in terms of preserving profit margins, the first
year (2021-2022) will have somewhat better financial results than the second year (2022-
2023).

F) Asset Turnover = Revenue / Total Assets

2021 :2073.4 / 24861 = 0.83

2022: 3,009.9 / 2,358.8 = 1.27

2023: 3,376.0 / 2,153.1 = 1.57

2021-2022 2022-2023
Increase/decrease 0.83to1.27 1.27to1.57

=0.44% =.030%

Chart Title
0.005
0.0045
0.004
0.0035
0.003
0.0025
0.002
0.0015
0.001
0.0005
0
0.83to1.27 1.27to1.57
2021-2022 2022-2023

Series1 Series2

10

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Liquidity Ratio

A) Current Ratio = Current Assets / Current Liabilities

2021: 833.4 /684.9 = 1.21

2022: 730.3 / 606.0 = 1.20

2023: 832.2 / 678.6 = 1.22

2021-2022 2022-2023
Increase/decrease 1.21to1.20 1.20to1.22

= -0.01 = -0.02

Chart Title
0
1.21to1.20 1.20to1.22
2021-2022 2022-2023
-0.005

-0.01

-0.015

-0.02

-0.025

The ratio changed only slightly throughout both times. Both the first and second periods
(2021–2022) witnessed very tiny decreases and very slight increases, respectively. The ratio
changed very little overall between the two years.

B) Quick Ratio = (Current Assets - Inventories) / Current Liabilities

2021: (833.4-345) /684.9 = 0.72

2022: (730.3 - 317.6) / 606.0 = 0.21

2023: (832.2 - 428.7) / 678.6 = 0.22

2021-2022 2022-2023
Increase/decrease 0.72to0.21 0.21to.22

11

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 = -0.51 0.01

Chart Title
0.1

0
0.72to0.21 0.21to.22
-0.1

-0.2

-0.3

-0.4

-0.5

-0.6

Series1 Series2

It's vital to remember that the Cash Flow Ratio showed a considerable decline in the first
period (2021–2022) but only a modest increase in the second period (2022–2023), and the
numbers stayed quite close to each other. This shows that the business had difficulties
managing its cash flow in the first year but made some progress in the second year.

C) Cash Flow Ratio: (Net Cash Flow from Operating Activities/Current Liabilities)
x100*

2021: 111.4/684.9 = 0.16

2022 (158.2 / 678.6) = 2.29%

2023: (8.2 / 678.6) = 1.21%

2021-2022 2022-2023
Increase/decrease 0.16to2.29 2.39to1.21

2.13% =1.18%

12

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 0.025

0.02

0.015

0.01

0.005

0
0.16to2.29 2.39to1.21
2021-2022 2022-2023

Series1 Series2

The capacity to meet current liabilities with operational cash flow is indicated by a greater
Cash Flow Ratio, which is significant information. This ratio may indicate a decrease in the
company's capacity to pay its short-term commitments with operational cash flow if it shows
a downward trend from 2022 to 2023. The precise ramifications, meanwhile, would depend
on the situation and the state of the business's overall finances.

Asset Efficiency ratio

A) Days in inventory = (Average Inventory / Cost of Goods Sold) x 365days

Average Inventory = (opening inventory + closing inventory) /2

2021: [(257.4+345/2)/1608.2] *365=78.83 days

2022: [(317.6 + 428.7/ 2)/2320.5] *365 = 58.59days

2023: [(317.6 + 428.7//2)/2719.6] *365 = 50.05days

2021-2022 2022-2023
Increase/decrease 78.83to58.59 58.59to50.05

20.44days -8.54days

An improvement in the company's inventory management practises can result in cost savings
and increased cash flow, hence a decline in the average inventory turnover days is typically
seen favourably. These patterns imply that the business has been focusing on improving its
inventory control.

B) Days in Debtors = (Trade and Other Receivables / Revenue) * 365

2021: (348.9/2073.4) *365 = 61.39days

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 2022: (274.7 / 3,009.9) * 365 ≈ 33.26 days

2023: (306.1 / 3,376.0) * 365 ≈ 33.10 days

2021-2022 2022-2023
61.39to33.26 33.26to33.10

= -28.13 = -0.16

2022-2023
0 0
= -28.13
-0.02

-0.04

-0.06

-0.08

-0.1

-0.12

-0.14

-0.16 -0.16

-0.18

The difference between 2021 and 2022 was far better, falling from 61.39 days to 33.26 days.
This may indicate that the business was able to collect receivables more swiftly in 2022 than
it did in 2021, which is good for cash flow and liquidity. There was a modest improvement
from 2022 and 2023, with the Days in Debtors falling from 33.26 days to 33.10 days. This
suggests that in 2023, accounts receivable management will continue to be effective. The
declining trend in Days in Debtors is encouraging since it implies that the business is
collecting consumer payments more successfully, which can boost cash flow and lower the
likelihood of bad debts.

C) Activity Cycle = Days in Inventory + Days in Debtors

2021: 78.83+61.39 =140.22 days

2022: 58.59 + 33.26 ≈ 91.85 days

2023: 50.08 + 33.10 ≈ 83.18 days

2021-2022 2022to2023
140.22to91.85 91.85to83.18

= -48.37 = -8.67

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 Chart Title
0
140.22to91.85 91.85to83.18
2021-2022 2022to2023
-10

-20

-30

-40

-50

-60

Series1 Series2

There was a noticeable improvement between 2021 and 2022, with the Activity Cycle falling
from 140.22 days to 91.85 days. This suggests that in 2022, the business was able to handle
its inventory and accounts receivable more effectively. The improvement persisted in 2022
and 2023, with the Activity Cycle falling from 91.85 days to 83.18 days. This shows that
inventory and accounts receivable management in 2023 should be further optimised.
Positively, the Activity Cycle's declining trend shows that the business has made progress in
managing its working capital and minimising the time it takes to turn over inventories and
receivables into cash. Better cash flow and liquidity may result from this.

Capital Structure (Solvency)

A) Debt Ratio = (Total Liabilities / Total Assets) * 100

2021: (1225.4/2486.1) *100% =49.26%

2022: (1,096.4 / 2,358.8) * 100% ≈ 46.47%

2023: (1,149.4 / 2,153.1) * 100% ≈ 53.42%

2021-2022 2022-2023
49.26%to46.47% 46.47%to53.42%

= -2.79 =6.95

15

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 Chart Title
8

0
49.26%to46.47% 46.47%to53.42%
2021-2022 2022-2023
-2

-4

Series1 Series2

The Debt Ratio dropped from 49.26% to 46.47% between 2021 and 2022. This suggests
that the company's reliance on debt as a percentage of its total assets decreased in 2022,
which is often an indication of financial stability. But the Debt Ratio grew from 2022 to
2023 to 53.42%, which indicates that the corporation expanded its usage of debt relative
to its total assets in 2023. This growth may have been a deliberate move, but it also
suggests more financial leverage. While the increase from 2022 to 2023 indicates that the
firm may have taken on additional debt, maybe for investment or expansion, the shift in
the debt ratio from 2021 to 2022 indicates improved financial health. It's crucial for the
company to carefully manage its debt levels to maintain financial stability.

B) Debt to Equity Ratio = Total Liabilities / Shareholders' Equity

2021 = 1225.4 / 1260.7 = 0.97

2022 = 1,096.4 / 1,262.4 ≈ 0.87

2023 = 1,149.4 / 1,003.7 ≈ 1.15

2021-2022 2022-2023
0.97to0.87 0.87to1.15

= - 0.10 = 0.28

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 Chart Title
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
0.97to0.87 0.87to1.15
-0.05 2021-2022 2022-2023
-0.1
-0.15

Series1 Series2

The Debt-to-Equity Ratio dropped from 0.97 in 2021 to 0.87 in 2022. The corporation
may have decreased its financial leverage in 2022, as seen by the drop, which also shows
a lower amount of debt in relation to equity. However, the Debt-to-Equity Ratio grew to
around 1.15 in 2023 from 2022 to 2023. This suggests that the business used debt more
frequently than equity in 2023, maybe to finance investments or expansion. While the
increase from 2022 to 2023 reflects a greater reliance on debt for financing, the move
from 2021 to 2022 suggests a reduction in financial risk and enhanced financial stability.
The business must control its debt levels in a way that is consistent with its overall
financial plan and risk tolerance.

C) Equity Ratio = Shareholders' Equity / Total Assets

2021= 1260.7/2486.1 = 0.54

2022 = 1,262.4 / 2,358.8 ≈ 0.53

2023 = 1,003.7 / 2,153.1 ≈ 0.47

2021-2022 2022-2023
0.54to0.53 0.53 to0.47

= -0.01 = -0.06

17

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 Chart Title
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
0.97to0.87 0.87to1.15
-0.05 2021-2022 2022-2023
-0.1
-0.15

Series1 Series2

The Equity Ratio showed a modest decline from 0.54 to 0.53 from 2021 to 2022. This
suggests that in 2022, a significantly lower percentage of the company's assets were
financed by equity. The equity ratio fell even further between 2022 and 2023, from
0.53 to 0.47. This implies that in 2023, an even smaller fraction of assets was financed
by equity. The firm has been depending less on equity funding for its assets, which
may be attributed to rising debt financing, as shown in the Debt-to-Equity Ratio,
according to the declining trend in the equity ratio. The effects of this trend on
leverage and financial risk may be significant. To preserve financial stability, the
business must carefully manage its capital structure.

D) Debt Coverage Ratio = (Net Cash from Operating Activities / Total Debt)

2021 = (111.4/1225.4) =0.09

2022 = (158.2 / 308.5) ≈ 0.51

2023 = (8.2 / 269.0) ≈ 0.03

2021-2022 2022-2023
0.09to0.51 0.51to0.03

= 0.42 = -0.48

18

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 Chart Title
0.6

0.4

0.2

0
0.09to0.51 0.51to0.03
2021-2022 2022-2023
-0.2

-0.4

-0.6

Series1 Series2

The Debt Coverage Ratio improved significantly between 2021 and 2022, rising from
0.09 to 0.51 percent. This shows that in 2022, the company's capacity to pay down its
debt using nett cash generated by operational operations greatly increased. However,
the Debt Coverage Ratio dropped from 0.51 to 0.03 between 2022 and 2023. It
appears from this that in 2023, the company's capacity to pay off its debt using
operating cash flow deteriorated. The improvement from 2021 to 2022 demonstrates
the company's better financial health and ability to service its debt, but the fall from
2022 to 2023 raises questions about the company's capacity to service its debt in 2023
using operational cash flow. To preserve financial stability, the business must keep an
eye on and manage its debt levels and cash flow.

E) Interest Coverage Ratio = (Net Cash Flow from Operating Activities / Interest
Expense)

2021: (97.4+10.4)/10.4=10.75

2022: (33.8+12.5)/12.25 = 3.70

2023: (-256.8+24.1)/24.1= -9.65

2021-2022 2022-2023
10.75to3.70 3.70to-9.65

=-7.05 =13.35

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 Chart Title
15

10

0
10.75to3.70 3.70to-9.65
2021-2022 2022-2023
-5

-10

Series1 Series2

The Interest Coverage Ratio dropped from 10.75 in 2021 to 3.70 in 2022. This suggests
that operational cash flow will be less able to pay interest costs in 2022 than it would be
in 2021.The Interest Coverage Ratio turned negative in 2023 and dropped to -9.65,
indicating a sharp reduction in the company's ability to pay its interest costs out of
operational cash flow. Concerns regarding the company's financial health and capacity to
pay its interest commitments arise when the interest coverage ratio is negative. Red flags
that point to impending financial hardship include the sharp decline in the Interest
Coverage Ratio from 2021 to 2022 and the negative ratio in 2023. To make sure it can
pay its interest obligations and keep its finances stable, the corporation must solve these
challenges.

Analysis and Interpretation of Cash Flow

Statements
We can learn more about the financial performance and cash management of the firm for
the years 2021, 2022, and 2023 by examining the cash flow statements for Bega Cheese
Limited.

Operating cash flow

1) Revenue Growth: From 2021 to 2023, Bega's client revenues climbed from
$1,691.6 million to $2,221.7 million. The company's primary business activities
have been growing, according to the significant revenue increase.

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 2) Operating Effectiveness: Payments to suppliers and workers grew in spite of the
revenue growth. The fact that this rise is comparable to the growth in income,
however, shows that the organization's cost management is generally steady.
3) Trade Receivables Facility: The decline in nett payments to the Trade Receivables
Facility from -$35.4 million in 2021 to -$12.7 million in 2023 raises the possibility
that Bega has increased the efficiency of its collection efforts or gotten better
financing conditions.
4) Interest and Taxes: Bega was able to lower the $11.3 million in 2021 interest and tax
payments to $10.5 million in 2023. This might be a result of decreased debt loads or
advantageous interest rates, which would save money.
5) Overall Operating Cash Flow: In 2023, operating activities' net cash inflow dropped
from $138.0 million in 2021 to $111.4 million. Although this decline may appear to
be a bad trend, it is primarily the result of greater corporate expenditures and
acquisitions.

Investing cash flow

1) Bega considerably cut back on their capital investment in 2023, spending $22.2
million as opposed to $42.8 million in 2021. This can mean that substantial capital
expenditure is not the main priority, but rather asset optimisation.
2) Acquisition of Subsidiaries: In 2023, Bega paid a significant sum for the purchase of
subsidiaries, causing a sizable cash outflow. This shows that Bega is strategically
extending its business through acquisitions to spur growth.
3) Nett Proceeds from Sales: In 2023, Bega made money from selling its property, plant,
and equipment, signalling an asset sale. This might be a tactic used to simplify
processes and concentrate on key company operations.

Financing cash flow

1) Borrowings and Share Issuance: In 2023, Bega raised a large sum of money through
borrowings and the sale of shares. This influx of money shows a desire to obtain
resources for a range of goals, including investments, purchases, or debt reduction.
2) Repayment of Borrowings: The corporation has been paying off its debt by making
repayments on time. The stability of the company's finances is shown by this.
3) Dividends: Bega regularly distributes dividends to its shareholders, which is a
standard practise for established businesses.

Overall Cash Position: From $22.9 million in 2021 to $87.2 million in 2023, Bega's cash and
cash equivalents expanded dramatically. This shows that the business has properly controlled
its cash flow despite substantial expenditures and acquisitions.

In conclusion, Bega Cheese Limited has had significant revenue growth, effective cost
control, and a strategic focus on mergers and acquisitions. A robust financial position, as seen
by the growth in cash and cash equivalents, should support the company's long-term growth
plans. The company's development and investment plans, which are crucial for its long-term
viability, look to be in line with the changes in cash flows.

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 Assessment of other relevant information

1) Market developments: It's critical to consider more general industry trends, including
alterations in customer tastes, trends in health and wellness, and the effects of
variations in the global dairy market on Bega's performance. However, the dairy
sector has been placing more and more emphasis on environmental issues and
sustainability. It is important to evaluate Bega's sourcing policies, waste management
techniques, and environmental practises.
2) Economic Situation: Operating expenses, pricing policies, and Bega's competitiveness
on a worldwide scale can be impacted by macroeconomic variables including
inflation, interest rates, and currency rates. Examine Bega's ESG reports to see how
committed it is to ethical and sustainable business practises. Insights into the
company's non-financial performance may be gained via ESG disclosures.
3) Examine consumer trends in sustainable packaging, plant-based substitutes, and
health and wellbeing, and determine how Bega adapts to these shifting tastes.
4) Analyse the competitive environment, considering the actions and monetary results of
the main rivals in the dairy and food sectors.
5) Environmental Impact: It is critical to evaluate Bega's environmental performance,
including initiatives to cut glasshouse gas emissions, water use, and waste production.
Additionally, think about any environmental sustainability goals the corporation may
have made.
6) Evaluate Bega's corporate social responsibility initiatives, including community
involvement, assistance for nearby dairy producers, and ethical hiring procedures.
7) Analyse the competitive environment, considering the actions and monetary results of
the main rivals in the dairy and food sectors.
8) If Bega participates in philanthropic endeavours, it's critical to consider how these
actions will affect its standing in the community, its relationships with other
organisations, and any potential tax advantages.
9) Think about the probable effects on Bega's supply chain, the demand for dairy
products, and international commerce of global occurrences like the COVID-19
pandemic, trade disputes, or geopolitical developments.
10) A company's strategic direction and corporate governance may be significantly
impacted by changes in leadership, including changes to the board of directors or the
hiring of a new CEO.

Summary and Conclusion

Over the years 2021 to 2023, Bega Cheese Limited's financial performance underwent
changes. Despite revenue growth and efficient cost control, profitability, liquidity, and
debt levels remain issues. The profitability statistics of the corporation, including
Return on Equity and Nett Profit Margin, have significantly decreased in 2023. While
the Cash Flow Ratio decreased, other liquidity ratios including the Current and Quick
Ratios remained mostly unchanged, which might influence the company's capacity to
pay short-term commitments. The asset efficiency ratios, such as Days in Inventory
and Days in Debtors, however, increased, pointing to better management of the

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 inventory and accounts receivable. While the Debt Ratio in terms of solvency
decreased in 2022, it grew in 2023, indicating a need for cautious debt management.

Recommendations
1) Enhance Profitability: Bega should concentrate on ways to increase profitability, such
cost cutting, product mix optimisation, and investigating new income streams. It's
crucial to address the declining Return on Equity.
2) Strengthen Liquidity: Even though liquidity ratios stayed mostly unchanged, Bega
should think about increasing its Cash Flow Ratio by managing working capital more
effectively and making sure it has adequate cash on hand to pay immediate
commitments.
3) Manage Debt Carefully: Bega should prudently manage its debt levels to prevent
undue financial leverage when the Debt Ratio rises in 2023. It should assess the goal
and effects of more debt funding.
4) Increase Asset Efficiency: Keep up the good work on inventory and receivables
management to lower Days in Inventory and Days in Debtors. A shorter Activity
Cycle will aid in better maintenance.
5) Monitor Market Trends: Keep an eye on market changes, consumer trends, and
sustainability issues. Be flexible in response to shifting consumer preferences and
market realities.
6) Assess and improve sustainability activities, especially those aimed at decreasing
environmental effect and adhering to market tendencies that place a strong emphasis
on sustainability.
7) Strengthen Corporate Social Responsibility: To improve the company's reputation for
social responsibility, increase community participation, support for regional dairy
farmers, and ethical hiring practises.
8) Analyse your rivals' behaviour and financial performance on a regular basis to be
inventive and competitive in the dairy and food industries.

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 References

 Bega Group, Bega Annual Report 2023 (Bega Group)

https://begagroup.com.au/wp-content/uploads/2023/09/133151_Bega-Annual-Report-
2023-Interactive.pdf

 Bega Group, Bega Annual Report 2022 (Bega Group)

https://begagroup.com.au/wp-content/uploads/2022/11/120669_Bega-Annual-Report-
2022_Interactive_optimised.pdf

 Bega Group, Bega Annual Report 2021 (Bega Group)

https://begagroup.com.au/wp-content/uploads/2021/10/Bega-Cheese-Ltd-Annual-
Report-2021-Interactive.pdf

 Bega Group, Home (Bega Group)

https://begagroup.com.au/

 Bega Group, Student Resources (Bega Group)

https://begagroup.com.au/student-resources/

 CFI Team (2020), Liquidity Ratio, Corporate Finance Institute

https://corporatefinanceinstitute.com/resources/accounting/liquidity-ratio/

 Hayes, A. (2023), Profitability Ratios: What They Are, Common Types, and How
Businesses Use Them, Investopedia
https://www.investopedia.com/terms/p/profitabilityratios.asp#:~:text=Profitability
%20ratios%20are%20a%20class,a%20specific%20point%20in%20time.

 Stobierski, T. (2020), How to Read and Understand a Cash Flow Statement, Harvard
Business School Online
https://online.hbs.edu/blog/post/how-to-read-a-cash-flow-statement

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