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FMCG

• Hindustan Unilever Limited is india’s


largest fastmoving consumer goods
(fmcg) company

• Has a clear purpose – to make


sustainable living commonplace

• With over 40 brands across 12


distinct categories

• 18,000 employees working across 28


company owned factories and nine
offices.
QUALITATIVE
ANALYSIS

1. BRAND VISIBILITY 2. DISTRIBUTION SYSTEM


3. SHARE OF WALLET 4. MARKET POSITION AND SHARE

1. CUT THROAT COMPETITION 2. PRICE OF


COMMODITIES
3. BUYER POWER 4. RISK FACTOR

1. RISK AND GOVERNANCE 2. BUSINESS INTEGRITY


3. CORPORATE GOVERNANCE 4. CSR
Ratio Analysis
• Liquidity Ratio

RATIO SIGNIFICANCE FORMULA VALUE INDUSTRY STANDARD


Current Ratio Ability of a company to pay off its Current Assets/ Current Liabilities 1.03 1.35
liabilities
Quick Ratio an indicator of a company’s short- Current Assets – Inventories / 0.73
term liquidity position and measures Current Liabilities
a company’s ability to meet its short-
term obligations with its most liquid
assets.

Current Ratio: HUL’s current ratio is almost at par with the industry standards. Thus, we can conclude that HUL has
enough current assets to pay off its short term borrowing

Quick Ratio:
ASSET MANAGEMENT RATIO
RATIO SIGNIFICANCE FORMULA VALUE INDUSTRY STANDARD
Inventory Rate at which company sells Net Sales/ Inventory 15.99 10.96
Turnover its products
Ratio
Fixed Assets Company’s return on its Net Sales/ Total Fixed Assets 6.81 4.01
Turnover investment in property,
Ratio equipment, etc
Inventory No. of days company holds its 365 days/ Inventory Turnover 22.83 29.26
Days Ratio inventory before selling it Ratio

Inventory Ratio: Company is selling goods very quickly and the demand for their products exists.

Fixed Assets Turnover Ratio: HUL has less money tied up in fixed assets for each unit of sales
revenue
Market Value Ratio
• Earning per share : Earning allocated per share
Ratio Significance Formula 2019 2018
Earning per Indicator of a company's profitability. (Net income - Preferred dividend)/ 29.94 24.25
share weighted average common share o/s
• Inference – As there is increase in the EPS, it indicates that there has been increase in company’s earning power.

• Dividend per share: the sum of declared dividends issued by a company for every ordinary share outstanding
Ratio Significance Formula 2019 2018
Dividend per An important metric to investors Sum of dividend declared for the 22 20
share because the amount a firm pays out in period/
dividends directly translates to income Ordinary shares o/s for the period
for the shareholder

• Inference – As the ratio has increased than previous year, it suggests to investor that company is in healthy
condition and can withstand current market conditions
Debt Management Ratio
• Return on asset ratio :
Ratio Significance Formula value Industry standard
Return on asset Measures how Net income/Total asset 35.07 40.62
effectively a company
can earn a return on its
investment in assets.
Inference – As industry standard is greater than the value, HUL should focus on effective utilization of its assets

• Profit Margin:
Ratio Significance Formula Value Industry Standard

Profit Margin The degree to which Net income/ Sales 23.74 22.71
a company or a
business activity
makes money.
• Inference – As the calculated value is more than the industry standard, it indicates that company is performing
fairly well
• RETURN ON EQUITY
• ROE is a profitability ratio that measures the ability of a firm to generate profit from its shareholder’s
investments in the company.
Ratio Significance Formula Value Industry Standard

Return on equity measures the ability of a firm to generate profits Net Income /Shareholder’s 82 47.23
from its shareholders investments in the company. Equity

• Inference- As the calculated value is higher than industry standard performance of the company is good

• RETURN ON CAPITAL EMPLOYED


• ROCE it is a financial ratio that determines a company’s profitability and the efficiency the capital is applied
Ratio Significance Formula Value Industry Standard
Return on capital Measures how efficiently a company can generate EBIT/Capital 94.87 53.56
employed profits from its capital employed by comparing net Employed
operating profit to capital employed
• Inference - As the calculated value is more than the industry standard, implies more economical use of capital
Conclusion

FMCG sector will continue to see growth as the demand for these goods remains
more or less constant , irrespective of recession or inflation

Overall performance of HUL is better compare to FMCG industry standard as


most of the ratios are on higher side

Higher asset management ratios indicates its efficient use of plants and
equipment, whereas increase in market ratios indicates its increase in
earning power and profits

Although its liquidity ratio are below industry average, they are within
acceptable limit

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