Manufacturing companies in Nigeria are
faced with the contemporary issues of controlling costs
due to the exchange rate volatility leading to a
continuous rise in inflation and its attendant impact on
the cost of operations. The 2021 Annual Reports and
Accounts of Vitafoam Nigeria Plc. revealed that the
company’s profit is squeezed and on a downward
trajectory due to the cost of raw materials. This paper
carried out a Financial analysis of the annual report and
accounts of Vitafoam Nigeria Plc for 5 years (2017-2021)
using Vertical, Horizontal, and Ratio analyses. All
findings using the three analytical tools revealed that the
company has maintained a positive operating profit and
steady growth until 2021 when despite growth in
Revenue, profit indicators did not grow in the expected
proportion as was the case in preceding years. This was
basically due to the impact of the cost of sales driven by
the unavailability and volatility of foreign exchange and
its attendant impact on the cost of raw materials and
other production inputs. Distribution and
Administrative costs remained stable and even in a
downward slide in 2021 relative to preceding years. It is
therefore recommended that the management of
Vitafoam Nigeria Plc. aside from working to increase
sales revenue, must tackle the issues of cost, especially in
sourcing foreign currency to finance their inputs. They
may have to explore the option of creating a market
internationally for their products or diversifying to
export other local contents to create room for foreign
exchange inflows to finance the purchase of raw
materials which is usually imported directly or through
authorized distributors.
Keywords :
Vertical Analyses, Horizontal Analyses, Ratio Analyses, Gross Profit, Operating Profit, Return on Asset, Cost of Sales.