Financial Evaluation of Unilever plc

Running Head: Finance
1
Project Report: Finance

Finance
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Contents
Introduction.......................................................................................................................4
Company overview...........................................................................................................4
Financial performance and financial position...................................................................4
Profitability ratio...........................................................................................................5
Return on shareholder’s fund....................................................................................5
Operating profit margin............................................................................................6
Gross profit margin...................................................................................................7
Liquidity ratio...............................................................................................................8
(Morningstar, 2018)..................................................................................................8
Current ratio..............................................................................................................8
Acid Test ratio..........................................................................................................9
Efficiency ratio...........................................................................................................11
Receivable collection period...................................................................................11
Payable payment days.............................................................................................12
Inventory days........................................................................................................13
Gearing ratio...............................................................................................................14
Investment ratio..........................................................................................................15
Earnings per share...................................................................................................16
Price earnings ratio.................................................................................................16
Initiative to enhance company’s performance................................................................17
Competitor’s stake in the company................................................................................18
Recommendation............................................................................................................19
References.......................................................................................................................21
Appendix.........................................................................................................................23

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Figure 1: return on shareholders’ Fund............................................................................6
Figure 2: Operating profit margin.....................................................................................7
Figure 3: Gross Profit margin...........................................................................................8
Figure 4: Current ratio......................................................................................................9
Figure 5: Acid Test Ratio...............................................................................................10
Figure 6: Receivable collection period...........................................................................12
Figure 7: Payable collection period................................................................................13
Figure 8: Inventory days.................................................................................................14
Figure 9: Gearing ratio....................................................................................................15
Figure 10: Earnings per share.........................................................................................16

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Introduction:
This report paper has been prepared to evaluate the financial position, financial
performance, competitor position and the investment opportunity of Unilever plc. Financial
evaluation over an organization is significant as it assists the company to make better
decision about the position and the performance of the company. This report explains that it
becomes easier for the company and the stakeholders of the company to evaluate the position
of the organization and make better conclusion about the position, investment opportunity
and performance of the company. Further, it explains that the financial performance of the
company could be analyzed on the basis of annual report, financial statements of the
company, stock price of the company, competitor position of the company and the worth of
the company.
For this report, financial data of Unilever plc of last 5 years have been analyzed and
the ratio study has been conducted. Further, the competitors financial performance has been
compare with the financial performance of Uniliver plc and lastly, the stock performance and
the investment opportunity of the company has been evaluated.
Company overview:
Unilever plc is one of the fastest growing organizations in consumer goods market.
This company operates its business through foods, home care, personal care refreshment
segment etc. The company has diversified its market among 112 countries and the market
share of the company is huge. Personal segment of the company provides hair care and
skincare products, oral care products and deodorants. Food segment provides sauces, soup,
mayonnaise, margarines, salad dressings, spreads etc. the company has been founded in 1885.
Headquarter of the company is in London, UK (Home, 2018). The financial performance and
the position expresses about various positive and impressive changes into the organization.
Financial performance and financial position:
Financial performance and financial position of an organization could be evaluated
and measured through the financial statement and the market worth of the company.
Basically, it is a process in which the results of an organization are measured through
identifying the policies and the activities of the company in monetary terms (Davies and

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Crawford, 2011). The study of financial performance and position of the Unilever plc is as
follows:
Profitability ratio:
Profitability ratio of the company has been evaluated firstly to identify the financial
performance and position of the company. Profitability ratios are the measurement of profit
position of the company. This explains about the profitability capacity of the company.
Following is the calculations of profitability ratio of the company:
Description Formula Unilever Plc
2017 2016 2015 2014
201
3
Profitabilit
y
Return on
shareholder
funds
NPAT/
Total
equity 31.70% 31.80% 37.88% 33.76%
29.5
5%
Operating
profit
margin
Operating
net profit /
Sales
100.00
% 100.00% 100.00% 100.00%
100.
00%
Gross Profit
Margin
Gross
Profit /
Sales 50.00% 50.00% 50.00% 50.00%
50.0
0%
(Breuer, Rieger and Soypak, 2014)
Return on shareholder’s fund:
Return on shareholder ratios explain about the total return which could be get by the
shareholder of the company. It is calculated on the basis of net profit after tax and the total
shareholder equity of the company. The current shareholder return explains that the current
return to the shareholders is 31.70% which has been lower from 31.80% and 37.88% in 2016
and 2015.
Description
Form
ula Unilever P&G
PepsiC
o
2017 2016 2015 2017 2017
Net profit 0
51840000
00
49090000
00
51710000
00
521700
0
632900
0
Equity 0
16354000
000
15439000
000
13651000
000
551840
00
551840
00

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Return on shareholder
funds
NPAT/
Total
equity 31.70% 31.80% 37.88% 9.45% 11.47%
Figure 1: return on shareholders’ Fund
The return on shareholder of its competitive company, P&G and PepsiCo have been
evaluated and it has been found that the return on capital employed position of both the
companies are 9.45% and 56.28% which explains that the current position of the company is
quite competitive and it is according to the industry rules. It explains that the profitability
position of the company is quite better (Bodie, 2013).
Operating profit margin:
Operating profit margin ratios explain about the total return which could be got by the
company after its operating expenses. It is calculated on the basis of operating profit and the
total revenue of the company. The current operating profit margin ratio explains that the
current operating profit position of the company is quite similar from last few years. It
explains that the operating profit margin of the company is 100% from last 3 years.
Description Formula Unilever P&G PepsiCo
2017 2016 2015 2017 2017
Operating
profit margin
5271300
0000
5327200
0000
4843600
0000
1,39,55,
000
97,85,00
0
Sales 5271300
0000
5327200
0000
4843600
0000 6,50,58,
2820900
0