1.0 Introduction - Impact on Neurodevelopmental Outcomes
Unilever is a big company whose analysis of ratios is done to understand its depth and to realize its weak points. The ratio assessments are done to calculate their profitability and financial gearing of it. This report highlights the changes or the possible reasons for the period given by the provider. This also includes the ratio analysis that is done individually to examine it. The scrutiny is done to compare its performance with other companies.
Looking for top-notch assignment assistance? Get expert help with assignment from subject-specific writers who understand the intricacies of your course. Whether it's Nursing, Marketing, Java, or any other subject, our qualified professionals are here to ensure your assignments meet the highest standards.
2.0 Discussion and Analysis of Ratios
2.1 Financial performance
Gross Margin Ratio
Figure 1: Gross Margin Ratio
The edge gross extents for the years 2022 is 40.23%, 2021 is 42.30%, 2020 is 43.45%, and 2019 is 44.01% separately. The net income of 2022 is 17.21%, in 2021 is 16.31, in 2020 is 15.76 and in 2019 it was 15.95%. The ROCE will be 19.73% in 2022, 17% in 2021, 16.99% in 2020, and 18.91% in 2019. The ROE in 2022 is 47.63%, in 2021 is 43.33%, in 2020 is 45.29% and 2019 is 59.69%. The asset turnover was 1.15%, 2021 is 1.04%, 2020 is 1.08%, and 2019 is 1.19% independently. The net overall revenue is a monetary metric that assesses an organization's benefit by estimating the extent of income staying in the wake of deducting the immediate expenses related to delivering or getting the labour and products sold. It very well may be derived from this that there will be an increment of 2.07% by 2022; thus, the organization is exchanging a negative bearing. (Shabbir et al 2020). As a result, the company's inefficiencies can be concluded to be since the previous year exceeded the current year's negative impact.
The net assets that are turnovers for the years 2022 is 1.15%, 2021 is 1.04%, 2020 is 1.08%, and 2019 is 1.19% respectively. This could conclude the results here that there is a 0.11% increase within the business. Here the ratio analysis of the two years can conclude that in the present year, it was higher than in the past years. Hence the company is using its assets more efficiently.
Current Ratio
Figure 3: Current Ratio
The current ratio analysis of the company within the years, 2022 is 0.75%, 2021 is 0.70%, 2020 is 0.78%, and 2019 is 0.78% respectively which concludes that the company has more than enough assets to cover its liabilities in the term. Hence the decrease in the percentage of 0.05% is seen which is not healthy for the business (Bartolacci et al 2020). This is considered very healthy for the company hence it has no chance of risk in the financial structure.
Liquidity Ratio
Figure 4: Liquidity Ratio
The analysis of the quick ratio is also given in the chart from which years 2022 is 0.52%, 2021 is 0.51%, 2020 is 0.57% and 2019 is 0.58% respectively this can be said that the company has a lower ratio hence it cannot pay its short-term bills. Hence the decrease in percentage is seen within the timeline (Gofwan, 2022). The ratio of the quick if less than 1 means that the company faces its working capital being negative and is experiencing a crisis in liquidity.
The turnover per employee ratio is done within the company to see how number of workers who have left the organisation. This is done to be able to fill the left ones with the new ones. In the years 2022, 2021, 2020, and 2019 385.471%, 295.826% 302.633%, and 287.497%, are concluded, which means there is a reduction in productivity and too much time spent recruiting and on boarding new employees.
2.2 Financial position
The financial calculations are done to provide insights into the company's ability to pay off its short-term and manage its assets more proficiently.
The Structure Ratio
Figure 5: The Structure Ratio
As the deductions done in the financial performance show the company’s health, here at Unilever Plc’s liquidity and its other proportions within it can be very much equal to the rivals. The ratios of the structure are seen in an increase and decrease trend like the current ratio has been decreased by 0.05% and in the case of gearing the percentage is seen in decreased manner which is 24.10%. Its current ratio has been constantly higher than any company hence concluding that this business has always been able to meet its short-term requirements. This is a very good sign for the organization.
The Operational Ratios
Figure 6: The Operational Ratios
Unilever’s liquidity and efficiency are influenced by the company which helps in its financial well-being. This also shows the company's capability to meet its short-term and long term to generate profits. The operational ratios increase and decrease are seen like in the creditor’s payment it is increased by 6%. The shareholder's values are also created using these ratios (Setiawan et al 2023). Its liquidity helps the company to understand its monetary position. Hence it needs to clearly and carefully understand it dealing with the functions in the capitals and requirements levels.
2.3 Financial structure
Gearing Ratio
Figure 7: Gearing Ratio
The gearing ratio as known shows the percentage of the company’s loan capital to its equity. Hence having a high gearing ratio usually means that it has a high proportion of debt to equity while a low one means that the company has a low proportion of debt to equity (Awaysheh et al 2020). Gearing ratio being low than in the present’s year like in year 2022 is 5% decrease. The consequences of the capital design opinions are significant for the company to consider while making its choices. It would help the company to concentrate on its investments and its operations within it.
Interest Coverage Ratio
Figure 8: Interest Coverage Ratio
The interest coverage ratio is also seen within the given which provides the fact that its coverage ratio over the four years has always been degrading. The decrease and increase are seen in the ratios like in this coverage ratio it is seen that it is decreased by 1%. But in this, it can be seen that a low ratio means that the company has more debt earnings and less capital to be able to use it in different places (Tien et al 2020). The capital structure when choosing a business should weigh the costs and financing options in various ways.
2.4 Limitations of ratio analysis
Unilever’s GP margin decreased as seen in the years 2022, 2021, 2020 and 2019 at 40.23, 42.30%, 43.45%, and 44.01%. This is because of a decline in the turnover by 1%. Turnover falls will influence the GP margin. This shows all the segments except the personal one that underwent a decline from 2019 to 2022. The other reasons for the fall could include the UK's negative currency impact and Latin America. The increase in success is because of local competitors who are becoming very vocal about the customer’s needs.
The operational ratios measure the operational performance of the management in 2022, 2021, 2020, and 2019 are 1.15%, 1.04%, 1.08%, and 1.19% respectively (Ichsan et al 2021). The ratio shows the revenue proportion available after removing the cost operating. The shareholders and creditors use this ratio analysis to conclude how the company’s characteristics are to be taken to take the risk. As the ratio analysis given it can be seen that Unilever was able to cover up its 1% decline in its turnover. This can lead to the reduction of the cost of operating for the years.
The percentage that is high that is found in the loan capital might be risky to the company and its stakeholders. This is very much so as the interest and capital are very much mandatory and must be concluded to avoid any risk of bankruptcy. Unilever’s gearing ratio shows a high ratio. This is so because the ratio may avert the providers for more loans to the company and investor usually prefers to invest in a company with a low ratio than the high one.
Conclusion and recommendation
Unilever's performance is good overall but the analysis is done to see it in more depth hence giving more attention to the areas where it needs to be improved. The decline in the return on capital employed can be seen as an underperformance but in the four years consecutively, shows that Unilever has very much improved on the ROCE, hence compared to the rivals the company needs to improve more on a steady basis and operate with the investors who will invest in the company. It’s GP and OP margin ratios have also improved and have outperformed the rivals. The ratios of the gearing and interest coverage need more attention as it is higher than its competitors and its interest is also very low. This results of the investors who have potential for investing and the creditors are also discouraged from the extra loan.
Section B Financial Analysis of Boris Limited
Question 2: Analysis of Financial position of Boris Limited
1.0 Financial Cash flow of Boris Limited
Figure 9: Cash flow for Boris Limited
This cash flow shows the company's earnings or spending over a period of time (Wu et al 2022). Here in Figure, the Boris company has its net cash flow from the operations is £70000 hence concluding the cash flow result which is needed to analyse it.
The investing cash flow of Boris Limited shows its cash generating or its spending related to the investment (Purba et al 2021). Here the year-end of the investing cash flow is £ 11,000.
The net cash flow of the financing part shows the net amount of funds that the company generates over a time period (Azizah et al 2023). Here it shows the year-end of the 31st December 2021 results which is £ 29500. This is done to understand Boris Limited’s cash and cash equivalent for further analysation.
2.0 Memorandum
Memorandum
To: Boris Limited Date: 22 November 2023
From: XXX
Subject: Resultants of the cash flow
Purpose:
The very purpose of this document is to notify the results and findings of the cash flow and its effects within the company. To understand its standpoint within the cost allocation of the company.
Background or context:
The cash flow is done with the help of a balance sheet as given by the provider. This is usually done to see the company’s report of resources within the financial statements, also it determines the cash balance with the maintaining of the working capital.
Action:
Over the past year, the cash flow can be seen declining, this is due to many reasons which might include decreasing sales and increased expenses. The way it could be reduced, is the expenses need to be less so cut back unrequired spending and negotiate better terms.
Conclusion:
It is believed that if these steps are taken then the cash flow of the company can be improved and will be able to get back on its feet.
Thanks,
XXX
References
Journals
Awaysheh, A., Heron, R.A., Perry, T. and Wilson, J.I., 2020. On the relation between corporate social responsibility and financial performance. Strategic Management Journal, 41(6), pp.965-987.
Bartolacci, F., Caputo, A. and Soverchia, M., 2020. Sustainability and financial performance of small and medium sized enterprises: A bibliometric and systematic literature review. Business Strategy and the Environment, 29(3), pp.1297-1309.
Gofwan, H., 2022. Effect of accounting information system on financial performance of firms: A review of literature. DEPARTMENT OF ACCOUNTING (BINGHAM UNIVERSITY)-2nd Departmental Seminar Series with the Theme–History of Accounting Thoughts: A Methodological Approach. Vol. 2, No. 1.
Ichsan, R., Suparmin, S., Yusuf, M., Ismal, R. and Sitompul, S., 2021. Determinant of Sharia Bank's Financial Performance during the Covid-19 Pandemic. Budapest International Research and Critics Institute-Journal (BIRCI-Journal), 4(1), pp.298-309.
Setiawan, C.A. and Rosa, T., 2023. The Analysis of The Effect of Return of Investment (ROI) on Stock Price and Financial Performance of a Company. Journal of Accounting, Management, Economics, and Business (ANALYSIS), 1(1), pp.20-29.
Shabbir, M.S. and Wisdom, O., 2020. The relationship between corporate social responsibility, environmental investments and financial performance: evidence from manufacturing companies. Business Environmental Science and Pollution Research, 27, pp.39946-39957.
Tien, N.H., Anh, D.B.H. and Ngoc, N.M., 2020. Corporate financial performance due to sustainable development in Vietnam. Corporate social responsibility and environmental management, 27(2), pp.694-705.
