RATIO ANALYSIS

Ratio analysis

[Nam of student]

Table of Content

Introduction1

Ratios1

Profitability ratios2

Liquidity ratios4

Financial leverage6

Efficiency ratios8

Conclusion11

References12

Ratio analysis

Introduction

The company that I have chosen for the task is Unilever. Everyday around two billion people use the products of Unilever in order to get more from their lives and feel good. Unilever's products are selling in more than 190 countries across the globe. Unilever has more than 400 brands which are focusing on the health and welfare of its customers. (www.unilever.co.uk, 2012) There is no company which touches customer's life in so many ways. The portfolio of Unilever has the leading brands such as Lipton, Knorr, Dove,Axe, Hellmann's and Omo. The Unilever has launched the program named “sustainable living plan” which means that the Unilever will grow its business with minimum effect on the environment. Unilever remain focus on the innovation this is the reason why it invests €1 billion every year on research and development. Out of Unilever's 400 brands 12 brands generate the sales of more than €1 billion a year. Unilever provides employment to more than 171,000 people. The vision of the Unilever is, “We help people around the world meet everyday needs for nutrition, and hygiene and wellbeing, with brands that help people look good, feel good and get more out of life.” Unilever is listed in London Stock Market and its symbol is ULVR. (www.unilever.co.uk, 2012)

Ratios

Ratios can be classified into four main areas which provide information about the different domains like liquidity of the firm, profitability, efficiency and the debt management of the firm. Liquidity ratios tell about the short term obligations and the firm's ability to meet its short term obligations. Turnover ratios tell that how effectively the firm is enhancing its sales. Profitability ratio of a firm tells how efficiently the firm is managing its resources. Debt ratios of the firm tell about the financing structure of the firm.” Ratios are found to know the meaningful information about the company. (www.zenwealth.com, 2012)Ratio helps to analyze the performance of the company. Ratio analysis can be used to assess the performance of the company such as efficiency, and how the company is using its funds. To analyze the ratios of any company we need some data. One can get data through the annual reports of the company. There should be a comparison or a benchmark while analyzing the ratios of the company. Ratios are used to analyze the financial position of the firm. It indicates the performance of the firm as well. The data given in the financial reports of the Unilever is used in calculating the ratios of that company. (www.zenwealth.com, 2012)

Profitability ratios

The profitability ratios are calculated to know the ability of the company to generate returns from its resources. Positive profitability ratios indicate that the company is performing well. It is better to have high profitability ratios. (www.cliffsnotes.com, 2012) I have calculated some profitability ratios such as net profit margin, return on assets, operating income margin, return on investment, and return on equity and Du Pont return on ...