Financial Analysis Orchards

Anthony’s Orchard

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Anthony Orchards financial analysis

Introduction

Anthony’s orchard is family owned company that needs to perform intense financial analysis in order to continued being viable and profitable in the future. Decisions that are made by the management are based on the financial health of the company that is after carrying out a timely and accurate analysis using budgeting and control methods. There are plans by the company to make aggressive plans for the future which include purchasing an apple press that will enable the company to lounge a new line of prepared apple. The company also plans on searching for new orchards throughout the country all with an aim of diversifying the types of apples that the company are making. The revenue target of the company is to exceed $25 million dollars by 2015. All these strategies can only be achieved through deep understanding of the current financial position of the company.

Financial position.

There are three financial statements that will be used in providing the financial position of Anthony’s orchard currently. The purpose of the statement is to find out the cash movements that took place, the total number of wealth generated and the overall accumulated wealth of the business. To begin with it is important to illustrate the cash movement of the company as at 2011. Cash is an important resource that is required by nearly all businesses to fully function and run effectively. Cash will determine if Anthony’s orchard have the ability to repay all debts or not. It would be much easier for the company to achieve new strategies if they have the ability to repay debts and acquire inventories.

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The cash flow statement is broken down to four quarters in the financial year. Cash from the sales is equal throughout the three quarters at an average of 2,751,302. The company incurred a total of 7,934,291 in making purchases of apples during the year. There were purchases by the company only during the first quarter of the year. This is the reason why the total cash expenses before interest for the first quarter is high while the subsequent quarters are less. The cash flow from operations for the first quarter is -6,549,959. The second and third quarter saw an increase to 1,422,157 and 2,265,694 during the last quarter. The company overall witnessed a negative value in terms of cash flows. The negative value in cash flows indicates that the company financial position is not such promising since most of the cash flow go towards covering for expenses.

Income statement

The report on cash flow is not enough to tell the financial position of Anthony’s orchard that is why there is need to find out the profit generated through the study of income statement.  

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Community events generate the highest gross margin out of all the three segments of the company. Administration costs is what is weighing down the profits that could be made by the company. Prepared apples has the highest value in net revenue out of while the least is the community events. Overall the company did not achieve the profit that it had budgeted for. The budgeted net income was 519,517 while the actual net income was 371,147.