Introduction

In this study ratio analysis I’m trying to find the Two company comparison
between two companies with ratio analysis’s Current ratio. Compares
current assets to current liabilities, to see if a business has enough cash to pay its
immediate liabilities.

 Debt to equity ratio. Compares the proportion of debt to equity, to see if a

business has taken on too much debt.
 Gross profit ratio. Calculates the proportion of earnings generated by the
sale of goods or services, before administrative expenses are included. A
decline in this percentage could signal pricing pressure on a company's core
operations.
 Inventory turnover. Calculates the time it takes to sell off inventory. A low
turnover figure indicates that a business has an excessive investment in
inventory, and therefore is at risk of having obsolete inventory.
 Net profit ratio. Calculates the proportion of net profit to sales; a low
proportion can indicate a bloated cost structure or pricing pressure.
 Return on assets. Calculates the ability of management to efficiently use
assets to generate profits. A low return indicates a bloated investment in
assets.

COMPANY PROFILE
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 Nestle India ltd.
Nestle India Limited is an India-based company engaged in food business.
The Company operates in the Food segment. The Company's food business
incorporates product groups, which include milk products and nutrition,
beverages, prepared dishes and cooking aids, and chocolate and
confectionery. Its milk products and nutrition include NESTLE BABY & me,
and NESTLE NESLAC. Its beverages include coffee products, such as
NESCAFE, NESCAFE CLASSIC, NESCAFE Sunrise, NESCAFE Cappuccino and
NESCAFE GOLD. Its prepared dishes and cooking aids products include
MAGGI, MAGGI Oat Noodles, MAGGI Bhuna Masala, MAGGI Vegetable Atta
Noodles, MAGGI Nutri-licious PAZZTA and MAGGI Sauces. The Company's
chocolate and confectionery products include Nestle KitKat, Nestle BarOne,
Nestle Alpino, Nestle Munch, Nestle CLASSIC, Eclairs and POLO. The
Company's plants are located at Moga, Samalkha, Nanjangud, Choladi,
Ponda, Bicholim, Pantnagar and Tahliwal.

Hindustan Unilever Ltd.

Hindustan Unilever Ltd (HUL) is India's largest fast-moving consumer
goods company. HUL operates in seven business segments. Soaps and
detergents include soaps, detergent bars, detergent powders and scourers.
Personal products include products in the categories of oral care, skin care
(excluding soaps), hair care, and talcum powder and color cosmetics.
Beverages include tea and coffee. Foods include staples (attar, salt and
bread) and culinary products (tomato-based products, fruit-based
products and soups). Ice creams include ice creams and frozen desserts.
Others include chemicals and water business.

BOJECTIVES

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 Objectives and Benefits of Ratio Analysis:
Ratio Analysis hence
becomes a vital tool for financial analysis and financial management.

Let us take some objectives that ratio analysis.

 Simplify accounting information.

 Assess the operating efficiency of the business.
 Analyze the profitability of the business.
 Help in comparative analysis, i.e. inter-firm and intra-firm comparisons.

Advantages Of Ratio Analysis

Ratio analysis plays an important role in analyzing a company’s financial
performance. Therefore, the advantages of ratio analysis are:

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 Useful tools for analysis for Financial Statements
 Simplifies accounting data
 Helpful in assessing the operating efficiency of business
 Useful for forecasting
 Useful in locating the weak areas
 Useful in inter-firm and intra-firm comparison

Limitations Of Ratio Analysis

Ratio analysis is a powerful tool for assessing the strengths and weaknesses of an
enterprise. But, it has certain limitations which are:

 False result
 Ignores Qualitative factors
 Lack of standard ratio
 May not be comparable
 Price level changes are not considered
 Window dressing

Research Methodology

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SOURCE OF DATA :-
 Secondary data:- Secondary data is collected from the
internet.

SAMPLING METHOD: 
 STATISTICAL TOOLS: The tables, line charts are used for
analyzing the data.
RESEARCH TYPE AND GENERAL GOAL :-

 The proposed research is applied, descriptive, experimental

and longitudinal.
 The proposed research is developed from quantitative point
of view.

DATA ANALYSIS

Working Capital Ratio

Working Capital Ratio = Current Asset - Current Liabilities

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 Nestle India Ltd.

Years Current Asset Current Liabilities Working Capital

2018 2923.77 4379.20 -1455.43
2017 2673.38 3906.86 -1233.48
2016 2138.99 3759.12 -1620.13
2015 2163.21 3598.33 -1435.12
2014 1932.25 3485.69 -1553.44
Hindustan Unilever Ltd.

Years Current Asset Current Liabilities Working Capital

2018 8,019.13 4728.17 3290.99
2017 9630.22 4916.25 1233.48
2016 9319.11 4873.49 1620.13
2015 7018.17 4756.46 2094.54
2014 8978.72 4326.65 2067.13

Working Capital
4000
3290.99
3000
2000 2094.54 2067.13
1620.13
1000 1233.48

0
2018 2017 2016 2015 2014
-1000 -1233.48
-1455.43 -1620.13 -1435.12 -1553.44
-2000

INTERPRETATON:- According to above data we can see that The Nestle company
is running loss and Hindustan Unilever Ltd. Is running in profit.

QUICK RATIO/Acid test ratio

Quick Ratio = Quick Asset /Current Liabilities

Nestle India Ltd.

Year Quick Asset Current Liabilities Quick Ratio

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 2018 1734.65 4379.20 0.48
2017 1546.39 3906.86 0.40
2016 977.93 3759.12 0.26
2015 855.36 3698.11 0.23
2014 981.32 3547.20 0.19
Hindustan Unilever Ltd.
Year Quick Asset Current Liabilities Quick Ratio
2018 488.14 472.17 1.03
2017 623.63 491.25 1.27
2016 638.80 487.49 1.31
2015 652.36 475.46 1.37
2014 659.42 513.69 1.28

Quick Ratio
1.6
1.4 1.37
1.27 1.31 1.28
1.2
1 1.03
0.8
0.6
0.48
0.4 0.4
0.2 0.26 0.23 0.19
0
2018 2017 2016 2015 2014

INTERPRETATION :- Quick Ratio is low for Nestle India Ltd but the Quick ratio of
Hindustan Unilever Ltd. Is in positive figure that means Nestle is not performing
well in the market and Hindustan Unilever is performing well.

CURRET RATIO
Current Ratio= Current Asset / Current Liabilities

Nestle

Year Current Asset Current Liabilities Current Ratio

2018 2923.77 4379.20 0.66

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 2017 2673.38 3906.86 0.68
2016 2138.99 3759.12 0.60
2015 2098.67 3469.87 0.61
2014 1947.21 3378.44 0.58
Hindustan Unilever Ltd.

Year Current Asset Current Liabilities Current Ratio

2018 4660.14 5456.33 0.85
2017 5684.3 5696.1 0.89
2016 5093.1 5959.6 0.95
2015 5601.8 5363.8 1.04
2014 4907.2 4714.7 1.04

Current Ratio
1.2
1 1.04 1.04
0.95
0.89
0.8 0.85
0.66 0.68
0.6 0.6 0.61 0.58
0.4
0.2
0
2018 2017 2016 2015 2014

INTERPRETITION :- Nestle company’s current asset is less than current

liabilities That means here incoming cash is less than the outgoing cash and
HUL CA is more than CL so company’s cash is more than outgoing cash. The
Ideal current ratio is 1:1.

INVENTORY TURNOVER RATIO

Inventory Turnover Ratio = Cost Of Goods Sold / Average Inventory

Nestle

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 Year Cost Of Goods Average Inventory Turnover
Sold Inventory Ratio
2018 11,292.27 965.55 11.70
2017 10,009.60 902.47 11.10
2016 9,223.80 943.18 09.78
2015 10,425.20 923.32 11.29
2014 8,365.01 919.11 09.10
Hindustan Unilever Ltd.
Year Cost Of Goods Average Inventory Turnover
Sold Inventory Ratio
2018 20113.98 777.12 25.88
2017 22557.8 949.95 23.75
2016 24427.8 926.90 26.35
2015 25047.6 934.70 26.80
2014 27224.9 938.35 29.01

35
30 29.01
26.35 26.8
25 25.88 23.75
20
15
11.7 11.1 11.29
10 9.78 9.1
5
0
20118 2017 2016 2015 2014

INTERPRETITION :
There is increase in inventory turn over ratio in both
company that means company effectively managed the inventory.

DEBT EQUITY RATIO

Debt Equity Ratio = Long Term Debt / Shareholder’s Equity

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 Nestle

Year Long Term Debt Shareholder’s Debt Equity Ratio

Equity
2018 35010.14 3273.74 10.69
2017 33105.05 3520.59 9.40
2016 17880.03 3013.70 5.93
2015 17650.02 3002.10 4.99
2014 1632.25 2825.87 3.94
Hindustan Unilever Ltd.
Year Long Term Debt Shareholder’s Debt Equity Ratio
Equity
2018 1619.54 145.33 11.14
2017 782.4 145.3 5.38
2016 899.1 145.3 6.19
2015 803.9 145.3 5.53
2014 816.1 145.3 5.66

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11.14
10.69
10
9.4
8

6 6.19
5.93
5.38 5.53 5.66
4.99
4 3.94

0
2018 2017 2016 2015 2014

INTERPRETITION :- From the diagram it is shown that in 2014 to 2018 the

debt equity ratio is increase continuously which means the company has to
pay more debt than past. It is a bad sign for the both company’s future .

FIXED Assets to Current Asset

FIXED Assets to Current Asset= Fixed Asset/ Current Asset

Nestle

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 Year Fixed Asset Current Asset Fixed Asset to CA

2018 1,133.96 4,660.14 0.24

2017 1,321.12 5,093.10 0.26
2016 1,272.30 5,684.30 0.22
2015 1,100.10 5,601.80 0.20
2014 1,245.30 4,907.30 0.25
Hindustan Unilever Ltd.

Year Fixed Asset Current Asset Fixed Asset to CA

2018 573.55 701.17 0.81

2017 731.30 897.72 0.81
2016 706.02 931.11 0.76
2015 705.68 963.22 0.73
2014 729.94 1,019.13 0.72

0.9
0.8 0.81 0.81
0.76 0.73
0.7 0.72
0.6
0.5
0.4
0.3
0.24 0.26 0.25
0.2 0.22 0.2
0.1
0
2014 2015 2016 2017 2018

Interpretation: According to this table we can say this the Fixed assets are
easily convertible into Current assets.

Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio = Net Sales/ Fixed Assets

Year Net Sales Fixed Assets Fixed Assets

Turnover Ratio
2018 1488.39 573.55 2.59

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 2017 1651.82 731.30 2.25
2016 1679.9 706.02 2.37
2015 1822.76 705.66 2.58
2014 2096.94 729.94 2.87
Hindustan Unilever Ltd.

Year Net Sales Fixed Assets Fixed Assets

Turnover Ratio
2018 8,049.32 1133.96 7.098
2017 8,248.20 1321.12 6.24
2016 8,547.60 1272.3 6.72
2015 8,170.10 1100.1 7.43
2014 8,980.60 1245.3 7.21

8
7.43 7.21
7 7.1
6.72
6 6.24

5
4
3 2.87
2.59 2.37 2.58
2 2.25

1
0
2018 2017 2016 2015 2014

Interpretation : In this table of data we can say that Nestle fail most of the
year to use Fixed asset to generate sales but Hindustan Unilever ltd
successfully used the fixed assets to generate sales for the company.

FINDINGS
 After doing this study we can see that The Nestle company is running
loss and Hindustan Unilever Ltd. Is running in profit.

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 Quick Ratio is low for Nestle India Ltd but the Quick ratio of Hindustan
Unilever Ltd. Is in positive figure that means Nestle is not performing well
in the market and Hindustan Unilever is performing well.
 Nestle company’s current asset is less than current liabilities That
means here incoming cash is less than the outgoing cash and HUL CA is
more than CL so company’s cash is more than outgoing cash.
 There is increase in inventory turn over ratio in both company that
means company effectively managed the inventory.
 Fro the study is shown that in 2014 to 2018 the debt equity ratio is
increase continuously which means the company has to pay more debt
than past. It is a bad sign for the both company’s future .
 we can say this the Fixed assets are easily convertible into Current
assets.
 Nestle fail most of the year to use Fixed asset to generate sales but
Hindustan Unilever ltd successfully used the fixed assets to generate
sales for the company

CONCLUSION

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Nestle India limited and Hindustan Unilever Ltd. is Indian’s largest
private sector companies. But after analysis the performance of last 5
years of the company. Based on the data analysis and findings the study
on concluded that Nestle India Ltd. performance is going down and run
for the bad position but Hindustan Unilever is performing better than
previous years. The companies need to work on their weak point and
must need to improve their financial condition.

CONCEPTUAL RELEVANCE

The working capital ratio is a measure of liquidity, revealing whether a

business can pay its obligations.

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 The quick ratio is an indicator of a company’s short-term liquidity position
and measures a company’s ability to meet its short-term obligations with its
most liquid assets.

The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year.

The inventory turnover ratio is an efficiency ratio that shows how effectively
inventory is managed by comparing cost of goods sold with average inventory
for a period.

Debt Equity Ratio: The Debt to Equity ratio (also called the “debt-equity ratio”,
“risk ratio”, or “gearing”), is a leverage ratio that calculates the weight of total
debt and financial liabilities against the total shareholders’ equity.

REFERENCE

Websites :
 www.google.com
 www.capitalmaket.com

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  www.investopedia.com
 www.inc.com
 www.accountingtools.com

Books :

 Cost Accounting By Basu and Das

 Financial Accounting by Hanif And
Mukharjee

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