A) Cash Flow Analysis

Buderim Group Limited is a listed company on the Australian Stock Exchange

(ASE). Buderim Ginger is one of Buderim Group Limited's leading companies,
which utilises only the purest Australian produced ginger to make everyone's
popular Naked Ginger.

Cashflows are a financial announcement that reviews the cash, including cash
equivalent, entering and leaving a corporation. The CFS (cash flow statement)
narrates how strongly a corporation controls its cash condition, meaning how
strongly the corporation performs cash to pay its debt loads and fund its operating
expenses.

The operating activities are proceeding the CFS incorporates several sources and

management of cash from business ventures. Net income from operating activities
of Buderim Ginger through its products operations is $860,000 in 2020 while $-
7,134,000 in 2019 which is negative cash flow that means the company might not
be paid its liability without borrowing money from financing activity or raising
additional capitals.
Investing activities encompass several references and management of cash of a
company's finances. Cash flow from investing activities tells that Buderim Ginger
has invested $1,394,000 in 2020 while has invested $132,000 in 2019 in property,
plant, equipment including cash receipts to generate profits.
Cash of financing activities involves the origins of cash from investors as well as
banks, and the management of cash yielded to stockholders. Net cashflow form
financing activity mentioned that Buderim Ginger has the total net flow of
$1,739,000 in 2020 after repayments of borrowing, lease and proceeds from
borrowing. In 2019, it had a net flow of $4,491,000.
The Buderim Ginger company has net cash flow at the end, and at the beginning of
the year 2020 is $2,673,000 and $1,512,000, and in the year 2019, $1,512,000 and
$4,293,000.

In conclusion, the cash flow statement explains how the cash, including cash
equivalents, has been practised in the Buderim in such a form to make the value
for the business in both the years. It reveals the aspects of the variation in of the
cash including, cash equivalents below operating activities, financing activities and
investing activities and net difference of the cash moreover cash equivalents in the
unique operations. The company has a stable ending balance than the preceding
year. Buderim Ginger has sufficient liquidity to pay its short-term obligations. By
studying Buderim Ginger's cashflow, any investor willing to invest in Buderim can
easily portray financial health as it reflects the company's financial health. Overall,
Buderim Ginger has a healthy balance sheet and good profit generating
investments.
 B) Calculation of Ratios

NOTE: Assumed days in a year is 360 days, and All amounts are round figured in
$000

Return on Equity
Solution:
Given,
Years 2018 2019 2020

Net Income/Loss (14,177) 4,036 (9,870)

($)
Equity ($) 32,025 36,259 26,389

ROE -44% 11% -37%

We know that,
Return on Equity (ROE) = net income/ equity1
ROE (2018) = -14177/32025= -0.44 or -44%
ROE (2019) = 4036/36259 = 0.11 or 11%
ROE (2020) = -9870/26389 = -0.37 or -37%

Operating Profit Margin

Solution;
Given,
Years 2018 2019 2020

Operating -11,050 3,585 -58

Income ($)
Revenue ($) 56,413 41,603 42,115

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 Operating Profit -19% 9% -0.13%
Margin

We know that,
Operating Profit Margin = Operating Income/Revenue2
Operating Profit Margin (2018) = -11050/56413= -0.19 or 19%
Operating Profit Margin (2019) = 3585/41603 = 0.09 or 9%
Operating Profit Margin (2020) = -58/42115 = -0.0013 or -0.13%

Inventory Turnover Period

Solution;
Given,
Years 2018 2019 2020

Inventory ($) Opening Closing Opening Closing Openin Closing

23,617 15,749 15,749 27,157 g
27,157 22,103
Cost of 52,958 38,397 38,424
Goods sold
(COGS) ($)
Inventories 2.69 times 1.79 times 1.56 times
Turnover
Ratio (ITOR)
Inventories 133 days 201 days 230 days
Turnover
Period

We know that,
Inventories Turnover Ratio (ITOR)= COGS/Average Inventory3
Where, Average Inventory= (Opening Inventory + Closing Inventory) / 24

Inventories Turnover Ratio (2018) = 52958/ {(23617 + 15749) / 2} = 2.69 times

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Inventories Turnover Ratio (2019) = 38397/ {(15749 + 27157) / 2} = 1.79 times
Inventories Turnover Ratio (2020) = 38424/ {(27157 + 22103) / 2} = 1.56 times
Again,
Inventories Turnover Period= number of days in a year/ ITOR 5
Let’s assume 360 days in a year, then,
Inventories Turnover Period (2018) = 360/ 2.69= 133.82~133 days
Inventories Turnover Period (2019) = 360/ 1.79= 201.12~201 days
Inventories Turnover Period (2020) = 360/ 1.56= 230.77~230 days

Current Ratio
Solutions,
Here,
Years 2018 2019 2020

Current Assets- 32,511.00 40,938.00 44,599.00

CA ($)
Current 17,104.00 23,531.00 29,208.00
Liabilities- CL
($)
Current Ratio- 1.9 times 1.74 times 1.53 times
CR

We know that,
CR= CA/ CL6
CR (2018) = 32511/17104 =1.9 times
CR (2019) = 40938/23531 = 1.74 times
CR (2020) = 44599/29208 = 1.53 times

Debt- Assets Ratio

Solutions,
Given,
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 Years 2018 2019 2020

Current-Debt 17,104 23,531 29,208

(CA)($)
Long-term-Debt- 18,633 21,763 18,001
LTD ($)
Total Debt= 35,647 45,294 47,209
CA+ LTD
Total Assets- TA 67,672 81,553 73,598
($)

We know that,
Debt to assets ratio = Total debts/ Total assets7
Debt to assets ratio (2018) = 35647/67672 = 0.53 times
Debt to assets ratio (2019) = 45294/81553 = 0.56 times
Debt to assets ratio (2020) = 47209/73598 = 0.64 times o

Interest Cover Ratio

Solutions,
Here,
Years 2018 2019 2020

Earning Before 11,050 3,585 58

Interest and Tax
(EBIT) ($)
Interest 2,781 4,033 2,154
Expenses ($)

We know that,
Interest Cover Ratio = EBIT/ Interest Expenses8
Interest Cover Ratio (2018) = 11050/2781 = 3.97 times
Interest Cover Ratio (2019) = 3585/4033 = 0.89 times
Interest Cover Ratio (2020) = 58/2154 = 0.027 times

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 C) Working Capital Management Analysis
Solutions,
We Have,
Periods 2018 2019 2020

Inventories 133.82 201.12 230.77

Conversion Period
(ICP)
Payable Deferral 53.94 72.55 49.57
Period (PDP)
Receivables 56.82 67.78 35.19
Conversion Period
(RCP)

Cash Conversion Cycle (CCC) = ICP+ RCP- PDP9

CCC (2018) = 133.82+ 56.82 - 53.94= 136.7~136 days
CCC (2019) = 201.12+ 67.78 - 72.55= 196.35~196 days
CCC (2020) = 230.77+35.19 - 49.57= 216.39~216 days
ALSO,
Years 2018 2019 2020

Cost of Goods 52,958 38,397 38,424

sold (COGS)
($)

Working Capital= COGS*CCC/Days in a year10

Working Capital (2018) = 52958*136.7/360= $20,109.33
Working Capital (2019) = 38397*196.35/360 = $20,942.36
Working Capital (2020) = 38424*216.39/360= $23,096.03

The CCC is a metric that exposes the space of experience (within days) that it
necessitates for a corporation to change its invested inventory also other sources into
cash flows from selling. The Cash conversion cycle implies an essential concept since
this means Buderim Ginger requires, 136 days in 2018, 196 days in 2019 and 216
days in 2020 goodness of "working capital" (Current Assets - Current Liabilities

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proceeding individual balance sheet) to hold its business moderator. Well, Buderim
Ginger has converted $20,109.33, working capital investment approximately in 136
days during 2018. In 2019, it converted working capital investment of $ 20,942.36 in
approximately 196 days while $23,096.03 in approximately 216 days during 2020.
Buderim Ginger has lower CCC in 2018, which denotes the quick liquidity because it
took fewer times to turn its investments and inventories in cash than 2019 and 2020.
CCC mainly represents the average length of time that the firm must hold investment
into working capital. Liquidity refers to the strength to meet short-term obligations of
a particular firm. Hence, the liquidity conversion period is long according to CCC's
calculation, which indicates Buderim Ginger wouldn't be able to pay short-term
obligations in the given period. The company seems more practical and healthier in
the past rather than in the present.
To increase liquidity, Buderim Ginger could shorten the cash conversion period by
reducing the inventory conversion period resulted from a quick conversion of raw
materials and quick sales of finished goods. Similarly, it can also reduce CCC by
reducing receivables conversion period resulted from speeding up the collections. To
be more effective, it can also reduce the payable deferral period resulted from slowing
down the payments. However, in doing so, the financial management of Buderim
Ginger must look into the impact of these changes into comparative cost and benefit to
the firm.

D)Further Company Analysis

Buderim Ginger's financial ratios are the essential aspects of financial analysis. These
degrees are employed to quantify the association among two or more assemblages of
financial data obtained either from one income statement of balance sheet or from
both. They provide information comparing to strength and instability on various
aspects of the firm's production and status.

The profitability of Buderim Ginger

Profitability is the result of several corporate policies and decisions. Buderim Ginger
earned losses 44% return after meeting all the expenses on its shareholder's money in
2018 whereas it has made a profit of 11% after meeting all the expenses. In 2020,
again, Buderim ginger faced a massive loss of 37% of its total equity. This means the
return on investments of the firm was entirely unacceptable in 2018 and 2020, but in
2019, the return on equity was 11%.

Gross profit margin is the degree among gross profit and sales of the business. The
gross profit margin of Buderim ginger during the fiscal years 2018, 2019 and 2020 are
10.99%, 21.18% and 20.46% which implies the firm earned, after meeting the cost of
goods sold, 10.99 on its sale in 2018, 21.18% on its sales in 2019 and 20.46% in 2020.
Higher gross profit margin is preferred as it allows more generous cushion to absorb
other expenses. Hence in this care, a gross profit margin of 2018 would be preferred
as effective and efficient.

Operating profit margin shows the relationship between operating profit and sales and
indicates a firm's operating efficiency. Financial ratio analysis indicates that the
Buderim Ginger has a negative profit margin in 2018 and 2020 and a positive margin
in 2019. It has an acceptable and efficient operating profit margin only in 2019i.e.
9%. 

Market Value

The share market value is the price at which a share would trade in a competitive
market setting. The market price per share is $0.305, $0.17 and $0.22, respectively
earning per share are $21.40, $0.46 and $2.89 during the years 2018,2019 and 2020. It
indicates that the market value of Buderim Ginger keeps on decreasing while earning
per shares fluctuates. Besides this, the Price Earnings ratio of Buderim is in the
negative, which implies the amount less confidence and involvement of investors in
the Buderim's future. Buderim Ginger has not distributed dividend for the last three
years; this indicates its loss or investment.

Asset management of Buderim Ginger

This ratio covers the effectiveness of the entity's assets utilization. Buderim Ginger
has minimum inventory turnover ratio maximum turnover period in 2020. In 2019,
this indicated that the Buderim Ginger is holding excessive inventory or unable to turn
it over in sales. The excessive investment in inventories is unprotective, as idle assets
earn nothing. Similarly, Buderim has maximum inventory turnover rate in the year
2018 indicates that the firm is changing over its inventory through the rate of 2,69
times in 133 days.

Liquidity 

Liquidity measures the capacity of the corporation to pay its short term responsibilities
out of current assets. If we talk about Buderim Ginger's liquidity, it is relatively low
compared to application standard 2:1, which is considered weak and symbolizes
financial troubles.
The quick proportion of the years 2018, 2019 and 2020 are 0.99, 0.52 also 0.74 means
that every 0.99 rupees of current liabilities, there is 0 worth of quick assets and so on
for 2019 and 2020. The conventional rule, a quick ratio of 1:1, is considered a
standard of comparison. The quick ratio of Buderim Ginger shows the insufficient
short-term solvency of the firm. 

Debt management 
The ratio shows the proportion of total assets that are financed by long-term debt
capital of the firm. The long-term debt ratio of 53% in the past year 2018, 56% in the
financial year 2019 and 64% in the current year 2020 implies that the firm has used
53%, 56% and 64% long term debt financing to satisfy the investment need of the
total asset in years 2018, 2019 and 2020.
Interest cover ratio measures the extent to which EBIT covers interest on debt capital.
Buderim Ginger has interest cover ratio 3.97, 0.89 and 0.027 in the fiscal years 2018,
2019 and 2020 which indicates the firm can satisfy interest claim of debt holders even
if the current expense increases to 3.97 times in 2018, 0.89 times in the year 2019 and
0.027 times in the year 2020. Thus, 2018 offers safety to the creditors because it has a
higher interest coverage ratio.

The efficiency of Buderim Ginger

Sales revenue to the capital employed measures the efficiency in generating revenue
from the net assets at its disposal. Sales revenue in 2018, 2019 and 2020 was 1.10,
0.88 and 0.84; this implies that Buderim was more efficient in 2018 as it has a higher
ratio than in 2019 and 2020.