Running head: BUSINESS PLAN 1
Bridgford Foods Business Plan
Business Name : Bridgford Foods Corporation
Location : Anaheim, California, the United States.
Legal Structure
Bridgford Foods is a corporation. The company’s headquarters is in Anaheim (10-K Form, 2018). Nonetheless, the entity has other amenities in Chicago, Illinois, Dallas, Texas, and Statesville.
Management Team
Bridgford Foods Corporation is under the management of five Executive Committee members who report to the Board of Directors. They include the President, Chairman of the Executive Committee, the vice president, the Chairman of the Board, the Executive Vice-President, and Chief Finance Officer.
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Mission Statement
Bridgford Foods's mission is to cultivate, create, and dispense excellent products that offer quality value to the customer.
Business History. Hugh H. Bridgford established Bridgford Foods Corporation in 1932. The company started its operations in San Diego, California, as a retail meat market before evolving into different retail meat markets before venturing into wholesaling, manufacturing of frozen food, frozen food supply, processing, and production. Currently, the company's headquarters is in Anaheim, California. Besides, the corporation has four other factories located in Dallas, Chicago, and Statesville.
Products and Services
Bridgford Foods Corporations was the pioneer of the manufacturing and sale of frozen bread dough to the institutional customers and supermarkets. According to D &B Hoovers (2019), the entity's first goods were produced in Anaheim meat-processing facility in 1996. The Chicago Meat Processing facility, which was acquired in 1975, emphasizes ion the production of dry and semi-dry sausages, as well as beef jerky. The original products include frozen bread dough, frozen micro-ready sandwiches, Beef jerky, and delicatessen products.
Target Market
The target market of Bridgford Foods Corporation includes supermarkets and institutions that deal with bread and meat production.
Competitive Advantage
Bridgford Foods Corporation's competitive advantage is a stable distribution system. The corporation has created a robust supply network that enhances the access of the majority of the potential market.
Objective and Goals
The significant purpose of Bridgford Foods Corporation is uniqueness, high quality, and consistency.
Analysis
Loan Amount
The loan amount that the company seeks to obtain is $ 1,791. The loan increases the company's total liabilities from $ 35,814 to $ 37,604. The loan amount is relatively low, thus treated as short term loans. The loan amount should be treated as working capital and used to finance the company's everyday business operations. It mainly covers the company's operational needs to help the management achieve organizational objectives. Other ways that the enterprise is likely to use the loan is to purchase inventory, equipment, or marketing the company's products to obtain more customers and keep loyal clients.
Vertical analysis of the income statement
According to the results presented is the company's income statement, the cost of goods has been increasing annually from $ 85,850 in 2016 to $ 105,637 in 2017, and finally to $ 117,751 in 2018. The increase is proportionate to the rise in net sales of the company from $ 140,063 in 2016, to $ 167,223 in 2017, and $ 174,257 in 2018. As such, it implies that the company has been increasing the purchase of materials needed to make goods. The subsequent increase in product production results in higher sales, thus an increase in net sales in the subsequent years.
Besides, the company's gross profits from 2016 to 2018 has been increasing progressively, which illustrates that the net sales have been rising as the cost of goods increases annually. However, the company's net income has been decreasing from 2016 until 2018. A proportionate decrease in net income is a result of an increase in total expenses, which reduces the net profits earned by the company from $ 44,377 in 2016, to $ 48,816 in 2017 and $ 49,929 in 2018.
Ratio analysis
Usually, ratios are used to analyze the profitability, solvency, and liquidity of an entity. In this case, ratios calculated will be used to analyze the profitability, liquidity, and solvency of Bridgford Foods Company. These ratios help in understanding the position of the company in the market.
Profitability ratios
Bridgford Foods' profitability ratios have been reducing for the last three years. For example, the profit margin in 2016 was 5.5 %, while in 2017, it reduced to 5.28%, and in 2018 it was 3.74%. A decrease in profit margin implies that the company's ability to generate profit annual has been reducing. As well, other profitability ratios of the company, such as the Gross margin, have been decreasing from 2016 to 2018. Subsequently, there is a decrease in ROE and ROA. The company's ROE declined from 39.84% in 2016, to 31.51% in 2017, and 19.84% in 2018. In the case of ROA, it fluctuated from 17.81% in 2016, rising to 18.10% in 2017, and falling to 12.84% in 2018. The results of ROA and ROI also indicate a decline in the ability of the company to produce profits over the years.
Solvency ratios
These ratios are used to determine the ability of the enterprise to meet its long-term obligations. The debt-to-equity ratio of Bridgford Foods has been decreasing since 2016 from 0.93 to 0.45 in 2017 and 0.27 in 2018. The decrease in debt-to-equity ratio shows that Bridgford Foods have been reducing debt capitalization. Therefore, this infers that the company can meet its long term obligations using its equity capital.
Liquidity ratios
The liquidity ratios are used to assess the ability of the business to meet its short-term obligations using its current assets. The higher the value of these ratios, the more capable a company can meet its short-term requirements. In the case of Bridgeford, the ratios considered include quick ratio, cash ratio, and current ratio. The entity’s current ratio has been reducing for the three years from 2016 to 2018. However, the values are still above one, which implies that Bridgford Foods can meet its short-term responsibilities using existing assets. On the other hand, cash ratio and quick ratios of Bridgford Foods have been fluctuating within three years. In 2016, the company's quick ratio was 1.93, which declined to 1.92 in 2017, and 1.55 in 2018. Regarding the cash ratio, it reduced from 0.57 in 2016, to 0.75 in 2017, and 0.45 in 2018. The results imply that the corporation's capability to service its short-term liabilities using its current asset has been reducing.
A question to Chief Financial Officer
According to the analysis above, the key area of concern that needs the attention of the Chief Financial Officer of the company is: What strategies has the company been using to ensure the reduction of total liabilities since between 2016 and 2018? The question is very critical to the management because it helps to understand how the company manages its obligation. Besides, it might give the CFO the insight of issues that he/she needs to focus on to enhance the effectiveness of the company.
References
10-K Form. (2018). Bridgford Foods Corporation. United States Securities and Exchange Commission. Accessed from https://www.sec.gov/Archives/edgar/data/14177/000149315219000765/frm10-k.htm
D &B Hoovers. (2019). Bridgford Foods Corporation. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.bridgford_foods_corporation.821456fdc194c7f0.html?aka_re=1
