This assignment intends to conduct financial analysis on Freedom Foods Group Limited. The quality of the accounting standard followed by the organization has been analyzed in this paper. Financial analysis of the proposed company has been conducted from the perspective of operating management, investment management and financial management. Based on the analysis some suitable recommendations have also been included in the report.
. Accounting analysis
1.1. Quality Disclosure of Freedom Foods Group Limited
After conducting a careful study of the financial statements of Freedom Foods Group Limited it was observed that the account managers and the internal auditors have adhered to the accounting rules and standards stated under the international accounting financial standards. The accounting reports have covered every aspect of the company’s business and the figures have represented the organization’s financial position and performance appropriately. The consolidated statement of financial position (balance sheet) and the consolidated statement of income are easy to understand and interpret. This is because the terminologies used to depict the financial figures are appropriate and they adhere to the standards set by the international accounting standards board. The company has reported the tangibles and the intangibles appropriately which in turn makes it easy for analysts to make a proper assessment of the company’s financial performance.
Freedom Goods Group Limited’s financial reports provide a robust foundation for analysts to incorporate data into other frameworks so that the company’s financial position can be appropriately adjudged. This paves way for an elaborate financial analysis whereby financial ratios can be calculated which in turn will indicate the company’s financial performance over the last few years. This illustrates that the managers of Freedom Foods Group Limited believe in conducting transparent business by providing quality disclosure of their financial figures to the stakeholders. This will help investors and other equivalent players in the market to assess the company’s financial performance and make an informed judgment regarding whether or not to invest in the company. However, the researcher has identified certain areas within the financial reports of Freedom Foods Group Limited that lacks transparency. The managers need to pay close attention to these areas as this information is a critical indicator of a company’s financial performance.
First of all, the income statement of the Freedom Food Groups limited was not categorized properly. The operating expenses and interest expenses were not delineated appropriately which made it very difficult for the researcher to find segregate the interest expenses from the operating expenses. The operating expenses were broken down into several expenses without any proper heading which also made it considerably difficult for the researcher to comprehend the total operating expense of the company. In addition to that, the minority interest of the company was not reported within the balance sheet regardless of the fact that the company had minority interests. Moreover, the interest income of the company was also not revealed within the financial statement of the company. Therefore, it can be said that, despite a strong compliance showed by the accounting managers of Freedom Foods group plc as far as preparing financial statements is concerned, some areas of the financial reports lacked transparency. Nevertheless the accounting managers of the company have given their best effort to give a transparent representation of the company’s financial performance.