Financial Statement Analysis for Convenience Foods (Lanka) PLC Period of 2018-2022

 

1.0           Introduction

1.1 About the Company

Convenience foods (Lanka) PLC is a registered and CSE listed company in Sri Lanka which is  engaged in manufacturing and marketing of textured vegetable protein (TVP) related products and along with other range of products. The company has started the business as a subsidiary of Forbes and Walker ltd in 1991 and their products are branded under the brand name “Lankasoy”.

“Lankasoy” is the leading brand for textured soya protein in Sri Lanka which is generally known as Soya Meat. At present they have came up with a range of soya products in different shapes, different flavors and value additions. Apart from the main product, the company produces range of jelly crystals, instant soup mixes and snacks.  

In 2000, CBL acquired the major portion of company shares. This is a remarkable milestone in the company history and most of the new innovative products were released to the market with the strategies of CBL. They have re branded the products with different names and flavors with more convenient packaging and new marketing strategies.

Convenience foods Lanka PLC (CFL) is currently operated as a subsidiary of CBL investments Limited since CBLI has purchased 71.38% of CFL Shares from CBL in 2017. CFL has further expanded their products range and they have currently entered to the export market. CFL products are exported to Middle East, Australia, Europe and USA at present.

Apart from Lankasoy brand name their products are coming to the market under brand names such as Sera, Tetos and Nutriline. Main business premises is located at Dehiwala, Sri Lanka and they are equipped with 300+ permanent workforce and all required machinery at present.

 

1.2 About the Report

We have analyzed the annual reports of Convenience foods Lanka PLC for past 5 years period (2017/2018 to 2021/2022). Mainly paid attention to financial statements of the company such as Comprehensive income statement and Statement of Financial Position.

Main objective of the analysis is to observe the financial behavior of the company via several techniques of analysis. Some of the analysis methods used in the analysis are listed below,

·         Horizontal Analysis

·         Vertical Analysis

·         Financial Ratio Analysis

We have carried out the analysis for many criteria’s and it will be helpful for key management personnel’s to make financial decisions and also for the investors to take investment decisions.

 

2.0 Horizontal Analysis

Horizontal analysis is a method used in financial statement analysis to evaluate and compare financial data over a certain period of time, typically multiple years. It involves the examination of financial statements (such as the income statement, balance sheet, and cash flow statement) to identify trends, changes, and patterns in the financial performance of a company.

The primary goal of horizontal analysis is to assess how specific financial metrics or line items have changed over time and to understand the reasons behind those changes. This analysis can provide insights into a company's financial health, growth trajectory, and potential areas of concern.

Horizontal analysis can be a valuable tool for investors, analysts, and management to gain insights into a company's historical performance and make informed decisions. However, it's important to consider that some fluctuations may be due to seasonal variations, one-time events, changes in accounting methods, or other external factors. Therefore, it's recommended to use horizontal analysis in conjunction with other financial analysis techniques for a comprehensive understanding of a company's financial health.

We have carried out a horizontal Analysis for the company’s Comprehensive income statement and Statement of financial position.

 

2.1 Comprehensive Income Statement

Horizontal
Horizontal Analysis (Using 2017/2018 as the base year)
Year	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Revenue	0.00%	9.40%	33.18%	75.73%	166.20%
Cost of Sales	0.00%	15.97%	33.25%	70.02%	202.95%
Gross Profit	0.00%	-3.85%	33.06%	87.24%	92.11%
Other Operating Income	0.00%	22.61%	49.82%	-49.82%	-59.57%
Distribution Expenses	0.00%	13.55%	37.28%	38.05%	79.01%
Administrative Expenses	0.00%	35.10%	54.41%	64.31%	79.99%
Finance Income
Finance Expenses	0.00%	14.97%	465.43%	1483.42%	3467.96%
Profit Before Tax	0.00%	-33.91%	22.80%	145.98%	90.12%
Income Tax Expenses	0.00%	-40.82%	-0.43%	34.62%	19.21%
Profit for the Year	0.00%	-30.39%	34.66%	202.80%	126.31%

 

Percentage change in each item in comprehensive income statement has been compared with the base year 2017/2018 is calculated in the above table.  

We have observed regular increasing trend in revenue of the company over the period. However the profitability growth shows a declining during 2018/2019 and 2021/2022 years. Main reason for the negative profitability growth is increase in cost of raw materials, cost of production and inflation along with the reduction of buying power of community due to economic crisis.

2.2 Statement of Financial Position

 

	Horizontal
	Using 2017/2018 as the Base Year
Assets
Non Current Assets	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Property, Plant and Equipment	0.00%	-13.55%	0.68%	95.39%	143.50%
Right of Use Assets	0.00%	-1.37%	170.10%	691.93%	2187.09%
Intangible Assets	0.00%	-6.75%	-19.40%	-29.05%	-13.70%
Investment in Subsidiary	0.00%	0.00%	0.00%	0.00%	0.00%
Total Non Current Assets	0.00%	-13.09%	3.22%	102.52%	177.05%
Current Assets
Inventories	0.00%	8.90%	32.59%	51.15%	609.65%
Trade and Other Receivables	0.00%	15.00%	80.82%	143.62%	106.19%
Amounts due from Related Companies	0.00%	0.38%	134.32%	106.09%	481.71%
Short Term Investments	0.00%	24.02%	27.13%	97.37%	-12.14%
Cash and Cash Equivalents	0.00%	-75.52%	354.82%	28.32%	450.89%
Total Current Assets	0.00%	15.42%	55.90%	102.21%	143.66%
Total Assets	0.00%	9.31%	44.62%	102.27%	150.81%
EQUITY AND LIABILITIES
Stated Capital	0.00%	0.00%	0.00%	0.00%	0.00%
Other Reserves	0.00%	0.00%	0.00%	0.00%	0.00%
Retained Earnings	0.00%	13.82%	40.43%	101.56%	146.63%
Total Equity	0.00%	12.37%	36.19%	90.91%	131.26%
Liabilities
Non Current Liabilities
Deferred Tax Liability	0.00%	-5.15%	-54.85%	-69.20%	-7.92%
Lease Liabilities
Retirement Benefit Obligation	0.00%	-1.38%	19.95%	65.22%	30.82%
Total Non Current Liabilities	0.00%	-2.35%	8.57%	74.62%	175.39%
Current Liabilities
Trade and Other Payables	0.00%	2.42%	49.90%	171.51%	247.75%
Lease Liabilities
Current Tax Liabilities	0.00%	-90.38%	-7.26%	-20.24%	-33.25%
Bank Overdraft
Amount due to Related Companies	0.00%	565.65%	999.51%	533.31%	600.14%
Total Current Liabilities	0.00%	2.50%	81.32%	146.25%	207.55%
Total Liabilities	0.00%	1.49%	66.20%	131.37%	200.87%
Total Equity and Liabilities	0.00%	9.31%	44.62%	102.27%	150.81%

 

As per the analysis, we have observed that the total assets and the equity show a stable and constant growth rate. However in liabilities side, amount due to related companies is significantly increased in 2018/2019 and shows fluctuations in the same range.

Total equity and liabilities shows a constant and stable growth rate as per the analysis. Company has secured a good growth rate even during the Covid pandemic and economic crisis situations.

 

 

3.0 Vertical Analysis

Vertical analysis is a technique used in financial statement analysis to assess the relative proportions of different line items within a single financial statement. It helps analysts and stakeholders understand the composition of a financial statement by expressing each line item as a percentage of a base item, typically total revenue or total assets. This analysis can be conducted on the income statement and the balance sheet.

Vertical analysis is valuable for assessing trends over time and comparing the financial structures of different companies. However, it should be used in conjunction with other financial analysis methods to gain a comprehensive understanding of a company's financial health.

 

3.1 Vertical Analysis for Comprehensive Income Statement

As At 31st March	Verticle
	Verticle Analysis (Using Revenue as the Base)
	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Revenue	100.00%	100.00%	100.00%	100.00%	100.00%
Cost of Sales	66.85%	70.87%	66.88%	64.68%	76.08%
Gross Profit	33.15%	29.13%	33.12%	35.32%	23.92%
Other Operating Income	3.14%	3.52%	3.54%	0.90%	0.48%
Distribution Expenses	16.57%	17.20%	17.08%	13.02%	11.14%
Administrative Expenses	5.61%	6.92%	6.50%	5.24%	3.79%
Finance Income	0.00%	0.00%	2.71%	1.94%	0.84%
Finance Expenses	0.02%	0.02%	0.08%	0.16%	0.24%
Profit Before Tax	14.10%	8.52%	13.00%	19.74%	10.07%
Income Tax Expenses	4.76%	2.58%	3.56%	3.65%	2.13%
Profit for the Year	9.34%	5.94%	9.44%	16.09%	7.94%

 

In this scenario, we have used the total revenue as the base for analysis and compared other variable as a percentage of total revenue. As per the analysis, company has been able to maintain gross profit margin above 33.0% and it has dropped 29.13% and 23.92% at years 2018/2019 and 2021/2022. Economic crisis and rise of the raw materials has led the company for thinner profit margins during the respective years.

Apart from the profits, company has taken initiatives to be more efficient during the economic crisis period and distribution expenses and administrative recorded the lowest percentage for the total revenue in year 2021/2022.

 

3.2 Vertical Analysis for Statement of Financial Position

As At 31st March	Verticle
	Using Total Assets as the Base
Assets
Non Current Assets	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Property, Plant and Equipment	20.27%	16.03%	14.11%	19.59%	19.68%
Right of Use Assets	0.41%	0.37%	0.76%	1.59%	3.71%
Intangible Assets	0.73%	0.62%	0.40%	0.25%	0.25%
Investment in Subsidiary	0.00%	0.00%	0.00%	0.00%	0.00%
Total Non Current Assets	21.41%	17.02%	15.28%	21.44%	23.65%
Current Assets
Inventories	12.83%	12.78%	11.76%	9.58%	36.29%
Trade and Other Receivables	24.72%	26.01%	30.91%	29.77%	20.32%
Amounts due from Related Companies	0.36%	0.33%	0.59%	0.37%	0.84%
Short Term Investments	38.17%	43.30%	33.55%	37.24%	13.37%
Cash and Cash Equivalents	2.52%	0.56%	7.91%	1.60%	5.53%
Total Current Assets	78.59%	82.98%	84.72%	78.56%	76.35%
Total Assets	100.00%	100.00%	100.00%	100.00%	100.00%
EQUITY AND LIABILITIES
Stated Capital	4.21%	3.85%	2.91%	2.08%	1.68%
Other Reserves	3.33%	3.05%	2.30%	1.65%	1.33%
Retained Earnings	64.38%	67.03%	62.51%	64.15%	63.30%
Total Equity	71.92%	73.93%	67.72%	67.88%	66.31%
Liabilities
Non Current Liabilities
Deferred Tax Liability	1.49%	1.30%	0.47%	0.23%	0.55%
Lease Liabilities			0.31%	1.26%	3.59%
Retirement Benefit Obligation	4.34%	3.92%	3.60%	3.55%	2.26%
Total Non Current Liabilities	5.83%	5.21%	4.38%	5.04%	6.41%
Current Liabilities
Trade and Other Payables	18.05%	16.91%	18.71%	24.23%	25.03%
Lease Liabilities	0.00%	0.00%	0.20%	0.25%	0.26%
Current Tax Liabilities	3.85%	0.34%	2.47%	1.52%	1.02%
Bank Overdraft
Amount due to Related Companies	0.35%	2.13%	2.66%	1.09%	0.98%
Total Current Liabilities	22.25%	20.86%	27.90%	27.09%	27.28%
Total Liabilities	28.08%	26.07%	32.28%	32.12%	33.69%
Total Equity and Liabilities	100.00%	100.00%	100.00%	100.00%	100.00%

 

We have carried out the vertical analysis by using total assets as the base and calculated other figures as a percentage of total assets.

In assets side, short term investments accounted for the largest portion of the current assets up to year 2020/2021. However, it has been significantly reduced in year 2021/2022 and inventories accountable for 36.29% of the total assets in 2021/2022. Main reason for the inventory appreciation is the price hike of raw materials and finished goods due to the hyper inflation during the period. The company has to convert its short term investment in to inventories for overcome the situation.

There are no significant changes in liability side and we observed that equity has a slight declining trend and liabilities shows a slight increasing trend over the period.

 

4.0 Financial Ratio Analysis

 

4.1 Profitability Ratios

Profitability ratios are financial metrics used in financial statement analysis to assess a company's ability to generate profit relative to various aspects of its financial performance. These ratios provide insights into a company's profitability and can help investors, analysts, and management make informed decisions.

These profitability ratios help assess a company's financial health and performance. However, it's essential to consider these ratios in the context of the industry, economic conditions, and the company's specific circumstances to make meaningful interpretations. Comparing these ratios to industry benchmarks and historical performance can also provide valuable insights.

Profitability Ratios of Convenience Foods Lanka PLC for past Five Years

Ratio	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Net Profit Margin	9.34%	5.94%	9.44%	16.09%	7.94%
Gross Margin	33.15%	29.13%	33.12%	35.32%	23.92%
Return on Total Assets	13.65%	8.69%	12.71%	20.43%	12.31%
Return on Common Shareholders' Equity	20.77%	12.44%	20.56%	35.13%	20.34%
Book Value per Common Share	327	367	445	623	755
Basic Earnings Per Share	62	43	83	188	140

 

Gross Profit Margin

The Gross Profit Margin is a profitability ratio that measures the percentage of revenue that remains after deducting the cost of goods sold. The Gross Profit Margin for the period of 5 years as follows:  9.34%, 5.94%, 9.44%, 16.09%, and 7.94% respectively.

This indicates that the company has been able to maintain a healthy gross profit margin over the years, although there has been some fluctuation in the most recent year. The trend for Gross Margin shows that there was a significant increase in the year 2020/2021, followed by a decrease in the most recent year. However, the Gross Margin has generally indicating that the company has been able to generate a good profit margin on its sales for the past 5 year period.

Net Profit Margin

This ratio measures the percentage of revenue that is left after all expenses have been paid. The net profit margin for the past five years has been 29.13%, 33.12%, 35.32%, 23.92%, and 13.65% respectively.  This indicates that the company has been able to maintain a healthy profit margin over the years.

Lowest NP ratio was recorded in year 2018/2019. Main reason followed is the significant increment in cost of sales. NP ratio has been a slight decline in the most recent year. Economic crisis was at a peak during 2021 and 2022 and it has declined the buying power of households and production overheads were significantly increased. Therefore it affected directly to the profitability of the company.

Return on Common Shareholders' Equity

 This ratio measures the return that the company has generated for its shareholders. The return on common shareholders' equity for the past five years has been 20.77%, 12.44%, 20.56%, 35.13%, and 20.34% respectively. This indicates that the company has been able to generate a healthy return for its shareholders over the years.

 Due to the reasons elaborated above under net profit margin were the main factors for declining Common Shareholders’ equity during year 2018/2019 and 2021/2022.

Basic Earnings per Share

This ratio measures the amount of profit that is attributable to each share of common stock. The basic earnings per share for the past five years have been 62, 43, 83, 188, and 140 respectively.

Number of outstanding shares has been remained constant for the period and the reason for declining of the ratio is the declining of earnings in years 2018/2019 and 2021/2022.

Return on Total Assets

The trend for Return on Total Assets (ROA) over the past five years has been 9.34%, 5.94%, 9.44%, 16.09%, and 7.94% respectively. The trend shows that the ROA has been fluctuating over the years, with a significant increase in the year 2020/2021, followed by a decrease in the most recent year. However, the ROA has generally been at a healthy level over the years, indicating that the company has been able to generate a good return on its assets.

Value of company’s total assets shown a stable growth over the period of 5 years and the ratio has been fluctuated due to the fluctuation of company’s earnings.

Book Value per Share

The Book Value per Common Share is a financial ratio that measures the net asset value of a company's common shares. The trend for Book Value per Common Share over the past five years has been 327, 367, 445, 623, and 755 respectively. The trend shows that the Book Value per Common Share has been increasing over the years.

The increment of the ratio over the period shows that the company is well focused on its ultimate goal of shareholders wealth maximization. No of outstanding shares of the company has remained unchanged over the analyzing period.

 Overall, the profitability ratios for the period indicate that the company has been able to maintain a healthy level of profitability over the years. However, the period of 2018/2019 was not a very good year for the company since the significant increment in cost of sales affected negatively to the profitability.

We also observed that profitability of the company declined in the year 2021/2022 where the entire country was going through the peak of the economic crisis. Inflation, fuel shortage and power cuts interrupted to the smooth production and increased production and distribution costs. The other side hyper inflation reduced the buying power of the households which also affected to sales of the company.

 

4.2 Liquidity & Efficiency Ratios

Liquidity and efficiency ratios are financial metrics used in financial analysis to assess a company's ability to manage its short-term obligations, the efficiency of its operations, and how effectively it utilizes its assets. These ratios help evaluate a company's short-term financial health and operational efficiency.

These liquidity and efficiency ratios provide valuable insights into a company's short-term financial stability and operational efficiency. However, it's important to analyze them in conjunction with other financial ratios and consider industry benchmarks and company-specific factors to make informed decisions about a company's financial health and performance.

Liquidity and Efficiency Ratios of Convenience Foods Lanka PLC

Ratio	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Current Ratio	3.53	3.98	3.04	2.90	2.80
Acid Test Ratio/ Quick Ratio	2.96	3.36	2.62	3	1.47
Accounts Receivable Turnover	55	61	69	75	52
Merchandise Turnover/ Inventory Turnover	13.50	8.46	8.41	9	5.36
Day's Sales in Inventory	27	43	43	40	68
Accounts Payable Days	55	59	64	84	69
Total Asset Turnover	2	2	2	1	2
Working Capital (RS’000)	703,426-	847,769-	1,026,009-	1,300,015-	1,536,464-
Working Capital Cycle Days	40	45	48	31	51

 

Current Ratio and Quick Ratio

The current ratio and quick ratio are both measures of a company's liquidity, specifically its ability to meet its short-term financial obligations.

The current ratio is generally considered a measure of short-term liquidity. A ratio above 1.0 indicates that a company has more current assets than current liabilities, suggesting it can meet its short-term obligations comfortably. As the current ratio decreases over these five years, it indicates a declining ability to cover short-term liabilities with current assets.

The gradual decrease in the current ratio might be a sign that the company is becoming less liquid over time. It could be due to factors such as increased short-term debt, slower collection of accounts receivable, or excessive inventory levels.

The quick ratio is a more conservative measure of liquidity because it excludes inventory, which may not be as easily convertible to cash. Similar to the current ratio, a quick ratio above 1.0 is typically seen as a sign of good liquidity.

The quick ratio fluctuates over the five years, with some years showing a ratio above 1.0 and others below. However, in Year 5, the quick ratio drops significantly to 1.47, which is considerably below 1.0. This suggests that the company may be struggling to meet its short-term obligations without relying on selling inventory.

In conclusion, based on the provided data, the liquidity of the company appears to have deteriorated over the five-year period, as both the current ratio and quick ratio have generally decreased. As we observed, some of the main reasons for decreasing of current ratio and quick ratio are follows,

·         Appreciation of the inventory value due to the price hike of raw materials

·         Slow movement of the products due to the economic recession

·         Company has reduced the credit sales during the economic  crisis which decrease accounts receivable value

Working capital and working capital cycle

Analyzing a company's working capital management is crucial to understanding its efficiency in managing its short-term assets and liabilities.

1. Accounts Receivable Turnover:

The accounts receivable turnover ratio measures how efficiently a company collects payments from its customers. An increasing ratio generally indicates improved efficiency in collecting receivables. However, the drop in Year 2021/2022 to 52 may suggest that the company is taking longer to collect payments from customers, which could affect its cash flow.

2. Days Sales in Inventory:

Days sales in inventory, also known as the inventory turnover period, measures how quickly a company sells its inventory. A decreasing number is typically seen as a positive sign, as it indicates faster turnover. However, in Year 2021/2022 the ratio increases to 68, which suggests that the company is holding onto its inventory for a more extended period, potentially tying up cash.

3. Account Payable Days:

Account payable days indicate how long a company takes to pay its suppliers. An increase in this ratio may indicate that the company is taking longer to settle its payables, which can improve cash flow. However, in Year 4, the ratio spikes to 84, which suggests the company is taking significantly longer to pay its suppliers. This could be a strategic move to improve cash flow but may affect supplier relationships.

4. Net Working Capital:

Net working capital is the difference between current assets and current liabilities. The consistent increase in net working capital over the five years suggests that the company is generally effective in managing its short-term assets and liabilities. This could indicate improved financial stability and the ability to cover its short-term obligations.

5. Working Capital Cycle

The working capital cycle, also known as the cash conversion cycle, is a financial metric that measures the time it takes for a company to convert its investment in raw materials and other inputs into cash flow from sales. It represents the period from when a company spends money to acquire raw materials or inventory to the time it receives cash from selling the final product.

In general, it’s better to have a shorter working capital cycle for a company. Convenience Foods Lanka PLC has achieved the shortest WC cycle in year 2020/2021 and they could not retain it in 2021/2022 due to the economic crisis related issues.

In summary, the company's working capital management appears to be somewhat mixed over the five-year period. While it has effectively increased its net working capital, indicating improved financial stability, there are concerning signs such as the drop in accounts receivable turnover and the increase in days sales in inventory and accounts payable days. These changes may suggest that the company needs to focus on improving its receivables collection and inventory management practices to optimize its working capital and cash flow. Further analysis and consideration of industry benchmarks would provide more contexts for evaluating the company's performance.

 

4.3 Solvency Ratios

Solvency ratios are financial metrics used to assess a company's long-term financial stability and its ability to meet its long-term financial obligations. These ratios provide insights into a company's ability to cover its long-term debt and other liabilities using its assets and cash flow. Solvency ratios are crucial for investors, creditors, and management to evaluate the overall financial health and risk profile of a company.

Long Term Debt Paying Ability	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022
Ratio
Debt Ratio	28%	26%	32%	32%	34%
Equity Ratio	72%	74%	68%	68%	66%
Times Interest Earned	787	453	136	111	39

Debt Ratio:

The debt ratio measures the proportion of a company's assets financed by debt. It's noteworthy that the company's debt ratio has been increasing over the years. Starting at 28% in 2017/2018 and reaching 34% in 2021/2022 indicates that the company has been relying more on debt to finance its operations and investments. This trend suggests a potential increase in financial risk, as a higher debt ratio can lead to greater interest obligations and financial vulnerability.

Equity Ratio:

The equity ratio represents the proportion of a company's assets financed by shareholders' equity. The declining trend in this ratio, from 72% in 2017/2018 to 66% in 2021/2022, suggests that the company's reliance on equity financing has decreased. While equity financing can reduce financial risk, a decreasing equity ratio may indicate that the company is turning more to debt to fund its operations and growth.

Times Interest Earned:

The times interest earned ratio measures a company's ability to cover its interest expenses from its operating earnings. A high times interest earned ratio indicates a strong ability to meet interest payments. However, it's concerning that this ratio has significantly decreased over the five-year period. A ratio of 787 in 2017/2018 to just 39 in 2021/2022 indicates a substantial reduction in the company's ability to cover its interest expenses from its operating income.

The company has gone for some debt funded expansions over the period as indicated by the Decrease in equity ratio and Increase in debt ratio. Interest expenses also increased in 2019/2020 due to increase in debt. However the interest cover ratio drastically reduced in 2021/2022 due to the huge increase in bank interest rates within the period. However, still the company maintains a healthy solvency position despite of economic crisis and macroeconomic downturns.

 

5.0 Conclution

Based on the financial statement analysis of Convenience Foods (Lanka) PLC for the period of 2018-2022, it can be concluded that the company has shown consistent growth in revenue and profitability over the years. The company's revenue has increased by an average of 8.5% annually, from LKR 5,678 million in 2018 to LKR 7,452 million in 2022. The net profit margin has also improved from 4.2% in 2018 to 6.5% in 2022, indicating better cost management and operational efficiency.

The company's liquidity position has remained stable over the years, with a current ratio of 1.5 in 2018 and 1.4 in 2022. However, the company's debt to equity ratio has increased from 0.5 in 2018 to 0.7 in 2022, indicating higher reliance on debt financing. The company's return on equity (ROE) has also improved from 10.2% in 2018 to 14.5% in 2022, indicating better profitability for shareholders.

Sri Lankan Economy has faced several downturns during the analysis period. Covid Pandemic in 2020 and followed by Economic crisis in 2021/2022 and several issues has interrupted the production and distribution. Some of the main concerns are fuel shortage, power cuts, huge increment in interest rates, hyper inflation.

However the company has managed their financial performance with minimum effect to their financial performance from the above mentioned factors. Even though some negative observations found in financial statements of year 2021/2022, those are in acceptable level especially during the crisis situation. (Ex. Reduction of interest cover ratio, increase in debt position and increase in inventory position)

Overall, Convenience Foods (Lanka) PLC has shown strong financial performance over the years, with consistent revenue growth, improved profitability, and stable liquidity position. However, the company needs to be cautious about its increasing debt levels and focus on maintaining a healthy balance between debt and equity financing.