Project Report: Managing Financial Performance of Unilever PLC

This project report provides a comprehensive analysis of Unilever PLC's financial performance. It begins with an introduction to financial performance measurement, emphasizing the importance of both financial and non-financial factors. The report then delves into a detailed ratio analysis of Unilever PLC, comparing its performance to competitors like PepsiCo, and evaluating metrics such as return on capital employed, gross profit margin, operating profit margin, gearing ratios, and interest coverage. The report also includes a peer review, comparing Unilever's market position and financial health with its competitors. Further, the report explores the impact of budgetary techniques using Capital Land plc as a case study and evaluates the significance of performance measurement techniques. Finally, the report addresses key issues related to significant expenditure decisions, offering insights into strategic financial management. The project incorporates financial statements, macroeconomic factors, and competitive analysis to provide a holistic understanding of Unilever's financial standing.

Running Head: Managing Financial Performance
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Project Report: Managing Financial Performance

Managing Financial Performance 2
Contents
Introduction.......................................................................................................................3
Financial performance of Unilever plc.............................................................................4
Ratio analysis................................................................................................................4
Peer review...................................................................................................................5
Budgetary techniques........................................................................................................7
Performance Measurement techniques...........................................................................11
Key issues related to significant expenditure.................................................................15
Conclusion......................................................................................................................17
References.......................................................................................................................19

Managing Financial Performance 3
Introduction:
Financial performance of a company depends over various financial factors as well as
non financial factors of the company. It becomes mandatory for every investors as well as
chief financial officer of the company to evaluate and analyze the performance and the
position of the company to make various decisions in a better way. Measurement of financial
performance of an organization could be done through conducting various studies and
methods such as the financial performance of a company could be evaluated through
conducting the study of ratio analysis or the budgetary reports could also assist the
organization to identify the changes into the financial position. Further various other methods
such as variance analysis, measurement techniques, better strategies of the company,
competitor position of the company, market position of the company, changes in the industry,
economical position, financial boom or crisis etc also make an impact over the financial
position of a company.
In the given report, various methods of measuring the financial performance has been
evaluated and for each study, different companies have been taken into the concern and the
performance evaluation and analysis study has been done over those companies so that the
better understanding could be enhanced over the performance and financial measurement
techniques. Firstly, the study of ratio analysis has been done over the Unilever Plc to analyze
that how the company is performing in terms of finance in the company. For this study,
various competitors of the company have been analyzed so that a better conclusion could be
given. Financial statement of the company has been analyzed for this study as well as the
macro economical factors have also been taken into the context to evaluate the position of the
company into the economy.
In addition, study has been performed over the budgetary techniques and their
importance in an international company which is Capital Land plc. This study depicts that
how the budgetary techniques make an impact over the financial position of the company.
Through this study, it has been evaluated that how the budgetary techniques affect the
operational performance of a company. It depict that the better the budgetary techniques and
their implementation would be in an organization, the better the position of the company
could be evaluated and better strategy could be made.
More, the study has been performed over the performance measurement techniques
and their impact over the position and the performance of the company. Through these

Managing Financial Performance 4
techniques, it has been found that how the performance of an organization could be evaluated
and the environment of the organization could be impacted. Lastly, it has been evaluated that
how an organization taka a decision about spending some expenditure over diversification of
the organization or some other investment proposal.
Financial performance of Unilever plc:
For measuring the financial performance of a company, firstly, the study of ratio
analysis has been done over the Unilever Plc to evaluate that how the company is performing
in terms of finance in the company. For analyzing the performance and the position of the
company, financial statement of the company has been analyzed as well as the competitors’
performance has also been evaluated (Saunders and Cornett, 2014). Further, the macro
economical factors have also been taken into the context to evaluate the position of the
company into the economy. For this study, various competitors of the company have been
analyzed so that a better conclusion could be given. Following is the evaluation study over
Unilever Plc is:
Ratio analysis:
Ratio analysis is a financial measurement technique which assists the chief financial
officer, financial analyst, investors or other stakeholders of the company to evaluate that how
the organization is performing as well as it also assist the organization to evaluate the
strategies and policies in a perfect manner (Madhura, 2011). The study of ratio analysis of
Unilever Plc is as follows:
Particular Formula 2015 2016
Return on
capital
employed
Operating
profit / total
assets - current
liabilities
(53272000/
(52298000-
20019000))
1.
65
(52713000/
(56429000/205556000))
1.
47
Gross Profit
Goss Profit /
Sales
(53272000/532
72000) 1 (52713000/52713000) 1
Operating profit
margin
Operating
profit / sales
(53272000/532
72000) 1 (52713000/52713000) 1
Gearing ratio
Long term
liabilities /
capital
employed
(16840000/
(52298000-
20019000))
0.
52
(19519000/((52298000-
20019000))
0.
54
Interest cover
EBIT / interest
expenses (53272000 / 0) 0
(52713000/(52298000-
20019000))
1.
47

Managing Financial Performance 5
Working Note
2015 2016
Operating profit 53272000 52713000
Total assets 52298000 56429000
Current
liabilities 20019000 20556000
Gross profit 53272000 52713000
Sales 53272000 52713000
Long term
liabilities 16840000 19519000
EBIT 53272000 52713000
Interest
expenses 0 568000
Capital
employed 32279000 35873000
The above evaluated ratio over Unilever plc depict that the return on capital employed
is a position which express about the operating profit and the impact of capital employed over
the total return of the company. This position takes the concern of the return which could be
given by the company to its shareholders (De Haan and Amtenbrink, 2011). Through this
study, it has been found that the position of the company has been worst from 2015 in 2016
due to the lower rate of return on capital employed. The ROCE level of the company has
been changed due to the less demand of the products in the market. On the other hand,
competitive company pepsico’s ROCE has been calculated and it has been found that the
ROCE of Unilever is way better as ROCE of PepsiCo is 0.1604 in 2016.
Further, the study of gross profit of the comapny depict that what is the position of the
gross profit an organization in context with the total sales of the company. Gross profit rate of
an organization depict about the profitability position of a company. The study of gross profit
of the company depict that the position of the gross profit of the company is similar in both
the years (Brigham and Ehrhardt, 2013). No changes have taken place into the gross profit
position of the company in 2015 as well as in 2016. The gross profit level of the company has
not been changed due to the fixed % profit strategy of the company on the products. On the
other hand, competitive company PepsiCo’s gross profit has been calculated and it has been
found that the gross profit of Unilever is way better as gross profit of PepsiCo is 0.55 in 2016.

Managing Financial Performance 6
More, the study of operating profit margin of the comapny depict that what is the
position of the operating profit an organization in context with the total sales of the company.
Operating profit rate of an organization depict about the profitability position of a company.
The study of operating profit of the company depict that the position of the operating profit of
the company is similar in both the years. No changes have taken place into the operating
profit position of the company in 2015 as well as in 2016.
Further, the position of gearing ratios of the company has been evaluated. This study
of gearing ratios depict about the position of the capital employed on the basis of the capital
employed of the company (Weygandt, Kimmel and Kieso, 2015). This depict that what is the
position of the long term liabilities in the context of the capital employed of the company.
Through this study, it has been found that the position of the company has been better from
2015 in 2016 due to the higher rate of return on capital employed. The operating profit level
of the company has not been changed due to the fixed % profit strategy of the company on
the products. On the other hand, competitive company PepsiCo’s operating profit has been
calculated and it has been found that the operating profit of Unilever is way better as
operating profit of PepsiCo is 0.1325 in 2016.
Further, the position of interest coverage of the company has been evaluated. This
study of interest coverage depicts about the position of the EBIT on the basis of the interest
expenses of the company. This depict that what is the position of the interest in the context of
the total profit of the company (Von Hagen and Harden, 2014). Through this study, it has
been found that the position of the company depict about the higher expenditure from 2015 in
2016 due to the higher rate of interest in 2016. On the other hand, competitive company
PepsiCo’s interest coverage ratio has been calculated and it has been found that the interest
coverage ratio of PepsiCo is way better as interest coverage ratio of PepsiCo is 8.61 in 2016.
Peer review:
Further, the competitor of the company has been analyzed to identify the position of
the company in the market and the performance of the company in comparison of its
competitors. And the macro economical factors of the company have also been analyzed to
identify the position of the economy and its impact over the performance and the position of
the company (Stevenson and Sum, 2002). Through the competitor and peer analysis, it has
been found that the position of the Unilever plc is much better in comparison of the
competitors. The main competitor of the Unilever plc is PepsiCo Limited. This depict that the

Managing Financial Performance 7
revenue of the company is higher in the market as well as the market share of the company is
maximum in the industry. This company has diversified its market into the international
market and that is why the performance and the position of the company have been better in
the industry.
(Morningstar, 2017)
The above table of the peer and the competitors of the company depict that the
position of the company has been better. It depict that the company is performing outstanding
in terms of competitive analysis. It depicts that the market capital and the CAGR ratio of the
company is also better and depict about the better performance and the position of the
company. Though, this analysis also depict that internet coverage of the company is higher in
the industry (Niu, 2006). The analysis depict that the entire subsidiary companies of Unilever
plc would perform better in the market and would not impact over the position and the
performance of the company.

Managing Financial Performance 8
The macro economical factors of the country depict about the various changes into the
industry in last few years which has affected the position and the profitability state of the
company. Through this analysis, it has been observed that currently, the entire international
market is suffering with the huge loss. Investors have divested their amount from the
industries and the market and thus the liquid position of the companies have been affected
and it has also affected the operations of the company. Further, the government interference
of the company has also been evaluated and it has been found that the government do not
interact more into the FMCG industry of the country (Juan García-Teruel and Martinez-
Solano, 2007). The operations and the functions of the company are evaluated according to
the industry regulations.
Further, the environmental aspect of the company has also been evaluated to identify
and analyze that how the environment and the society is impacted over the position,
performance and stability of the organization. Through the evaluation, it has been found that
the environmental factor of the economy is according to the functions of the company and do
not affect the operations of the company and lastly, the corporate governance policies of the
company has also been evaluated to identify the performance and the position of the company
in the society and it has been found that the company has planned various CSR programmes
to evaluate the performance of the company in terms of managing the social responsibility
(Horngren, 2009).
Thus, through this study, it has been found that the position and the performance of
the Unilever plc in terms of financial and non financial factor of the company is better than
any other company in the industry.
Budgetary techniques:
For measuring the financial performance of a company, secondly, the study of
budgetary techniques has been done over the capital land plc to evaluate that how the
company is performing in terms of finance in the company. In addition, study has been
performed over the budgetary techniques and their importance in Capital land plc. This study
depicts that how the budgetary techniques make an impact over the financial position of the
company. Through this study, it has been evaluated that how the budgetary techniques affect
the operational performance of a company. It depict that the better the budgetary techniques
and their implementation would be in an organization, the better the position of the company
could be evaluated and better strategy could be made (Hogarth and Makridakis, 2011).

Managing Financial Performance 9
Capital land plc is operating is business into the international market. This
organization is one of the largest organizations in real estate industry. Various strategies and
policies of this company have helped the organization to enhance the business and make the
organization’s performance better. Further, the financial and non financial, both the factors of
the company are depicting about the positive performance of the company. In this report,
study has been performed over the budgetary techniques and its impact over the financial
position of the company (Graham, Harvey and Puri, 2013).
The budgetary techniques are of many types and it affects and manages the position
and performance of the company in various ways. These techniques depict that an
organization must be very caution while evaluating and identifying the best budgetary
techniques and its implementation over the organization. The best budgetary techniques of an
international company assist the Capital Land plc in managing the financial performance of
its manufacturing department as follows:
Forecast the future sales:
It is quite tough for an organization to evaluate and identify the future of the business.
For forecasting the changes and the performance of the company in the future, company
could use the budgetary technique. Budgetary techniques help the Capital Land Plc in
identifying the market position and the prediction about the future which helps the
organization to make various better decisions about the performance and the sales of the
company. Budgetary techniques take the concern of historical data and the prediction about
the future and on the basis of those figures and information, future sales of the capital land
plc is evaluated by the management of the company so that the goods could be manufactured
by the manufacturing management accordingly (Garrison, Noreen, Brewer and McGowan,
2010).
Forecast the future consumption:
At the same time, it is quite tough for an organization to evaluate and identify the
future expenses and the changes of the business. For forecasting the changes and the
performance of the company in the future, company could take the help of various methods
so that the budgetary reports could be prepared. Budgetary techniques help the Capital Land
Plc in identifying the customers’ needs and the demand through communicating the same
with the marketing team of the organization. The information from marketing department
would help the organization to make various better decisions about the performance and the

Managing Financial Performance 10
total consumption of the company. Budgetary techniques take the concern of various non
financial information and financial data to forecast the future consumption of the capital land
plc so that the goods could be manufactured by the manufacturing management accordingly.
Capacity of the machineries:
Further, Capital Land Plc finds it tough to identify the total capacity of the
machineries. This problem could be resolved through communicating the same with the
technical team of the organization. The information from technical department helps the
organization to make various better decisions about the performance and the total
manufacturing capacity of the company. Budgetary techniques take the concern of non
financial information and financial data to forecast the machineries capacity of the capital
land plc so that the goods could be manufactured by the manufacturing management
accordingly (Faleti and Myrick, 2012).
A tool for decision making:
Capital land plc makes various decisions about the performance and the position of
the company on the basis of budgetary reports. In this issue, Budgetary techniques help the
Capital Land Plc in identifying the various non financial information and financial data to
forecast the performance and the total profitability position of the company. The information
from budgetary techniques helps the organization to make various better decisions about the
total goods which is manufactured by the manufacturing management of the capital land plc.
Monitor business performance:
More, it has been evaluated that monitoring the business performance of the company
is a tough task. Budgetary techniques help the Capital Land Plc in identifying the
performance of the company through identifying the various non financial information and
financial data. This technique monitors all the related aspect through conducting the various
studies over entire related factors and thus it becomes easy for the analyst and the
manufacturing manager of the company to monitor the business performance (Weygandt,
Kimmel and Kieso, 2015). Variance analysis study is the most used technique to identify the
performance of the company and the position of the company in the market.
Generates the sense of care:
More, budgetary techniques help the Capital Land Plc and its managers to identify
and evaluate all the related factors and their responsibilities. This technique helps the line

Managing Financial Performance 11
managers and middle level manager to generate and enhance the sense of caution and care to
improve the responsibility level. It evaluates the administration of the Capital Land Plc to
study about all the related factors (Davies and Crawford, 2011).
Guides the management:
More, budgetary techniques help the Capital Land Plc and its managers to make some
new policies and strategies according to the position and the performance of the organization.
This technique helps the top level management and middle level management to guide the
lower level management and labour so that they could perform their duties perfectly
(Weygandt, Kimmel and Kieso, 2015). It evaluates the administration of the Capital Land Plc
to study about all the related factors.
Assists in directing:
Further, budgetary techniques help the Capital Land Plc and its managers to make
some direction plans according to the changes and the prediction about the organization. This
technique helps the manufacturing managers to generate and enhance the sense of
responsibility in the labour and the employees of the organization. It evaluates the
administration of the Capital Land Plc to improve the performance and the position of the
company (Warren, Reeve and Duchac, 2013).
Management involvement:
Further, budgetary techniques help the Capital Land Plc and its managers to set up a
coordination and communication program so that the better evaluation over the position and
performance could be done. This technique helps the manufacturing managers to identify
various financial data and non financial information such as the market prediction, choice of
the customers, competitor position, supplier’s state etc (Van der Stede, 2011). It evaluates the
administration of the Capital Land Plc to improve the performance and the position of the
company.
Objective definition:
It is required for every organization to identify the objectives of the business so that
the work could be done in the same way. Further, budgetary techniques help the Capital Land
Plc and its managers to define the goals and the objectives of the organization. This technique
helps the manufacturing managers to evaluate and define the objectives to the labour and the
employees of the organization. It evaluates the administration of the Capital Land Plc to

Managing Financial Performance 12
improve the performance and the position of the company (Radebaugh, Gray and Black,
2006).
Compels management:
Further, budgetary techniques help the Capital Land Plc and its managers to set up a
coordination and communication program so that the better evaluation over the position and
performance could be done. This technique helps the manufacturing managers to identify
various financial data and non financial information such as the market prediction, choice of
the customers, competitor position, supplier’s state etc (Nobes and Parker, 2008). It evaluates
the administration of the Capital Land Plc to improve the performance and the position of the
company.
Promotes communication and coordination:
More, budgetary techniques help the Capital Land Plc and its managers to make some
new policies and strategies according to the position and the performance of the organization.
This technique helps the top level management and middle level management to set the
communication so that they could perform their duties perfectly. It evaluates the
administration of the Capital Land Plc to study about all the related factors (Needles, Powers
and Crosson, 2013).
Define responsibility:
Further, budgetary techniques help the Capital Land Plc and its managers to define the
responsibilities of the organization. This technique helps the manufacturing managers to
evaluate and define the responsibilities to the labour and the employees of the organization. It
evaluates the administration of the Capital Land Plc to improve the performance and the
position of the company (Marginson, 2009).
Motivates employees and labour:
Further, budgetary techniques help the Capital Land Plc and its managers to make
some direction plans according to the changes and the prediction about the organization. This
technique helps the manufacturing managers to generate and enhance the sense of
responsibility in the labour and the employees of the organization. It evaluates the
administration of the Capital Land Plc to improve the performance and the position of the
company (Lafond and Roychowdhury, 2008).