Conclusion
Alliance Farmers cooperative is a critical player in meat processing in NZ. In the last two years, the company has been performing well in some aspects. However, there are several areas where the management should address. The company revenue decreased in 2019 compared to 2018. The management should there take measures such as target marketing, production of quality product, and adding value to its products to appeal to more of the target market. While the company recorded an increase of 1.04% in gross margin, his is a slight improvement. The management should seek to cut its operating costs to increase its gross profit margin. Furthermore, the company should attempt to reduce its expenses to increase net profit and thus increase its net Profit margin, which increased by a mere 0.7% in 2019.
Alliance farmers assets return on assets increased by 5% in 2019. This is a recommendable increase; however, the management can encourage a further increase in return on assets by employing strategies such as negotiating with suppliers to reduce the cost of supplies and reduce operating expenses. The company debt to asset ratio increased in 2019 relative to 2019 by 3%. This is a signal that the company debts outweighed the assets and weakened the company’s solvency position. Therefore to address this shortcoming, the management of the company should seek to increase its holdings by investing more in assets using owners’ equity to reduce the amount of debt. Finally, the company recorded an increase in the debt-equity ratio of 5%, which implies that equity reduced while debt increased. This means that the company solvency position reduced in 2019 relative to 2018. To address this drawback, the management should consider reducing equity and encourage more equity funding.