Finanacial Evaluation of Unilever

elude of Contents Table of Content3 List of Tables4 Table 1 6 1. Introduction2 2. Main Body2 3. Management Structure4 4. Ability to Earn Income 5 5. Size of parentage Held5 6. Relience on Debt Financing5 7. Key Indicators for 2011 and 20126 8. gainfulness of var. Product Lines and geographic Regions 6 Table 28 9. FINANCIAL RATIOS FOR UNILEVER10 9. 1 Ope proportionalityns Analysis10 9. 2 Liquidity Analysis12 9. 3 Debt and Solvency Analysis 14 9. 4 hitability Analysis15 5. CONCLUSION16 come OF REFERENCES17 IntroductionWhen evaluating a company important is to know companys history, carrying outs and the nature of the business in which it operates. On other hand by reviewing companys fiscal statements, opeproportionnal pract applesauces we put forward evaluate its carrying out and compare it with the previous age or with the key competitors. By analyzing its monetary indicators we can assess how profitsable and sound the company is. This research musical theme will give bri ef description Unilever, its main divisions and products, its troubles mental synthesis and the financial achievement evaluation, with an aim to highlight the best practices and the exploitation drivers.Main Body 2. 1 Profile of the company, its divisions, products and write out chain Unilever is multinational corporation and is one of the worlds disruptive moving consumer easilys companies with a host of well known brands. The company operates by and through four segments Personal Care, Foods, Refreshment, and Home Care. Unilever is a joint venture of cardinal companies that date back from the late nineteen century. It was formed by devil Dutch families, Jurgens and Van den Bergh, butter merchants who later started producing margarine and by the British soap producer William Hesketh Lever.Since the early nineteen century the ii companies were concentrated on acquisitions and in the early 1929 they signed an agreement to vex Unilever (Unilever, 1929 p. 2). Unilever ov er the last two decades acquired the meat business Zwanenbergs at Oss, Lipton International, Brooke Bond, Naarden, Calvin Klein and Elizabeth Arden/Faberge, Brayers ice cream, Kibon ice cream, Bestfoods, Slim Fast Foods, Ben & Jerrys and the Amora-Maille. In 1992 Unilever entered the Czech Republic and Hungary, and effected UniRus in Russia, also enters in India and other vocalizations of the world. (Unilever, 1995 p. 3) Unilever N.V. operates as a fast-moving consumer goods company in Asia, Africa, the Middle East, Turkey, Europe, and the Americas Unilever possesses a portfolio of more than 400 brands, from nutrition all toldy balanced foods to indulgent ice creams, affordable soaps, luxurious shampoos and everyday family line care products. Their products are sold in more than 190 countries, generating gross revenue of 51 million in 2012. In the 21st century they launched fruit strategies, in order to transform the business, leading to more acquisitions, rationalization of ma nufacturing and merchandise sites to form centers of excellence.Unilever is responding quickly to rapid shifts in consumer behavior by expend in Research and Development and changing market conditions. Unilevers sells its product across 170 countries and their procurement teams are purchasing from a network of round 160,000 suppliers worldwide. For the same reason its suppliers materials and services are an integral part of their commercialised operations. Unilever has integrated supply management informational system that helps their local, regional and global supply managers to make appropriate sourcing decisions, allowing them to analyze information quickly and easily.Through this system they can negotiate with their suppliers in a more transparent and efficient way. Unilevers largest global competitors are Procter & Gamble and Nestle. While the competition in local markets or specific product ranges from numerous companies, including Beiersdorf, ConAgra, Danone, Henkel, Ma rs, Pepsico, and others (Unilever) Management Structure Maintaining good governing body is one of the essentials factors for the long-term achievement of the company. For the same reason Unilever is engaged in conducting its operations in accordance with internationally accepted principles of good incorporate governance.The success of Unilever is receivable to a combination of structural globeity and managerial flexibility. Being a company that is present for more than a century, that operated in changing and transitional environment, is evidence of a flexible management structure that made Unilever successful (Floris 1992,p. 6). Learning through a trial and delusion Unilever has focused on two reliable and related practices to strengthen all structural limitings recruitment and training of high-quality managers, and the importance of linking decentralized units through a common corporate farming (yearly report 2012 p. 5) Unilevers companies maintain formal processes to info rm, consult and involve employees. They recognize collective bargaining on a number of sites and engage with employees. Their usage of sites dicks such as check originative Maintenance rely heavily on employee involvement, contribution and commitment (Annual piece 2012 p. 28). The profitable growth that Unilever accomplishes is mainly due and is achieved through the right state functional in an organization that is fit to win and with a culture in which performance is aligned with values.Unilever has built an employer brand development tool which leverages best practice, and adapts recruitment models to reach the best people worldwide. The better recruitment, family-friendly workings conditions, a culture of accountability, initiatives, and remuneration represent one of the crucial factors for the success which it achieves (Annual chronicle 2012, p. 66). Ability to earn income Unilevers ability to earn income has change magnitude due to the increase in revenue. In 2012 their ability to earn income has change magnitude by 8. % compared with 2011, and with no changes from 2010 to 2011 (Annual spread over 2012/11, p. 32 p. 24). Size of inventory held millionsmillionsmillions Inventories 201220112010 fresh materials and consumables1. 5171. 5381. 554 Finished goods and goods for resale2. 9193. 0172. 753 4. 4364. 6014. 307 Source www. unilever. com The size of inventory during the last three socio-economic classs was moving closely. The raw materials and consumables from 2010 to 2011 change magnitude by 1% and in 2012 by 1. 3%. On the other hand the finished goods and goods for resale increase by 8. 5 in 2011 and a decrease of 3. 35% in 2012. This change in the finished goods and goods for resale was charged to the income statement for damaged, obsolete and lost inventories (Annual Report 2012/11, p. 113). Reliance on debt financing The net debt position in 2011 was 8. 781 billion or 2. 1 billion high than the last family, in part due to the acquisiti on of Alberto Culver (Annual Report 2011, p. 28). In 2012 the net debt was 7. 355 billion, or 1. 4 billion bring down than 2011.The cash outflow from acquisitions, dividends, tax, net groovy disbursal and touch on, and the negative impact of foreign exchange rates exceeded the cash inflow from operating activities and business disposals. The leverage ratio reveals that 32% of the financing its cover by debt (Annual Report 2012, p. 36). Key indicators for 2011 and 2012 The sales growth of Unilever in 2011 increased by 6. 5% and volume growth by 1. 6%. acclivitous markets delivered 11. 5% underlying sales growth and disturbance of 5% compared to 2010 (Annual Report 2011, p. 9). In 2012 the sale growth increased by 6. % and volume growth increase of 3. 4%. Emerging markets represented 55% of the turnover or 11. 6% of sales and turnover of 10. 5% compared to 2011 (Annual Report 2012, p. 9). Profitability of confused product lines and geographical regions The region with the high est turnover, sales and volume growth in 2011 and 2012 is Asia, Africa and Central & Eastern Europe with over 20. 5 billion of turnover in 2012 and 18. 9 in 2011. Followed by Americas 17. 1 billion in 2012 and 15. 3 in 2011. the last is Western Europe with turnover of 13. 9 in 2012 and 12. in 2011 (Annual Report 2012/11, p. 10) Table 2 grammatical constructions for Financial proportionalitys (Methodology) rulesNumber 1. Activities (operating(a)) ratios document disturbance = COGS/average inventory1. 1 clean number age in stock =365 long time/inventory turnover1. 1. 1 Receivables Turnover = Net gross revenue/average receivables 1. 2 Av. Number of days receivables not bad(p) =365days/receivables turnover 1. 2. 1 explanation knuckle underable Turnover =Cost of Sale/ norm Acc. Payable 1. 3 Av. N. of days correctables outstanding =365days/payable turnover1. 3. 1 workings slap-up Turnover =Sales/ fair(a) Working Capital . 4 laid asset turnover =net sales/av. Net fixed a ssets1. 5 Asset Turnover Ratio= Net Sales/ mean(a) fall Asset1. 6 Liquidity ratios Current Ratio= Current Assets/Current Liabilities2. 1. firm Ratio= ((Cash + sellable Securities)+ Acc. Receivables)/Current Liabilities2. 2 Cash Ratio =(Cash + Marketable Securities)/Current Liabilities2. 3 Cash Flow From Operations Ratio = chief financial officer/Current Liabilities2. 4 Solvency ratios Debt to Capital Ratio= Total Debt/Total Capital3. 1 Times Interest Earned Ratio= EBIT/Interest Expense3. 2 chief financial officer to Debt Ratio=chief financial officer/Total Debt3. 3Total Debt Ratio=Total Liabilities/Total Assets3. 4 Leverage Ratio= Long term debt/ (Long term debt+ Shareholders equity)3. 5 Profitability ratios blunt Profit gross profit margin= Gross Profit/Net Sales4. 1 Operating Profit Margin = Operating Income/Net Sales4. 2 Pre tax revenue Margin = EBT/Sales4. 3 issue on Assets= EBIT/Average Total Assets4. 4 Return on Total Capital= (Net Income + Interest Expense)/(Long-Term debt + faithfulness)4. 5 Return On Total Equity = Net Income/Average Total Equity 4. 6 Authors own sources FINANCIAL RATIOS FOR UNILEVER 9. 1. Operational analysis Formula 1. 1 Formula 1. 1. Average inventory2010 =3942. 5 Average inventory2011 =4454 Average inventory2012=4518. 5 Inventory turnover ratio2010 =6. 57 Average number days in stock2010 =55. 6 days Inventory turnover ratio2011 = 6. 27 Average number days in stock2011 = 58. 2 days Inventory turnover ratio2012 = 6. 53 Average number days in stock2012 = 55days destination In socio-economic class 2012 UN has performed better. higher(prenominal)(prenominal)(prenominal) the ratio, better it is. Which means that in 2012 it required 55 days to turnover(renew its inventory) Formula 1. 2 Formula 1. 2. 1 Average receivebles2010 =2424. 5 Average receivebles2011 = 2719Average receivebles2012 =3666. 5 Receivables Turnover 2010 = 18. 23 Av. Number of days receivables outstanding2010 =20days Receivables Turnover 2011 =17. 09 Av. Number of days receivables outstanding2011 =21. 3days Receivables Turnover 2012 =14 Av. Number of days receivables outstanding2012 =26days ratiocination In stratum 2010 UN has performed better. Higher the ratio, better it is. Which means that in 2010 it required 20 days to collect its receivables from customers. Formula 1. 3 Formula 1. 3. 1 Average payables2010 = 5006 Average payables2011 = 6398. 5 Average payables2012 = 9217Account Payable Turnover 2010 = 5. 1 Av. N. of days payables outstanding 2010 =71. 56days Account Payable Turnover 2011 = 4. 36 Av. N. of days payables outstanding 2011 = 83. 6days Account Payable Turnover 2012 = 3. 2 Av. N. of days payables outstanding 2012 =114days Conclusion In year 2012 UN has performed better. Lower the ratio, better it is. Which means that in 2012 it required 114 days do pay its liabilities. By extending the period the company enables financing of its operation activities. Formula 1. 4 Average working capital2010 = -931 Average working capital 2011 = -2356Average working capital2012 = -3653 Working Capital Turnover2010 = -47. 54 Working Capital Turnover2011 = -19. 72 Working Capital Turnover2012 = -14 Conclusion In year 2012 UN has performed better. Higher the ratio, better it is. Which means that in 2012 UN had more efficient utilization of the working capital, needed for maintaining trustworthy level of sales, and even though it is negative we can see crisp decrease during the precedent years. Formula 1. 5 Average fix assets2010 = 6218 Average fix assets2011 =7033 Average fix assets2012 =8404 Fixed asset Turnover2010= 7. 11Fixed asset Turnover2011= 6. 6 Fixed asset Turnover2012= 6. 1 Conclusion In year 2010 UN has higher ratio. This means that in 2010 UN had more efficient utilization of the long-term capital investments. Formula 1. 6 Average total assets2010 =39094 Average total assets2011 =44342 Average total assets2012 =46839 Asset Turnover Ratio 2010 = 1. 13 Asset Turnover Ratio 2011 = 1. 048 Asset Turnover Ratio 2012 = 1. 1 Conclusion In year 2010 and 2012 UN has higher ratio. This means that had higher and more efficient performance of the company. 9. 2 Liquidity analysis Formula 2. 1Current Ratio2010 = 0. 92 Current Ratio2011 = 0. 79 Current Ratio2012 = 0. 76 Conclusion In year 2010 UN has higher ratio. A commonly acceptable current ratio is 1. 5-2. This level of ratio whitethorn show than UN cannot meet its short-term financial obligations. Formula 2. 2 dissolute Ratio2010 = 0. 36 Quick Ratio2011 =0. 37 Quick Ratio2012 =0. 46 Conclusion In year 2012 UN has higher ratio. This means that in 2012 UN was more financially ripe to meet its short-term financial obligations. Commonly acceptable current ratio is 1, but may vary from industry to industry. Formula 2. 3Cash Ratio2010 =0. 179 Cash Ratio2011 = 0. 21 Cash Ratio2012 = 0. 182 Conclusion In year 2011 UN has higher ratio. This indicates that in 2011 UN has good level of liquid assets which can be easily used to pay its current obligation s. Formula 2. 4 CFO Ratio2010 = 0. 4034 CFO Ratio2011 =0. 3 CFO Ratio2012 =0. 432 Conclusion In year 2012 UN has higher ratio. This indicates that in 2012 UN current liabilities were cover by the cash flow generated from operations. 9. 3 Debt and solvency analysis Formula 3. 1 Debt to Capital Ratio2010 = 1. 18 Debt to Capital Ratio2011 = 1. 44Debt to Capital Ratio2012 = 1. 308 Conclusion In year 2011 UN has higher ratio. This means that in 2011 UN has low level of capital that is financed through debt. Formula 3. 2 Times interest earned2010 = 6. 46 Times interest earned2011 = 11. 66 Times interest earned2012 = 12. 87 Conclusion In year 2012 UN has higher ratio. This means that in 2012 UN can 13 times make the interest payments on its debt with its EBIT, or this means that it easily can pay interest expenses on outstanding debt. Formula 3. 3 CFO to Debt Ratio 2010 = 0. 21 CFO to Debt Ratio 2011 =0. 16 CFO to Debt Ratio 2012 =0. 25 Conclusion In year 2012 UN has higher ratio. This mea ns that in 2012 UN has higher ability to cover the total debt from the cash flow from operations Formula 3. 4 Total Debt Ratio 2010 =0. 63 Total Debt Ratio 2011 =0. 68 Total Debt Ratio 2012 =0. 66 Conclusion In year 2010 UN has lower ratio. This means that in 2010 UN risk is lower and the company relies less on debt to finance its assets. Formula 3. 5 Leverage Ratio 2011 =0. 38=38% Leverage Ratio 2012 =0. 32=32% Conclusion In year 2012 UN has lower ratio. This means that in 2012 Unilever had 32% of its financing covered by debt. . 4 Profitability Analysis Formula 4. 1 Gross Profit Margin 2010 = 0. 41 Gross Profit Margin 2011 = 0. 39 Gross Profit Margin 2012 = 0. 45 Conclusion In year 2012 UN has higher ratio. This means that in 2012 UN has higher earnings taking into consideration the be that it incurs for producing its products. Formula 4. 2 Operating Profit Margin 2010 = 0. 144 Operating Profit Margin 2011 = 0. 142 Operating Profit Margin 2012 = 0. 137 Conclusion In year 2010 UN has higher ratio. This means that in 2010 UN profit left after paying its variable costs was higher.Formula 4. 3 Pre-tax Margin 2010 = 0. 06 Pre-tax Margin 2011 = 0. 123 Pre-tax Margin 2012 = 0. 122 Conclusion In 2011 and 2012 UN has high ratio. This indicates that in 2011 and 2012 UN had greater profitability, comparing it with 2010 when it was two times lower. Formula 4. 4 Average Total assets2010 = 39094 Average Total assets2011 =44342 Average Total assets2012 =46839 ROA 2010 = 10. 8% ROA 2011 = 9. 58% ROA 2012 = 9. 56% Conclusion In year 2010 UN has higher ratio which suggest that it has earned more capital and invested less in assets. Formula 4. 5ROC2010 = 11. 36% ROC2011 = 21. 14% ROC2012 = 22. 3% ConclusionIn 2012 UN has higher ratio which indicates the event that UN is achieving from the capital employed and this return has doubled from 2010 to 2011/12. Formula 4. 6 ROE2010 = 28. 14% ROE2011 = 28. 49% ROE2012 = 29. 25% Conclusion In 2012 UN has higher ratio which indicate s a high level of profit UN earned in comparison to the total amount of shareholder equity. This ratio measures how profitable Unilever is for the owners of the investment, and how profitably the company employs its equity. ConclusionThe purpose of this paper was to reveal the financial performance of Unilever and to make an evaluation and assessment of the firms management structure and what contributes to the success they achieve and key figures and ratios. The financial position of Unilever for 2012 was admirable, due to the fact that had increased revenues, sales and volume growth of its divisions worldwide and decreased net debt. The compared data for 2010,2011, and 2012 show continuous improvement and increase of their financial position. List of references Unilever site www. unilever. comAnnual Report 2012, Available at http//www. unilever. com/images/ir_Unilever_AR12_tcm13-348376. pdf Accessed date 05/03/2012 Annual Report 2011, Available at http//www. unilever. com/images/U nilever_AR11_tcm13-282960_tcm13-348380. pdf Accessed date 07/03/2012 Floris M. (1992), Inside Unilever The Evolving Transnational Company, Harvard trade Review Vol. 70 Issue 5, p46-52, EBSCO Host http//web. ebscohost. com/ehost/detail? vid=4=8aace911-769a-43f3-9949-b4364f9185cf%40sessionmgr111=124=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3ddb=bth=9301105365 Accessed date 09/03/2012