The document analyzes the financial statements of Unilever Nepal Limited to evaluate its financial condition. It includes a comparative balance sheet analysis showing assets, liabilities, and equity for the fiscal years 2073-74 and 2072-73. It also includes a comparative income statement analysis showing revenue, expenses, and total income for those same years. The objective is to evaluate the company's financial status, operating efficiency, asset utilization, and ability to manage debt through financial ratio analysis of its annual reports.
The document analyzes the financial statements of Unilever Nepal Limited to evaluate its financial condition. It includes a comparative balance sheet analysis showing assets, liabilities, and equity for the fiscal years 2073-74 and 2072-73. It also includes a comparative income statement analysis showing revenue, expenses, and total income for those same years. The objective is to evaluate the company's financial status, operating efficiency, asset utilization, and ability to manage debt through financial ratio analysis of its annual reports.
The document analyzes the financial statements of Unilever Nepal Limited to evaluate its financial condition. It includes a comparative balance sheet analysis showing assets, liabilities, and equity for the fiscal years 2073-74 and 2072-73. It also includes a comparative income statement analysis showing revenue, expenses, and total income for those same years. The objective is to evaluate the company's financial status, operating efficiency, asset utilization, and ability to manage debt through financial ratio analysis of its annual reports.
The document analyzes the financial statements of Unilever Nepal Limited to evaluate its financial condition. It includes a comparative balance sheet analysis showing assets, liabilities, and equity for the fiscal years 2073-74 and 2072-73. It also includes a comparative income statement analysis showing revenue, expenses, and total income for those same years. The objective is to evaluate the company's financial status, operating efficiency, asset utilization, and ability to manage debt through financial ratio analysis of its annual reports.
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Financial Analysis of Unilever Nepal Limited
Programme Name: ___MBA______
Course Code: ___FINC 5101____ Course Name: ___ Financial Management ___ Assignment / Lab Sheet / Project / Case Study No. __2_ Date of Submission: __August 11, 2020___
Submitted By: Submitted To:
Student Name: Suraj Ban Faculty Name: Durga Prasad Acharya Semester: 2nd Semester Department: MBA Financial Analysis of Unilever Nepal Limited 2
Table of Contents Chapter 1....................................................................................................................................3 Introduction................................................................................................................................3 Background of the study....................................................................................................................3 Objectives of the study.......................................................................................................................3 Limitations.........................................................................................................................................3 Methodology......................................................................................................................................4 Chapter II...................................................................................................................................5 Body...........................................................................................................................................5 Data Analysis and Interpretation........................................................................................................5 Major Findings...................................................................................................................................8 Chapter III..................................................................................................................................9 Conclusion & Recommendation................................................................................................9 Conclusion..........................................................................................................................................9 Recommendation................................................................................................................................9 References................................................................................................................................10 Financial Analysis of Unilever Nepal Limited 3
Chapter 1
Introduction Background of the study Investors review important factors in a company's economic status by analysing financial statements. These elements include solvency, liquidity, risk management and profitability. A financial statement is an accounting document summarizing an organization's economic events and their impacts on the firm's competitive position. There are four types of economic data summaries: balance sheets or statements of financial position, statements of profit and loss, statements of cash flows and reports on shareholders' equity, also known as statements of retained earnings. The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. To this report the researcher tried to analyse the financial condition with the ratio analysis of Unilever Nepal Limited. This research report covered the essential sector of financial department of the company. This report included the Liquidity Ratio Analysis and the Debt Management Ratio Analysis of the Financial Data of Unilever. Thus, it would be appropriate to say the report supported the subject matter of the field of financial sector of Business Company.
Objectives of the study
The overall objectives of this study are to give a brief insight about the financial strength and weakness of the organization. However, the specific objectives of this analysis are as follows: To evaluate the organization's financial status To evaluate the organization's operating efficiency To evaluate the organization's efficiency in managing and utilizing its assets To help us work on the practical scenario of day-to-day operation in an organizational environment.
Limitations Regarding the data collection procedures, time management, Source reliability etc. the following are the limitations of this report: a) The required time period to complete this research report was limited. Financial Analysis of Unilever Nepal Limited 4
b) As it was the researcher's first financials study of an organization, how far the researcher did but was unable to cover all financial information. c) This study was done with the help of the financial data found in the website and other internet sources. So, the entire analysis is based on the secondary data. d) The data provided then is limited to the research and the report. Detailed information about the financial resources of the company could not be provided.
Methodology Research methodology implies the basic research method to be carried out through the entire study. Methodology is the most important part for the study. It describes the site selection, research design, population and sample, sources of data, method of data collection, data analysis tools, analysis model and limitation of the methodology. The task began with the collection of necessary data and information concerning the study. The data and information collected were studied carefully and presented them systematically and get them analysed so as to meet the objective of the report. All data provided were thoroughly studied and then search design was to plan systematically. Most of the information had adopted from the site of Unilever Nepal as it is a trustable and authoritative source with reference to this report. Financial Analysis of Unilever Nepal Limited 5
Chapter II
Body Data Analysis and Interpretation This chapter is incorporated with different tools for the analysis of the financial status of Unilever Nepal Limited. Different ratios are used for the purpose of analysis. The first presentation of the analysis is the comparative balance sheet. Unilever Nepal Limited Comparative Analysis of Balance sheet Particulars 2073-74 2072-73 Assets Non-Current Assets Property, plant and equipment 56,33,40,715 47,99,00,510 Intangible assets 19,30,731 21,90,377 Deferred tax assets 1,59,49,220 77,54,405 Other non-current assets 5,93,001 - Total Non-Current Assets 58,18,13,667 48,98,45,292 Current assets Inventories 62,00,25,639 67,46,90,691 Financial assets Trade and other receivables 68,02,78,067 29,70,66,288 Investments 1,16,04,93,610 1,03,67,71,634 Cash and cash equivalents 24,17,36,744 51,75,66,166 Bank balance other than CCE 3,48,92,484 2,83,49,570 Other current assets Prepayments 25,88,198 21,51,449 Total current assets 2,74,00,14,742 2,55,65,95,798 Total assets 3,32,18,28,409 3,04,64,41,090 Equity And Liabilities Equity Share capital 9,20,70,000 9,20,70,000 Retained earnings 1,98,22,01,113 1,95,69,18,640 Total Equity 2,07,42,71,113 2,04,89,88,640 Liabilities Non-Current Liabilities Provisions 1,29,48,402 1,08,70,569 Total Non-Current Liabilities 1,29,48,402 1,08,70,569 Current Liabilities Trade and other payables 1,01,94,48,347 90,20,20,708 Provisions 16,03,32,004 4,36,63,608 Income Tax Liability 5,48,28,543 4,08,97,565 Total Current Liabilities 1,23,46,08,894 98,65,81,881 Total Liabilities 1,24,75,57,296 99,74,52,450 Financial Analysis of Unilever Nepal Limited 6
Total Equity and Liabilities 3,32,18,28,409 3,04,64,41,090
Comparative Analysis of Income Statement
Particulars 2073-74 2072-73
Revenue from operations 4,44,23,74,518 3,94,64,75,648 Other income 62,63,32,010 51,27,24,588 Total Income 5,06,87,06,528 4,45,92,00,236 Expenses Cost of materials consumed (2,39,19,81,812) (1,97,94,11,692) Changes in inventories of finished 10,89,79,198 (2,67,59,143) goods (including stock-in-trade) and work-in-progress Employee benefits expenses (34,72,98,786) (24,26,98,762) Depreciation and amortization (3,29,86,701) (2,64,34,130) expenses Other expenses (1,14,47,23,099) (77,64,17,084) Total Expenses (3,80,80,11,200) (3,05,17,20,811) Profit before tax 1,26,06,95,328 1,40,74,79,425 Income Tax Expense (29,54,65,022) (28,58,02,098) Profit from continuing operations 96,52,30,306 1,12,16,77,327 Net Profit for the year 96,52,30,306 1,12,16,77,327
1. Debt ratio
Debt ratio = Total liabilities / total assets
= 1,24,75,57,296 / 3,32,18,28,409
= 0.37 times.
Therefore, the debt ratio of Unilever shows that the company has the ability to pay off their debt with
the assets by 0.37 times.
2. Debt to equity ratio
Debt to equity ratio = Total Liabilities / total equity
= 1,24,75,57,296 / 2,07,42,71,113
= 0.60 times.
Therefore, the debt equity ratio of Unilever shows that the company’s shareholders equity can cover
all the outstanding debt by 0.60 times.
3. Return on assets
Return on assets = Net Income / Total assets
Financial Analysis of Unilever Nepal Limited 7
= 96, 52, 30,306 / 3,32,18,28,409
= 0.29 times.
Therefore, the return on assets of Unilever Nepal LTD is 0.29 times which shows that, every 1 rupee
invested on Assets generated 29 rupees of Net Income.
4. Return on equity
Return on equity = Net income / shareholder’s equity
= 96, 52, 30,306 / 2, 07, 42, 71,113
= 0.46 times
Therefore, the return on equity of Unilever Nepal LTD is 0.46 times which means that for every 1-
rupee investment on Equity generated 46 rupees of Net Income.
5. Current ratio
Current ratio = current assets / current liabilities
= 2,74,00,14,742 / 1,23,46,08,894
= 2.21 times
Therefore, the current ratio of Unilever Nepal LTD shows that the company is capable of paying
their short-term liabilities with its current assets by 2.21 times.
6. Quick ratio
Quick Ratio = (Total current assets – Inventory – Prepayments) / Current Liabilities
Therefore, the quick ratio of Unilever Nepal LTD shows that it can change its assets into cash by
1.71 times when they have to pay its current liabilities.
7. Inventory turnover
Inventory turnover = Costs of Goods Sold / average inventory
= 3, 80, 80, 11,200 / 62, 00, 25,639
Financial Analysis of Unilever Nepal Limited 8
= 6.14 times.
Therefore, the Unilever has sold and replaced its inventory up to 6.14 times over a 1-year time.
8. Days in inventory
Days in inventory = 365 / inventory turnover
= 365 / 6.14
= 59.44 days
Therefore, it shows that the Unilever inventory moves its inventory in 59.44 days.
9. Accounts receivable turnover
Accounts receivable turnover ratio
= Net sales / average accounts receivable
= 5,068,706,528 / 680,278,067
= 7.45times
Therefore, Unilever collects it average accounts receivable by 7.45 times during the year.
10. Earnings per share (EPS)
Earnings per share = net income / average outstanding common shares
= 96, 52, 30,306/ 9, 20, 70,000
= 10.48 per share
Therefore, the company’s share of stock receives 10.48 per share which is comparatively low.
Major Findings
a) Unilever Nepal Limited being a multinational company has performed not so well than that it did in 2073 in the Nepalese market. b) The company has decreased its current assets in compare to the year 2073 whereas; it has increased its non-current assets by adding plant and machineries for its operations. c) The company has decreased its total equity than the year 2073 and has increased its liabilities in 2074. Financial Analysis of Unilever Nepal Limited 9
d) Moreover, the current price for per share in the market is 19,380 whereas the earning per share as per the investment has resulted to just 10.48 which is comparatively low to invest in the company. e) Investors look for a company to have debt ratio between 0.3 and 0.6. Debt ratio of 0.4 or
lower are considered better. So, this makes Unilever better off to get financials.
f) Current ratio of Unilever Nepal LTD shows that the company is capable of paying their
short-term liabilities with its current assets by 2.21 times which is above the required average
ratio. So, the Current Ratio and Quick Ratio of Unilever is in good position.
g) From the income statement, the net profit of the company is decreasing trend due to more
consumption of materials. However, the trend of organization is fluctuating.
h) Earning Per Share has also decreased due to the decrease in Net Profit.
Chapter III Conclusion & Recommendation Conclusion
Liquidity position of Unilever Nepal Limited is good. It has a satisfactory liquid asset and there is no liquidity crisis in the organization. The current ratio and quick ratio has been balanced and is satisfactory. However, Profitability position of Unilever Nepal Limited is not highly satisfactory. Although the company has been earning profits every year, the profit so earned is not enough for a financial firm. On the basis of this analysis, we can clearly see that the main profit indicators such as Return on shareholders equity, return on total assets, dividend per share, earning per share etc. are in a decreasing trend. Last but not the least, this analysis is based only on the availability of an annual report. Other necessary documents required for the total analysis could not be obtained due to various reasons. Likewise, an analysis based only in terms of ratios may not be sufficient for the overall analysis of a company. Hence, due to these limitations this report can not be concluded as the overall and the actual analysis of Unilever Nepal Limited. This analysis report may only be used as reference concerning the Financial Analysis of Unilever Nepal Limited. In addition, since the company is run by highly competent personnel, they may have utilized the company's assets and loans to its optimum capacity. Financial Analysis of Unilever Nepal Limited10
Recommendation
Based on the study performed, the following suggestions are recommended:
a) The profitability ratio of Unilever Nepal Limited is not highly satisfactory which is not a good indication in this cut- throat competition. The financial manager should make more effective policies to make high profit. The management of the company should investigate the reasons for the decreasing tend and should increase the ratio in the coming year. b) The management should use effective policies to increase its interest income trend from external assets. c) The spending on miscellaneous expenses is very high compared to past year, so the company should carefully analyze if the spending is bieng done on unproductive sectors. d) Similalry, the cash balance of the company ia also comparatively low, so the management team should consult with the Finance team, analyze the industry and maintain adequate cash and qeuivalents.
