Analysis of unilever financial reports (1)

Analysis of Unilever’s financial Statements

By: Thao HoClass: Myriam English practice

Prof. Dr. Rainer StachuletzCorporate FinanceBerlin School of Economics

Content

1. Types of financial analysis 2. Key Financial Statements3. Analysis of key financial Statements

Horizontal analysis of balance sheet Trend analysis of income statement

4. Analysis of Financial Ratios Liquidity ratios Activity Ratios Debt ratios Profitability ratios


Types of financial analysis

3

Developing trends can be seen using multi-year comparisons

Trend analysis - performance evaluation over time

Firms’ financial ratios compared at the same point in time


Key Financial Statements

4

Balancesheet

Income statement

Financial Managers and analystsuse financial statements to conduct:

- Performance (Ratio) Analysis


Horizontal analysis of balance sheet

5

€ million € million € million € million € million 𝐶𝐴𝐺𝑅 2012 2011 2010 2009 2008

non-current assets 34,019 33,221 28,683 26,205 24,967 6.38%

Current assets 12,147 14,291 12,484 10,811 11,175 1.68%

Total assets 46,166 47,512 41,167 37,016 36,142 5.02%

Current liabilities 15,815 17,929 13,606 11,599 13,800 2.76%

Non-current liabilities 14,635 14,662 12,483 12,881 11,970 4.10%

Total liabilities 30,450 32,591 26,089 24,480 25,770 3.39%

Shareholders’ equity 15,159 14,293 14,485 12,065 9,948 8.79%

Non-controlling interest 557 628 593 471 424 5.61%

Total equity 15,716 14,921 15,078 12,536 10,372 8.67%

Total liabilities and equity 46,166 47,512 41,167 37,016 36,142 5.02%


Developing trend in 2008-2012

6


Trend analysis of income statement

7

2008 2009 2010 2011 2012 𝐶𝐴𝐺𝑅Turnover (€ million) 40,523 39,823 44,262 46,467 51,324 4.84%

Trend percentage 100% 98.27% 109.23% 114.67% 126.65%

Operating profit (€ million) 7,167 5,020 6,339 6,433 6,989 -0.50%

Trend percentage 100% 70% 88% 90% 98%

Net profit (€ million) 5,285 3,659 4,598 4,623 4,948 -1.31%

Trend percentage 100% 69% 81% 86% 93%


Performance evaluation in 2008-2012(Teacher’s comment: Use another type of

chart to describe easier

8


Analysis of Financial Ratios

9

•Current ratio • Quick ratio• Fixed asset turnover• Total asset turnover• Average collection period• Debt-to-equity ratio• Debs ratio• Return on sales (Gross margin) • Return on total assets• Return on equity

Activity Ratios

Debt Ratios

Profitability Ratios

Liquidity Ratios


Balance sheet (years order should be the sames other slides)

10

€ million € million2012/2011

2012 2011Goodwill and intangible assets 21,718 21,913 -0.89%Other non-current assets 12,301 11,308 8.78%Current assets 12,147 14,291 -15.00%Total assets 46,166 47,512 -2.83%Current liabilities 15,815 17,929 -11.79%Non-current liabilities 14,635 14,662 -0.18%Total liabilities 30,450 32,591 -6.57%Shareholders’ equity 15,159 14,293 6.06%Non-controlling interest 557 628 -11.31%Total equity 15,716 14,921 5.33%Total liabilities and equity 46,166 47,512 -2.83%


Consolidated income statement

11

€ million

2012€ million

2011 % change

Turnover (€ million) 51,324 46,467 10.50%

Operating profit (€ million) 6,989 6,433 9%

Core operating profit* (€ million) 7,062 6,289 12%

Profit before tax (€ million) 6,683 6,245 7%

Net profit (€ million) 4,948 4,623 7%

Diluted earnings per share (€) 1.54 1.46 5%

Core earnings per share* (€) 1.57 1.41 11%


Liquidity ratios

12

€ million2012

€ million2011

Current Ratio

=Current Assets

Current Liabilities12,14715,815

0.76814,29117,929

0.797

Quick Ratio

=Current Assets - Inventory

Current Liabilities12,147 - 4,436

15,8150.488

14291-4601

179290.540


Activity Ratios

13

€ million € million

2012 2011

Average collection

period=

Accounts receivableAverage sales per day

4,43651,324/365

31.5474,513

46,467/36535.450

Fixed Asset turnover

=Sales

Net fixed assets

51,3249,445

5.43446,4678,774

5.296

Total asset turnover

=Sales

total assets51,32446,166

1.11246,46747,512

0.978


Debt ratios

14

€ million € million

2012 2011

Debt Ratio =Total Liabilities

Total Assets30,45046,166

0.66032,59147,512

0.686

Debt- Equity ratio

=Total debt

Stockholder's equity

30,45015,159 2.009

32,59114,293

2.280


Profitability Ratios

15

€ million € million2012 2011

Return on Sales (RoS)

=Net IncomeNet Sales

4,94851,324

0.0964,623

46,4670.099

Return on total assets (RoA)

=Net Income Total assets

4,94846,166

0.1074,623

47,5120.097

Return on common Equity

(RoE)=

Net Incomestockholder's equity

4,9484480

1.1044,6234252

1.087

Economy & Finance

Analysis of unilever financial reports (1)