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Five Year Retrospective Study of the Financial Situation of Northern Foods Plc., United Kingdom

Louie Dacosta and Charles Adusei
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Louie Dacosta: MBA (Finance) and FCCA, London, England
Charles Adusei: Garden City University College, Ghana

Expert Journal of Finance, 2016, vol. 4, 19-30

Abstract: This study was conducted as a retrospective analysis of Northern Foods Plc., once a major player in FTSE 350 Food Sector, to evaluate its financial situation over a five year period. The ex post factor research design was used for this study. Annual reports and databases on Northern Foods Plc., and Associated British Foods Plc., were used to perform a series of ratio analyses. The results revealed that Northern Foods Plc.’s performance has been declining as evidenced in the profitability ratios calculated. Also, financial strength was weak and working capital has not been effectively managed, hence affecting its cash and profit generation potentials. The company was limited in its ability to grow and expand as it needed to regularly fund its pension deficit, and finance its high levels of debt. The study concludes that Northern Foods was not in a very strong financial position, yet it was not making the required investments to improve, hence its takeover though this paper will not rule out non-financial issues. Furthermore, the study prescribed five generic points to improve the financial health of any organisation.

Keywords: financial situation; retrospective study; 2003 -2007; Northern Foods Plc. (search for similar items in EconPapers)
JEL-codes: F23 G23 (search for similar items in EconPapers)
Date: 2016
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