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Biffa Inc. Analysis
Name
Institution Affiliation
Course
Instructor’s Name
Date
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Part A
Company context
Biffa plc is a British waste management company. Collections and Resources & Energy make up
the company's two main divisions. Among its responsibilities are trash management and energy
production as well as waste collection and recycling. General waste collection, dry mixed
recycling, food waste collection and single stream recycling are just some of the services that the
company provides, along with hazardous waste collection and treatment, unexpected waste
removal, skip hire, asbestos waste disposal, and bin cleaning for businesses in a variety of
industries. Waste management services include recycling, waste disposal (including bulk hauling),
waste transfer station and household waste recycling center services. Waste electrical and
electronic equipment and textiles are collected as well as domestic tank cleaning, environmental
consulting, as well as producer responsibility compliance schemes. These are just a few of the
many services offered by the company. A total of 2,900 collection vehicles are used by the
business. Founded in 1912, Biffa's headquarters are in High Wycombe, Buckinghamshire, England
(Biffa, n.d.).
Profitability Analysis
Net profit margin
As a proportion of revenue, a company's net profit margin, or simply net profit margin, is
calculated to show how much of a company's revenue is used to generate profits (Nissim and
Penman.,2001).
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(Exhibit 1)
Year
Net
Formula
profit
Margin
2021
2020
2019
2018
NP X100
71100 x100
64700x100
50500x100
50500x100
Sales
1042000
1163100
1091200
1076700
=6.8%
=5.6%
=4.6%
=4.6%
NP- net profit
As shown from the above in Exhibit 1, net profit margin projection, Baff Inc. is experiencing an
upward trend in net profits. In 2018 and 2019 the company posted a profit margin of 4.6%. 5.6%
and 6.8% in periods 2020 and 2021 respectively. This upward trend indicates that for the past four
years the company has deviced a working technique of translating its sales into profits and the
trend is expected to continue even in the coming years.
Return on Equity
ROE measures a company’s profitability by gauging the degree of shareholders investment being
translated into profits. It is calculated by dividing net income by the total shareholders equity.
(Exhibit 2)
Year
Return On
Equity
Formula
NI x100
TSE
2021
2020
2019
2018
71100x100
64700x100
50500x100
50500x100
457900
411000
360200
341200
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=15.5%
15.7%
=14%
=14.8%
TSE- Total shareholders’ Equity
NI-Net Income
As shown by exhibit 2, Biffa Inc has experienced a relatively stable range in its return on Equity
over the last four years. A slight decline from 2018 to 2019 thereafter the ROE hitting a record
15.7% in 2020 and a slight decrease to 15.5%. For sustainable growth rate Biffa Inc. ought to aim
at surpassing the average industry ROE that stands at 18%.
Return on Assets
ROA measures a company's profitability as a percentage of its total assets. Management, investors,
and analysts can use ROA to gauge a company's ability to use its assets to generate profit
(Johnson,1970).
(Exhibit 3)
Year
Formula
2021
2020
2019
2018
Return on
NI X100
71100x100
64700x100
50500x100
50500x100
1420600
1385000
1149700
1054300
=5%
=4.7%
=4.3%
4.8%
Assets
TA
NI-Net Income
TA- total Asset
As depicted in Exhibit 3 above, Biffa Inc has been experiencing an upward projection in its Return
on Assets over the last four years. It is noted that the company has adopted an acquisition strategy.
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From the company’s 2020 annual report the company paid £5.1 million for the trade and assets of
five small enterprises. All previous year's acquisitions had been successfully integrated, and that
was similarly the case this year. COVID-19 had a substantial impact on the company's acquisition
plans as of March 2020, however those processes were put on hold as a result.
Efficiency analysis
Asset turnover ratio
Using the asset turnover ratio, a company's sales or earnings are compared to its assets' worth. The
asset turnover ratio could be used as a measure of a company's ability to produce revenue from its
assets. In order to maximize profits, a corporation must have a high asset turnover ratio. Asset
turnover ratio is a measure of how effectively a company's assets are being put to use to produce
revenue (Johnson,1970).
(Exhibit 4)
Year
Formula
2021
2020
2019
2018
Asset
TS X100
1042000x100
1163100x100 1091200x100
1076700x100
turnover
AA
1420600
1385000
1149700
1054300
=73.3%
=83.9%
=94%
=1.003%
ratio
TS- Total sales
AA- average assets
As Exhibit 4 indicates, Biffa Inc Asset Turnover ratio analysis indicates that the company is very
efficient in generating sales from its assets. Even though the company has been experiencing a
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declining trend in its ability to generate sales from its assets. This downward trend indicates that
the company is not efficiently using its assets to generate sales.
Liquidity Analysis
Current ratio
When it comes to short-term financial obligations, the current ratio is one of the best indicators of
a company's ability to pay. It measures a company's ability to use its existing assets to pay current
debts and other liabilities.
(Exhibit 5)
year
Formula
2021
2020
2019
2018
Current
CA
258100
332200
293100
248100
ratio
CL
360600
347000
298000
278200
=0.72
=0.96
=1
=0.89
CA- Current assets
CL-Current Liabilities
From the above current ratio analysis Biffa Inc has been experiencing a down ward trend in its
ability to meet its short-term obligations. From 2019 to 2021 the company has posted a current
ratio of 1, 0.96 and 0.72 respectively. This puts into questions its ability to meet its short-term
obligations in the coming years.
Quick ratio
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Short-term liquidity is a measure of a company's capacity to meet short-term obligations of its
most liquid assets, such as cash and short-term investments. For this reason, it is also known as the
acid test ratio: the ability of a corporation to pay off its current liabilities with its near-cash
resources (Johnson,1970).
(Exhibit 6)
year
Formula
2021
2020
2019
2018
Quick
C+MS+AR
35700
73300
76300
40600
360600
347000
298000
278200
=0.099
=0.21
=0.26
=0.15
ratio
CL
C- cash and cash Equivalent
MS- marketable securities
CL- current Liabilities
As shown in exhibit 6 above. Biffa Inc. is experiencing a very worrying trend in its ability to meet
immediate obligation using its most liquid current assets. The company has recorded a quick ratio
of below 1.5 over the last 4 years a posting that is far below the industry average of 1.5. this is
deemed risky for the company.
Gearing analysis
Debt-to-Equity Ratio
To determine a company's financial leverage, the debt-to-equity (D/E) ratio is used, this involves
dividing a company's total liabilities by its shareholder equity. An organization's debt-to-totallyowned-funds ratio is an indicator of how much of its activities are funded by debt in comparison
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to Equity. The ability of shareholders' equity to pay off all outstanding debts in the case of a
business downturn is reflected in this metric.
(Exhibit 7)
year
Formula
2021
2020
2019
2018
Debt-to-
TL
962700
974000
789500
713100
Equity Ratio
TSE
457900
411000
360200
341200
=2.1
=2.4
=2.2
2.09
TL- Total Liabilities
TSE-Total Shareholders’ equity
Projections in Exhibit 7 shows that much of Biffa Inc activities are financed by equity in
comparison to debt. For the last four years the company has posted a debt-to-equity ratio of nore
than 2, this indicates that equity finances twice activities as debts. This is a good trajectory for
Biffa Inc. even in the years to come.
Debt Ratio
The debt-to-equity ratio is a financial metric for determining the degree to which a company is
leveraging its assets. It's a measure of how much of a company's assets are financed by debt, so
to speak. In other words, if the debt-to-asset ratio is larger than one, the corporation has a bigger
amount of liabilities than assets. If interest rates suddenly rise, a company with a high debt-toincome ratio may find itself in default. Ratios under 1 indicate that shareholders' equity accounts
for a larger share of a company's assets.
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(Exhibit 8)
year
Formula
2021
2020
Debt Ratio
TDx100
962700x100
974000x100 789500x100
713100x100
TA
1420600
1385000
1149700
1054300
=67.8%
=70.3%
=68.7%
=67.3%
TD- Total debts
2019
2018
TA- Total assets
As shown in exhibit 8 above, Biffa Inc has experienced a debt ratio of less than 100%; this indicates
that the number of liabilities is less than one and that shareholders' equity accounts for a larger
share of Biffa Inc. assets when compared to debt financing.
Investment performance
It has been a good year for Biffa Inc. since the stock was highlighted in March, and the epidemic
rebounded faster than predicted. Progression has continued, with the company recently announcing
a revenue increase of 12 percent over the equivalent time in 2019 and a 3-percent increase
excluding acquisitions for the first five months of the financial year through August. A stabilization
of like-for-like volumes was seen in the core Business and Business collections segment. There
has been a 25 percent increase since March in consensus earnings projections for 2022 and 2023
(Biffa's year ends in March). Biffa's acquisition of Viridor's collection operation and some of its
recycling assets has also helped solidify its position as the world's biggest waste recycling
company. A new plastics recycling plant has been put into operation, a new Company Shop store
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has opened in Southampton, and the development of energy from waste facilities, including the
opening of a new plastics recycling facility, has also taken place (Biffa, n.d.).
Part B
investment appraisal techniques
net present value, Payback period and internal rate of return are some of the investment appraisal
approaches. Project evaluations are the primary focus of these assessments. Before starting a new
project, it is always critical to check the viability. Each technique delivers a unique perspective on
the subject.
Net present Value
Cash inflows and outflows over a duration of time are summed up to arrive at the net present value
(NPV). To determine the viability of a proposed investment or project, budgetary control and
investment planning employ net present value (NPV). The present value of a projected stream of
payments is calculated using NPV, which is the result of a series of calculations.
The time value of money is taken into consideration when calculating the net present value (NPV).
In order to calculate the net present value (NPV), a discount rate is used, which can be obtained
from the cost of capital necessary to invest. For example, NPV analysis relies on assumptions
about future events that aren't always accurate.
According to NPV, an investment's profitability may be evaluated by comparing the value of a
dollar in the future to that of a dollar in the present. Inflation reduces the value of money over time.
For an investment to be worthwhile, the present value of its future cash flows must be taken into
account above and beyond the initial cost of the investment itself. For the NPV formula, future
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cash flows are discounted at a predetermined discount rate. Cash flows from today's investments
can be subtracted from today's costs to determine whether or not an investment is worthwhile.
This signifies that the estimated revenues created by a project or investment in present dollars
exceed the anticipated costs, likewise in present dollars, in the long run. An investment with a
positive net present value (NPV) is presumed to be profitable (Klammer and Walker, 1984).
It is impossible to profit from an investment with a negative net present value (NPV). If an
investment has a positive net present value (NPV), it is eligible for consideration under the Net
Present Value Rule. Inflation and probable gains from other investments during the intervening
time mean that money in the present is more valuable than money in the future. To put it another
way, a dollar earned today is worth less than a dollar earned in the future. This can be taken into
consideration with the inclusion of a discount rate in the NPV formula.
Payback period
The payback period is the amount of time it takes to recoup an investment's initial cost. It is the
amount of time it would have taken to recoup a project's initial expenditure. In order to evaluate
projects, the payback period will indeed be utilized as a method of capital budgeting to determine
how long it takes to recoup the investment. The venture with the shortest time frame is usually
chosen.The time worth of money is not taken into account when calculating the payback period.
The amount of years it would take to recoup the initial investment is used to calculate this. The
payback period is five years, for example, if it takes that long to recoup the cost of an investment.
It does not take into account what happens once repayment has been received. Therefore, it does
not take into account the investment's long-term returns. When it comes to making investment
decisions, many managements and shareholders prefer using the NPV (net present value). An
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investment's net present value (NPV) is calculated by taking the difference between both the
current cash inflow and the current cash outflow over a given period of time (Klammer,1972).
Internal rate of return
Ultimately, the purpose of IRR is to determine the rate of discount that makes the total of yearly
nominal cash inflows equal to the investment's original net cash outlay. There are a variety of ways
to calculate expected returns, but IRR is frequently the best option for evaluating the possible
return on a new project that a business is considering.
Consider of IRR as the predicted yearly growth rate of an investment. A compound yearly growth,
on the other hand, can be likened to this (CAGR). In the actual world, the annual return on an
investment is rarely constant. The exact rate of return that what a given investment generates is
usually different from the IRR that was projected.
Corporate stock buyback schemes can also benefit from IRR analysis. There's little doubt that
investing in the company's own stock is a superior investment — one with a greater internal rate
of return (IRR) — than other options like opening new locations or purchasing other businesses.
IRR can also be used to evaluate investment returns. When calculating the claimed return, the
assumption is usually made that all interest and cash dividends will be reinvested. But what
happens if you don't want to reinvest your earnings and instead rely on them as a source of income?
Also, dividends are either paid out or left in cash if they aren't believed to be reinvested. To what
extent is the cash expected to earn a profit? Instruments like annuities, with their potentially
complex cash flow, necessitate the use of IRR and other assumptions (Klammer and Walker,
1984).
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Corporate Responsibility Report
As a self-regulating business model, corporate social responsibility (CSR) aids in a company's
social accountability—to itself and its stakeholders as well as to the general public. It is possible
for firms to be aware of the impact they have on all parts of society, including environmental,
social and economic, by adopting corporate social responsibility (Biffa, n.d.).
There are a couple of strategies that are employed by Biffa to bring out corporate responsibility
aspect in United Kingdom. These are:
1. Building a Circular Economy
2. Tackling issues related to Climate Change
3. Commitment to our People and Community
Building a Circular Economy
An economic model that is robust, distributed, diversified, and inclusive is possible in a circular
economy. However, there is no waste in this economy since it is designed to be regenerative in
order to combat global issues like biodiversity loss, pollution, and climate change.
Biffa Inc. has actually pumped £1bn of the target investment in green economy infrastructure with
an objective of achieving £1.25bn by the year 2030.
This has been able due to the company’s involvement in Recycling, Plastic Recycling, Processing
of food waste, Energy production from waste and influence on the consumer behaviour.
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
Recycling
Our recycling business is made up of our Polymers plastics division and our Material Recyclers
(MRFs). Because they are built to separate blended recyclables into their constituent material
streams and prep them for sale on the commodities markets, MRFs are critical to the production
industry's supply of high-quality raw materials. The MRFs separate, process, and disinfect
recyclables from a variety of sources. These materials are paper, cardboard, steel, aluminium cans,
and plastic bottles.
Moreover, since business based packaging can be difficult to recycle and trash as a result of its
necessity, Biffa plc has come up with a simplified process. As part of the "Packaging Surgery"
service, it addresses the most prevalent recycling concerns that our customers have. There are
several examples, such as bioplastics, which can be composted or degraded by bacteria, fungi, and
microorganisms in the soil.

Food waste-
Food waste in the United Kingdom totals 9.5 million tonnes per year, according to WRAP. While
some food waste is currently being sent to landfills, the carbon dioxide and methane it produces
are both aides of global warming. Anaerobic digestion (AD) is a renewable energy source that can
be used instead of burning garbage and food waste.

Energy produced from refuse
Using garbage as a source of renewable energy is the goal of energy from waste. Electricity, heat,
and transportation fuels all fall under this category (e.g. diesel). In a variety of methods, this can
be accomplished. The most well-known method is incinerating waste. To assist offer low-carbon
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energy for the UK grid, Biffa plc is the largest provider of refuse-derived fuels to EfW plants in
the UK (Biffa, n.d.).
Tackling issues related to Climate Change
Being that climate change is a universal emergency that needs immediate actions in the present in
order to have a better future, Biffa Inc. has decided to reduce the carbon footprint whilst increasing
the carbon savings. This has led to reduction of carbon emissions by 70% and a further 50%
reduction by 2030.

Greenhouse Gas Emissions from Operations and Air Pollution
Since Biffa plc increased its garbage collection's efficiency, decreased emissions per tonne of
waste, and increased the kind of recyclables it was collecting, enhancing the treatment's
effectiveness and minimizing the size of the co-ownership of a landfill business (Biffa, n.d.).

Greenhouse Gas Emissions from Landfill
In 2020, Biffa became a member of the Science Based Targets project (SBTi), which establishes
emission reduction goals based on scientific evidence. In joining the SBTi scheme, Biffa is
demonstrating its devotion to a greener world and defining its path to net zero emissions.

Renewabe Energy
These AD plant Staffordshire also produces biogas, which is used to generate methane for use in
the production of biofuels from food and other wastes.
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Commitment to our People and Community
Biffa plc wants to establish a culture and atmosphere where everyone can thrive, working together
successfully and securely to accomplish our goals and have a positive impact on the organization.
Our priorities are guided by our People Strategy. In order to attract, lead and inspire active
participation, personal growth, and elevated levels of output (Biffa, n.d.).
This is supported by our policies, which help to ensure that our well-defined stances have been
taken on crucial issues conveyed to our staff and ourselves in a bid take action that is both
consistent and appropriate.

Community Engagement
When the flu pandemic hit, Biffa's employees were recognized around the country for their
dedication to the company's mission. Throughout the year, it continued to assist the local
community by raising money for causes like food banks and conservation efforts. WasteAid, a
non-profit organization that provides low-cost waste management advice to communities in poor
nations, is Biffa plc's long-term partner(Biffa, n.d.).

Diversity and inclusion
Because of this, Biffa is committed to treating all of its employees fairly and equally. Most of the
operating teams in the waste management industry are made up primarily of men, as is customary
in this profession. In total, there are 18.2% female employees and 81.82% male employees
working for the company. A female board member will be appointed to the Biffa plc board in April
2021, as part of the company's efforts to achieve greater gender parity (Biffa, n.d.).
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References
(n.d.). Biffa. https://www.biffa.co.uk/
Advantage, C., 2020. Corporate Social Responsibility. CSR and Socially Responsible Investing
Strategies in Transitioning and Emerging Economies, 65.
Horrigan, J.O., 1968. A short history of financial ratio analysis. The Accounting Review, 43(2),
pp.284-294.
Johnson, C.G., 1970. Ratio analysis and the prediction of firm failure. The Journal of
finance, 25(5), pp.1166-1168.
Klammer, T., 1972. Empirical evidence of the adoption of sophisticated capital budgeting
techniques. The Journal of Business, 45(3), pp.387-397.
Klammer, T.P. and Walker, M.C., 1984. The continuing increase in the use of sophisticated capital
budgeting techniques. California management review, 27(1), pp.137-148.
Nissim, D. and Penman, S.H., 2001. Ratio analysis and equity valuation: From research to
practice. Review of accounting studies, 6(1), pp.109-154.
Appendix 1
Biffa Inc.
Income statement
For the year ended 2018-2021
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Source: Yahoo finance
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Appendix 2
Biffa Inc.
Statement of Financial Position
For the year 2018-2021
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Source: Yahoo Finance