Financial Statement Analysis

FMCG INDUSTRY – RECENT PERFORMANCE

MARKET SHARE OF TOP PLAYERS

SALES TURNOVER

OBJECTIVE

Perform vertical analysis of the Balance Sheet and P&L account

Interpret significant changes in reserves and surplus, current liabilities, debtors, cash and bank balances

Compare common size statements for different years to reveal important changes in the Balance Sheet and P&L account.

Perform ratio analysis Analyze the companies from an investor’s

and creditor’s point of view

HUL INTERPRETATION

Reserves & Surplus of the company has decreased in the given period.

Secured Loans – Percentage increase due to disproportionate decrease in total assets. Reduction in absolute terms.

Unsecured loans taken have increased - utilized in the current liabilities.

Increase in net block of assets – high profits earned invested in assets.

Investments – Percentage increase, reduction in absolute terms. Used to payoff secured loans.

DABUR INDIA LTD.INTERPRETATION

Reserves & Surplus of the company has increased due to higher profits.

Short term as well as the Long term loans of the company have decreased due to payoffs from higher profits.

Increase in the net block of assets – Investments from higher profits.

Cash & Bank balance of the company has increased by more than 70%.

COMPARISON OF DABUR INDIA & HUL

Reserves & Surplus, and Net worth for Dabur India is slightly greater than that for HUL.

Percentage of secured/unsecured loans as well as current liabilities is greater for HUL as compared to Dabur India - former uses greater debt financing than latter.

Although liabilities of HUL are far greater than those of Dabur India, so are its current assets and investments

FINANCIAL RATIO ANALYSIS - HUL

FINANCIAL RATIO ANALYSIS – DABUR

COMPARISON OF HUL AND DABUR INDIA LTD.

Interest coverage ratios - Dabur Less than HUL – Safer to give loans to HUL

Gross profit margin of Dabur is more than HUL

– More efficient production processes ROE of HUL is higher than Dabur -

investments made by HUL are more justified as gross profit margin of Dabur is more than HUL but the ROE is still less.

EPS of HUL is better than Dabur – Investors should invest in HUL as compared to Dabur.

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