Financial Analysis: 1. Open the Excel spreadsheet provided. Prepare a vertical analysis of Bridgford’s income statement. Enter the percentages in columns C, E, G, I and K. For additional information r

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Brief Synopsis of Bridgford Foods

Bridgford Foods is a company that provides frozen food products as well as snack food products to several large food chains as well as a plethora of smaller grocery chains. According to their detailed income statement and balance sheet; Bridgford Foods has consistently grown in net sales and net income over the last three years. Today we will provide a brief synopsis of the company, discuss how the company should invest the 5% loan they desire to obtain and present the CFO with questions and concerns we may have based off the data provided.

The Brief Synopsis of Bridgford Foods.

While there has been a steady growth pattern in regards to the net income and the sales in years 2016 (140,063), in 2017 at ($167,223) and in 2018 at ($174,257) there are some significant changes in 2018 that the show decreases in net income/profit margin ratio, which decrease 1.81% between years 2016 and 2018. When looking at the income sheet we discover that the Return on Assets and the Return on Equity have a major decrease as well as the gross profit margin ratio.

This can be accounted for when looking at the balance sheet. There, we can see a significant increase in the current assets such as property, plant and equipment etc. There is also an increase in the current liabilities and shareholders’ equity. In this case, the company does not seem to be doing as bad as the original numbers of the income statements would suggest. According to "Shareholders' Information"(2018), this seems to be deemed true and the decrease can be contributed to the efforts placed in marketing, making changes to their manufacturing operations and changes in the tax regulations.

If Bridgford Foods were to acquire the 5% loan they wish to obtain, it would be wise for the company to consider investing in their marketing efforts. Not only in their marketing for business to business purposes, but also increasing their marketing efforts in reaching the general public. This would bring more awareness to their products. I think this is one way to ensure sales are guaranteed and can possibly bring new clientele that would be willing to carry their products. While reviewing form 10k, it was revealed that 46.1% of Bridgford Foods sales are from 2 of their main customers; Walmart and Dollar General. A loss of one of their customers can be devastating to Bridgford Foods. It would be in the best interest of the company to begin seeking other customers, such as Kroger or Family Dollar  ("United States Securities And Exchange Commission Washington, D.c. 20549 Form 10-K", N.D.)..

My questions for the CFO would be what are the key drivers to transform the profitability of the business? I would propose this question simply because there seems to be a lot of changes made in the year 2018 that would suggest that the company has invested money for their growth and development. I am curious to know what the company expected to gain from the changes made. Another question I would ask the CFO is which marketing campaigns have had the greatest ROI over the last 12 months? I would be concerned about this simply because there has been so much invested within the year 2018 for marketing that I am wondering what the results have been, what they should keep and what they should continue to use in order to begin to see a profit from their marketing campaigns. My final question to the CFO of Bridgford would be what are the greatest risks to their planned profit target are for this year and what actions could be taken to reduce that risk? The answer to this question would assist in placing the loan proceeds in the proper place in the best interest of the company.

In conclusion, Bridgford Foods have seemingly made some good decisions in the interest of growing a sustainable company. 2019 and 2020 will definitely be the result of the decision made and show whether or not those decisions were worth it. As long as their cost of raw materials stay relatively low and their profit margin grows; Bridgford can look forward to a bright future.

References

Shareholders' Information (2018). Retrieved from https://www.bridgford.com/corporate/investors

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K(N.D.). Retrieved from https://www.sec.gov/Archives/edgar/data/14177/000149315219000765/form10-k.htm#a_03