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FINANCIAL PERFORMANCE

ANALYSIS
2015 -2016

Group 3 Advanced Accounting 56


OVERVIEW AND BACK GROUND

Nguyn Th Thi H
OVERVIEW

Nguyn Th Thi H
OVERVIEW

Unilever N.V. Unilever PLC


Based in Rotterdam Based in London

Nguyn Th Thi H
THE ORGANIZATION STRUCTURE

The company operates in 150


countries, including 3 regions:
Europe
(mainly in Western Europe and Central
Europe)
The Americas
(mainly in North America and Latin
America)
Asia/AMET/RUB
(mainly in Turkey, Australia, Middle
East, )

Nguyn Th Thi H
THE ORGANIZATION STRUCTURE

Main business sectors

43%

57%

Nguyn Th Thi H
FINANCIAL PERFORMANCE
ANALYSIS IN 2015 2016
FINANCIAL STRUCTURE POSITION
Assets structure table

Proportion (%)
2015 2016
Current Assets 24.26 24.6
Cash & Short Term
5.47 7.06
Investment
Account Recivable 9.06 9.61
Inventories 8.3 7.58
Other Current Assets 1.42 0.37
Non-current Assets 75.74 75.4 Increase in Current assets
Property, Plant &
Equipment
22.11 20.62
and decrease in Non-
Intangible Assets 47.92 48.62
Total Investment And
1.13 1.19 current Assets.
Advance
Other Long Term
0.93 1.19
Investment
Long Term Note
0.85 -
Receivable
Other Long Term Asset 2.80 3.7
Total Assets 100 100

ng Th M Hnh
FINANCIAL STRUCTURE POSITION
Assets structure table

Proportion (%)
2015 2016
Current Assets 24.26 24.6
Cash & Short Term
5.47 7.06 The reason for the change is
Investment
Account Recivable 9.06 9.61 in 2016, the company
Inventories 8.3 7.58 increased Cash and Short-
Other Current Assets 1.42 0.37
term Investments (2.59%)
Non-current Assets 75.74 75.4
Property, Plant & and promoting to improve
22.11 20.62
Equipment Account Receivables
Intangible Assets 47.92 48.62
Total Investment And (0.55%).
1.13 1.19
Advance On the contrary, the Inventories
Other Long Term
Investment
0.93 1.19 and Other Current Assets
Long Term Note
0.85 - showed the downward tendency
Receivable
Other Long Term Asset 2.80 3.7
in proportion by -0.72% and
Total Assets 100 100 -1.05%, respectively.
ng Th M Hnh
FINANCIAL STRUCTURE POSITION
Assets structure table

Proportion (%)
2015 2016
Current Assets 24.26 24.6
Cash & Short Term
5.47 7.06 The reason for the change is in
Investment
Account Recivable 9.06 9.61 2016, the company increased
Inventories 8.3 7.58 Cash and Short-term
Other Current Assets 1.42 0.37
Investments (2.59%) and
Non-current Assets 75.74 75.4
Property, Plant & promoting to improve Account
22.11 20.62
Equipment Receivables (0.55%).
Intangible Assets 47.92 48.62
Total Investment And On the contrary, the
1.13 1.19
Advance Inventories and Other
Other Long Term
Investment
0.93 1.19 Current Assets showed the
Long Term Note Receivable 0.85 - downward tendency in
Other Long Term Asset 2.80 3.7
proportion by -0.72% and
Total Assets 100 100 -1.05%, respectively.
ng Th M Hnh
FINANCIAL STRUCTURE POSITION
Assets structure table
Proportion (%)
2015 2016
Current Assets 24.26 24.6
Cash & Short Term
5.47 7.06
Investment
Account Recivable 9.06 9.61
Inventories 8.3 7.58 Non-current Assets proportion in
Other Current Assets 1.42 0.37 2016 and 2015 was 75.4% and
Non-current Assets 75.74 75.4 75.74%, respectively.
Property, Plant &
22.11 20.62 The decretion in Non-current
Equipment
Intangible Assets 47.92 48.62
Asssets proportion could be
Total Investment And result in withdraw Long Term
1.13 1.19
Advance Financial Investments, especially
Other Long Term Investment in Bonds.
0.93 1.19
Investment
Long Term Note
0.85 -
Receivable
Other Long Term Asset 2.80 3.7
Total Assets 100 100

ng Th M Hnh
FINANCIAL STRUCTURE POSITION
Capital structure table


(number in %)
2015 2016 Equity in both two years
Current Liabilities 26.39 35.73 were quite high. It proves
Other current liabilities 11.88 0.69
that financial self-control
Total Current Liabilities 38.27 36.42
Long-Term Debt 18.45 19.74 ability of company is also
Provision for Risks & high.
10.08 11.12
Charges
Deferred Taxes 1.07 1.25 The downward tendancy of
Other Liabilities 1.38 1.39 Liabilities has major reason
Total Equity 30.75 30.08 that Current Liabilities
Total Liabilities & Owners'
100% 100% decreased by 1.85%. It
Equity
showed that company paid
for Short term borrowing,
paying decompress for
company.
ng Th M Hnh
FINANCIAL RATIO ANALYSIS
1. Liquidity
ratio

Year 2016 2015


Current 0.68 0.63
Ratio
Quick Ratio 0.43 0.25

According to the table, the Unilevers current ratio in 2016 is more than
the previous years one.
It shows that the safety level in meeting the demand to pay short-term
debts in 2016 is better than in 2015.

Hunh Nht H
FINANCIAL RATIO ANALYSIS
1. Liquidity
ratio

Year 2016 2015


Current 0.68 0.63
Ratio
Quick Ratio 0.43 0.25

At this ratio, Unilever had 0.43 times in 2016, which is more than 0.25
times in 2015 and it shows that the company is more flexible at paying
liabilities in 2016 than in the previous year.
Basically, it is because the inventory of this company in 2016 is less than
in 2015.

Hunh Nht H
FINANCIAL RATIO ANALYSIS
2. Asset
management
a, Inventory turnover ratio:

Unit 2016 2015


Cost of goods
30,299 30,808 COGS
sold million
Inventory turnover ratio =
Inventory
Inventory 4,278 4,335
million
Inventory
times 7.08 7.11
turnover
The inventory turnover of Unilever slightly dropped from 2015 to 2016, from 7.11 to
7.08.

However, compared to its biggest competitor, Procter & Gamble (PG) (2016) 6.72,
the Inventory turnover rate of Unilever is still higher, this could lead to the waste of
labor cost.

Khng Minh H
FINANCIAL RATIO ANALYSIS
2. Asset
management
b, Account receivable days:

Unit 2016 2015


Account receivable million 5,102 4,804
Average daily sale Account receivable
million 144.42 145.95
(= Turnover*/365) Account receivable days
Account receivable 35.3275 = Average daily sales
days
days 32.91538
2

The Account receivable days of Unilever raised over 2% from 2015 to 2016. This
figure can be quite high and quite risky compared to its biggest competitor,
Procter & Gamble (PG) (2016) with 14.18 days.
Therefore, Unilever should try to adjust its account receivable. However, this
can be viewed as Unilevers competitive advantage against PG to attract more
business partners.

Khng Minh H
FINANCIAL RATIO ANALYSIS
2. Asset
management
b, Asset turnover:

Unit 2016 2015


Sales million 52,713 53,272 Sales
Total asset million 56,429 52,298 Asset turnover =
Total asset
Asset
times 0.934147 1.018624
turnover

The ability to utilize the companys asset and generate it to cash/sale


decreased from 2015 to 2016.
Unilever should try their best to bring this figure up, use their asset more
effectively. However, their efficiency is more than double that of their
competitor, PG whose figure is at 0.52 (2016)

Khng Minh H
FINANCIAL RATIO ANALYSIS
3. Debt
ratio

Unit 2016 2015


Total
million 39,449 36,216 Total liabilities
liabilities
Debt ratio =
Total asset million 56,429 52,298 Total asset
Debt ratio % 69,91 69,25

The debt ratio of Unilever is quite high, management should try to lower this by
decreasing the total liability and increase the companys worth.

Chang Dayoung
FINANCIAL RATIO ANALYSIS
4. Interest Coverage Ratios a.k.a Times Interest Earned
TIE)

Unit 2015 2016


EBIT million 7,469 7,220
Interest Expense million 400.66 478.78 TIE = EBIT / Interest
expense
TIE times 18.64174 15.07999

The ability to pay debts of Unilever is quite high and seem very safe for
the creditors to give out loans to Unilever
=> High credential and trustworthy.

Chang Dayoung
FINANCIAL RATIO ANALYSIS
5. Profitability
ratio
a) Gross profit margin:

Ratios unit 2015 2016


(Revenue-COGS)
Gross profit Gross profit margin =
% 42.17 42.65 Revenue
margin

In 2016, GP margin of the company has increased by 0.48% to 42.7% driven


by margin - accretive innovations and acquisitions as well as the discipline in
driving savings programs.

Nguyn Th M Hoa
FINANCIAL RATIO ANALYSIS
5. Profitability
ratio
b) Net profit margin:

Ratios unit 2015 2016


Net profit Net profit margin = Net income/Sales
% 9.22 9.83
margin revenue

Net profit margin increased by 0.61% to 9.83%

Reason: Net profit from joint ventures and associates improved due to growth in
profits from the Pepsi Lipton joint venture. Other income from non-current
investments in 2016 was also higher than the previous year and included a gain
from the revaluation of a financial asset.

Nguyn Th M Hoa
FINANCIAL RATIO ANALYSIS
5. Profitability
ratio
c) Return on common equity (ROE):

Ratios unit 2015 2016


Return on ROE = Net income/Total equity
% 33.75 32.61
equity

Although Unilevers net income continued to increase in the year of 2016, the
ratio of ROE declined 1.14% compared with ROE ratio in the previous year.

Reason: New shares were constantly issued to the investor to increase the
shareholders capital but without an effective operation, the net income came
out not as high as expected.

Nguyn Th M Hoa
FINANCIAL RATIO ANALYSIS
5. Profitability
ratio
d) Return on asset (ROA):

Ratios unit 2015 2016


ROA = Net income/Total
Return on
% 9.79 9.54 asset
asset

ROA gives an idea as to how efficient management is at using its assets to


generate earnings.

ROA ratio of Unilever also slightly decreased by 0.25% within the year of
2016

Nguyn Th M Hoa
FINANCIAL RATIO ANALYSIS
6. Market
ratio
a) Earnings per share:

Ratios 2015 2016


Earnings per EPS = net income/ shares outstanding
1.72 EUR 1.82 EUR
share

Diluted earnings per share for the full year was up 5.7% to 1.82 due to lower
charges within non-core items than in the prior year.
In 2016, they recorded acquisition and disposal related costs of 132 million and a
loss on disposal of 104 million for local Alberto Culver brands and the rights for
VO5 in Argentina that they were required to sell as part of the regulatory approval
process Market ratios.

Trnh Th Thu Phng


FINANCIAL RATIO ANALYSIS
6. Market
ratio
b) Price - Earnings Ratio (P/E):

Ratios 2015 2016


P/E= Price per share/ Earnings per share
P/E 24.5 21.2

The increase in EPS led to a decrease in P/E ratio.

It indicates poor current and future performance of the company. This also
proves to be a poor investment.

Trnh Th Thu Phng


FINANCIAL RATIO ANALYSIS
6. Market
ratio
c) Price- Sales Ratio (P/S):

Ratios 2015 2016


P/S = price per share/ sales per share
P/S 2.084 1.979

In 2015, the ratio displays a strong market price and an equally strong
company.
However, in 2016 the ratio decreased. It could be a chance for a good buy
with a stock price which is undervalued. Some investors seek a low P/S ratio
to uncover good stock buys.

Trnh Th Thu Phng


FINANCIAL RATIO ANALYSIS
6. Market
ratio
d) Enterprise Value - EBITDA Ratio:

Ratio 2015 2016 Company March 2017


Enterprise Unilever 14.16
Value 16.9 14.4 P&G 15.06
EBITDA Industry median 12.08

Compared with P&G(15.06), the ratio of Unilever currently (14.16) is healthier.


Although the ratio is higher than 10, it is still acceptable compared to the
industry median (12.08).
The ratio tends to smaller over the years, which means the performance of
Unilever in the industry continues improving.
Trnh Th Thu Phng
FINANCIAL RATIO ANALYSIS
6. Market
ratio
e) Tobins Q ratio:

Company March 2017


Unilever 0.93
P&G 1.83

With smaller ratio, Unilever would be attractive to corporate raiders or


potential purchasers if they may want to purchase the firm instead of creating
a similar company.

This would likely result in increased interest in the company, which would
increase its stock price, which would in turn increase its Tobin's Q ration.

Trnh Th Thu Phng


THANK YOU FOR LISTENING!

GROUP 3 ADVANCED ACCOUNTING 56