School of Business, Public Policy and Social

Entrepreneurship

Quantitative Analysis Of Hindustan Unilever Limited





Under the guidance of Submitted by :
Mr Saurabh Mithal Amrita Arora
S143F0005
School of Business, Public Policy
& Social Entrepreneurship (SBPPSE)
Ambedkar University Delhi (AUD)
HINDUSTAN UNILEVER LIMITED

Quantitative Analysis Using Ratios
Ratio Analysis
Accounting is designed to provide information that business owners, managers and other
stakeholders then use to make decisions.
Ratio analysis is an important tool for analyzing the company's financial performance. There are
six main types of ratios:
Leverage Ratios
Liquidity Ratios
Operating Ratios
Efficiency Ratios
Profitability Ratios
Return Ratios
To do the quantitative analysis of HUL, all these ratios have been calculated.


Leverage Ratios
Meaning
Any ratio used to calculate the financial leverage of a company to get an idea of
the company's methods of financing or to measure its ability to meet financial
obligations.
Ratios of HUL
HUL HUL
Leverage 2013-2014 2012-2013
Debt/Capital
46.04% 49.09%
EBIT/Interest
132.21 171.94


Cash
2220.97 1707.89
Debt
2795.7 2578.36
Equity
3277.05 2674.02
Capital
6072.75 5252.38


EBIT
4763.68 4324.33
Interest
36.03 25.15

Formulae Used


Implications
The decrease in debt- capital ratio shows decrease in proportion of debt in the total
capital. This is always a good indicator.
The decrease in interest coverage ratio shows the decrease in the ability of the company
to pay of its interest on debt. But, even after decrease the company is still in a safe
position.
Liquidity Ratios
Meaning
Liquidity ratios are the ratios that measure the ability of a company to meet its
short term debt obligations. These ratios measure the ability of a company to pay
off its short-term liabilities when they fall due.
Ratios of HUL

HUL HUL
Liquidity 2013-2014 2012-2013
Current ratio
1.03 0.86
Quick ratio
0.71 0.57


Current assets
8852.47 7569.99
Current
liabilities
8603.84 8838.45
Inventory
2747.53 2526.99

Formulae Used

Implications
Increases in the current ratio over time may indicate a company is
"growing into" its capacity.
Increasing quick ratio generally indicates that a company is experiencing
solid top-line growth, quickly converting receivables into cash, and easily
able to cover its financial obligations.


Efficiency Ratios

Meaning
Efficiency ratios measure how effectively the company utilizes these assets, as
well as how well it manages its liabilities.
Ratios of HUL
HUL HUL
Efficiency 2013-2014 2012-2013
Receivable days
10.75 10.69
Receivable turnover
33.96 34.13
Payable days
179.26 173.73
Payable turnover
2.04 2.10
Inventory days
86.26 89.50
Inventory turnover
4.23 4.08


Fixed Assets (as % of sales)
9.79% 9.72%
OWC (as % of sales)
-0.05% -4.28%
Total assets (as % of sales)
46.39% 44.60%


Capex/depreciation
1.71 1.77
Acc. depreciation / Gross PP&E
42.06% 41.12%

Formulae Used




Implications
The operating ratios have remained, more or less same.
There has been an increase in the contribution of operating working
capital and total assets to the sales of HUL.
The PP&E ratios have also not changed much.
Thus the position of the company in terms of these ratios has
remained mostly constant, with a little bit increase.


Profitability Ratios
Meaning
Profitability ratios measure a companys ability to generate earnings relative to
sales, assets and equity.
Ratios of HUL

HUL HUL
Margins 2013-2014 2012-2013
Gross margin
60.17% 60.15%
Operating margin
17.26% 16.95%
Net margin
13.80% 14.71%
EBITDA margin
18.19% 17.86%

Formulae Used

Implications
The business has gross margins of around 60% but operating, net and
EBITDA margins are comparatively lower. This may be due to high
operating costs of HUL.
This is because HUL sells a number of branded goods.

Return Ratios
Meaning
Return ratios seek to link the profit being earned with the investment required to
earn it.
Ratios of HUL
HUL HUL
Returns 2013-2014 2012-2013
Return on assets
31.56% 33.79%
Asset turnover
2.16 2.24
Return on equity
118.02% 141.98%
Return on
Invested Capital
154% 278.83%

Formulae Used

Implications
The returns on assets, equity and invested capital have decreased over time.
This is a matter of concern for the company.

CONCLUSION
HUL has maintained its financial position over the year, even in the presence of changing
economic scenario, with a little matter of concern being decrease in returns. This should be
taken care of.

APPENDIX
HUL HUL HUL
Inputs 2013-2014 2012-2013 2011-2012
Cash
2220.97 1707.89
Debt
2795.70 2578.36
Equity
3277.05 2674.02
Capital
6072.75 5252.38


Gross PP&E
4138.80 3832.84
Accumulated
depreciation
1740.86 1576.05
Depreciation
244.83 217.3
Capex
419.67 385.06
Net PP&E
2397.94 2256.79


OWC
-15.33 -1104.33
A/c payable
5793.89 5167.69 4622.96
A/c receivable
816.43 833.48 678.99
Inventory
2747.53 2526.99 2516.65
Avg Inventory
2637.26 2521.82
Avg A/c
receivable
824.955 756.235
Avg A/c payable
5480.79 4895.325


Current assets
8852.47 7569.99
Current
liabilities
8603.84 8838.45


Sales
28019.13 25810.21
Total Assets
12998.4 11512.47 10958.27
Avg Assets
12255.44 11235.37
Fixed Assets
2741.84 2508.54


COGS
11159.81 10284.66


Gross Profit
16859.32 15525.55
Operating Profit
4835.74 4374.63
Net Profit
3867.49 3796.67
EBITDA
5096.29 4610.65
Tax Expenses
1160.9 1161.21
NOPAT
3674.84 3213.42
Net PP&E +
OWC
2382.61 1152.46