FINANCIAL ACCOUNTING

PROJECT REPORT
ON
“COMPANY ANALYSIS- HUL & MARICO LTD.”
SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

I – Term

POST GRADUATE DIPLOMA IN MANAGEMENT

(INTERNATIONAL BUSINESS)
(2021-2023)

OF
FORE School of Management
New Delhi

SUBMITTED BY

UNDER THE GUIDANCE OF

Prof. Gaurav Gupta
18th October, 2021

DECLARATION

We, declare that, we have completed this project titled as “Company Analysis” which is
submitted in partial fulfillment of the requirements for I-Term of Post Graduate Diploma in
Management (International Business) of FORE School of Management, New Delhi, 2021-
2023.

1
The information presented in this project is an original work and does not form any part
of the project undertaken previously to the best of our knowledge.

ACKNOWLEDGEMENTS
We would like to acknowledge the generous assistance we received from a number of people
and we would like to take this opportunity to extend our gratitude to all of them who spent their
valuable time and efforts to encourage us in completion of this project report.

2
First of all, we would like to extend our sincere regards to FORE School of
Management, New Delhi for instilling us with such opportunities to learn and grow.
Secondly, we thank Prof. Gaurav Gupta for his timeless assistance and guidance throughout
the term.
We express gratitude to each other for being available at all times & supporting each other in
the successful completion of this project.
It wouldn’t be fair without thanking our family and colleagues who continuously inspired and
supported us throughout.

TABLE OF CONTENTS
1. Company Profile – Marico Limited

2. Company Profile – HUL

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 3. Comparative Common Size Analysis of Marico and HUL

4. Horizontal Analysis

5. Trend Analysis

6. Cash Flow Analysis

7. Ratio Analysis

COMPANY PROFILE – MARICO LTD.

Marico Ltd (Marico) is a manufacturer, marketer and seller of skin care, health care and food
products. The company’s product portfolio comprises coconut oil, hair serum, value added hair
oil, edible oil, oats, body lotion, hair gain tonic, ant ageing creams, deodorants, hair gel and

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 wax and hair color. Marico manufactures and markets its products under Hair Code,
Nihar Uttam, Caivil, Black Chic, Livon, Revive, Medicare, Nihar Naturals, Hair & Care,
Saffola, Parachute, Hercules, Code 10, Set Wet and Parachute Advansed brands. It sells its
products through retail outlets, e- commerce and modern trade. The company exports its
products to South Africa, the Middle East, Malaysia, Egypt, Vietnam and Bangladesh. Marico
is headquartered in Mumbai, Maharashtra, India.

Company Snapshot
 Employees (all sites): 1,694
 Assets (Mil USD): 761
 Revenue (Mil USD): 1,103.08
 Ticker symbol: 531642
 Year started: 1988
 Incorporated 1988
Corporate Family

85
Corporate Family Connections
MARICO LIMITED
(ULTIMATE PARENT)
8 Subsidiaries
76 Branches
Financial Statements
Financial data as of March 31, 2021 (12-month period) in USD
ANNUAL REVENUE 2021
$1.10 BILLION USD
1 USD = 72.4428 INR
The company reported revenues of (Rupee) INR80,480 million for the fiscal year ended March
2021 (FY2021), an increase of 10% over FY2020. In FY2021, the company’s operating margin
was 18.2%, compared to an operating margin of 17.8% in FY2020. In FY2021, the company
recorded a net margin of 14.6%, compared to a net margin of 14% in FY2020. The company
reported revenues of INR25,250 million for the first quarter ended June 2021, an increase of
25.5% over the previous quarter.
Income statement (All financial data is in millions except per share data. Source: Morningstar)

 2021 revenue: $1,103.08

 Cost of revenue: $625.05
 Gross profit: $478.03
 Operating income: $200.57
 Income before tax: $210.23
 Net income: $161.78
 Diluted EPS: $.13

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Cash Flow (All financial statement data is in millions except per share data | Source:
Morningstar)
CASH FLOW (MIL) 2021 2020 2019

NET OPERATING CASH $285.47 $167.58 $146.6

NET INVESTING CASH -$129.48 -$5.38 -$46.11

NET FINANCING CASH -$154.47 -$158.33 -$96.35

NET CHANGE IN CASH $1.52 $3.87 $4.14

CASH AT BEGINNING OF PERIOD $12.84 $6.63 $7.04

CASH AT END OF PERIOD $15.05 $12.84 $6.63

CAPITAL EXPENDITURE -$19.6 -$25.95 -$22.36

Assets (All financial statement data is in millions except per share data | Source: Morningstar)
ASSETS (MIL) 2021 2020 2019

CURRENT ASSETS

CASH AND CASH EQUIVALENTS $14.91 $12.84 $6.63

ACCOUNTS RECEIVABLE $53.56 $74.4 $71.37

INVENTORIES $155.43 $190.5 $194.77

OTHER CURRENT ASSETS $236.6 $156.95 $168.96

ASSET SUMMARY

TOTAL CURRENT ASSETS $460.5 $434.69 $441.73

TANGIBLE FIXED ASSETS $106.98 $118.58 $106.29

INTANGIBLE ASSETS $31.75 $5.66 $7.59

TOTAL ASSETS $760.6 $686.06 $677.64

Liabilities (All financial statement data is in millions except per share data | Source:
Morningstar)
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 LIABILITIES (MIL) 2021 2020 2019

CURRENT LIABILITIES

ACCOUNTS PAYABLE $156.54 $131.14 $130.31

SHORT-TERM DEBT $47.21 $45.42 $46.8

OTHER CURRENT LIABILITIES $74.13 $65.43 $60.88

LIABILITY SUMMARY

TOTAL CURRENT LIABILITIES $277.87 $241.98 $237.98

LONG-TERM DEBT $1.1 $1.38 $1.93

OTHER LONG-TERM LIABILITIES $ $ $

TOTAL LIABILITIES $310.87 $266.97 $265.31

Shareholders Equity (All financial statement data is in millions except per share data | Source:
Morningstar)
STAKEHOLDER'S EQUITY (MIL) 2021 2020 2019

EQUITY

COMMON STOCK $17.81 $17.81 $17.81

RETAINED EARNINGS $419.37 $391.34 $392.45

EQUITY SUMMARY

TOTAL EQUITY $447.25 $417.29 $410.67

SHARES OUTSTANDING 1,291,349,998 1,289,996,298 1,289,780,248

SWOT Analysis
STRENGTHS WEAKNESSES

Strong Financial performance Limited Global Presence

Massive Distribution Network Largely Dependent on Saffola and
parachute brands
Strong presence in Asia and Africa

OPPORTUNITIES THREATS

Strong economic indicators for india Political Risks

Promising growth in rural markets Commodity Price fluctuations
GST implementation benefits

COMPANY PROFILE – HUL

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 Hindustan Unilever Limited (HUL or 'the company') is an Indian FMCG company. The
company offers products such as soaps, detergent bars detergent powders, hair care,
deodorants, talcum powder, color cosmetics, tea and coffee. The company offers health care
drinks under Horlicks and Boost brand names HUL markets its products through brand names
such as Pepsodent, Dove, Knor, Kissan, Taza, Surf Excel and Lipton. It sells its products
through various distributors and associates across India and internationally. The company is
headquartered in Mumbai, Maharashtra, India.

Company Snapshot
 Employees (all sites): 7,416
 Assets (Mil USD): 9,491
 Revenue (Mil USD): 6,476.84
 Ticker symbol: 500698
 Year started: 1933
 Incorporated 1933
 Fiscal year end: March
 Sales growth %: 18.45%
 Net income growth: 18.48%
Corporate Family
351
Corporate Family Connections
HINDUSTAN UNILIVER LIMITED
(ULTIMATE PARENT)
12 Subsidiaries
338 Branches
Financial Statements
Financial data as of March 31, 2021 (12-month period) in USD
ANNUAL REVENUE 2021
$6.48 billion USD 
1 USD = 72.4428 INR
The company reported revenues of (Rupee) INR 470,280 million for the fiscal year ended
March 2021 (FY2021), an increase of 18.2% over FY2020. In FY2021, the company’s
operating margin was 21.7%, compared to an operating margin of 21.6% in FY2020. In
FY2021, the company recorded a net margin of 17%, compared to a net margin of 17% in
FY2020. The company reported revenues of INR 121,940 million for the first quarter ended
June 2021, a decrease of 1.9% over the previous quarter.
Income statement (All financial data is in millions except per share data. Source: Morningstar)

 2021 revenue: $6,476.84

 Cost of revenue: $3,161,39
 Gross profit: $3,315.44
 Operating income: $1,456.6
 Income before tax: $1,464.05
 Net income: $1,1,3.63
 Diluted EPS: $.47

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Cash Flow (All financial statement data is in millions except per share data | Source:
Morningstar)
CASH FLOW (MIL) 2021 2020 2019

NET OPERATING CASH $1,264.86 $1,052.28 $800.63

NET INVESTING CASH -$210.93 $247.23 -$60.46

NET FINANCING CASH -$1,285.01 -$941.29 -$744.04

NET CHANGE IN CASH -$231.08 $358.21 -$3.87

CASH AT BEGINNING OF PERIOD $443.94 $85.72 $89.59

CASH AT END OF PERIOD $254.27 $443.94 $85.72

CAPITAL EXPENDITURE -$574.66 -$118.99 -$105.88

Assets (All financial statement data is in millions except per share data | Source: Morningstar)
ASSETS (MIL) 2021 2020 2019

CURRENT ASSETS

CASH AND CASH EQUIVALENTS $254.27 $443.94 $85.72

ACCOUNTS RECEIVABLE $242.67 $158.61 $250.68

INVENTORIES $494.05 $381.96 $355.31

OTHER CURRENT ASSETS $971.53 $716.29 $952.89

ASSET SUMMARY

TOTAL CURRENT ASSETS $1,962.51 $1,700.79 $1,644.61

TANGIBLE FIXED ASSETS $947.09 $767.09 $634.71

INTANGIBLE ASSETS $3,855.46 $55.49 $56.04

TOTAL ASSETS $9,491.22 $2,781.92 $2,571.55

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Liabilities (All financial statement data is in millions except per share data | Source:
Morningstar)
LIABILITIES (MIL) 2021 2020 2019

CURRENT LIABILITIES

ACCOUNTS PAYABLE $1,215.03 $1,040.13 $994.72

SHORT-TERM DEBT $ $ $13.67

OTHER CURRENT LIABILITIES $317.63 $245.99 $188.01

LIABILITY SUMMARY

TOTAL CURRENT LIABILITIES $1,532.66 $1,286.12 $1,196.39

LONG-TERM DEBT $ $ $

OTHER LONG-TERM LIABILITIES $ $ $

TOTAL LIABILITIES $2,907.54 $1,643.64 $1,483.1

Shareholders Equity (All financial statement data is in millions except per share data | Source:
Morningstar)
STAKEHOLDER'S EQUITY (MIL) 2021 2020 2019

EQUITY

COMMON STOCK $32.44 $29.82 $29.82

RETAINED EARNINGS $949.72 $1,062.63 $1,014.32

EQUITY SUMMARY

TOTAL EQUITY $6,580.92 $1,135.93 $1,085.96

SHARES OUTSTANDING 2,349,567,819 2,164,844,187 2,164,704,405

SWOT Analysis
Hindustan Unilever Limited (HUL or 'the company') is a FMCG company. Market leadership,
improving profitability, and research and development activities are the company's major
strengths, whereas liquidity position remains an area for concern. Growing global skin care
market, strategic expansion and positive outlook of savoury snacks market are likely to provide
growth opportunities for the company. However, competition pressures, changing cosmetic
trends and counterfeit markets may affect the company’s business operations.

Strengths Weaknesses
Improving profitability Increasing Trade Receivables
Market leadership
Research and development activities

Opportunities Threats

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 Positive outlook of savoury snacks market
Expansion initiatives
Changing cosmetic trends
Growing global skin care market
Competition pressure
Counterfeit goods market

Comparative Common Sized Analysis of Marico & HUL

Year 2019-2020
General: Similarities & Dissimilarities
1. Both the companies are in Fast Moving Consumer Goods (FMCG)
2. The total non-current Assets of HUL was more than twice than that of Marico’s, Whereas
Marico’s current assets were more than thrice of HUL’s.
3. The revenue from operations of HUL is 5% more than Marico’s and ultimately a difference of
approximately 5% in the PAT (HUL’s being greater)
4. Total expenses of Marico’s is 2% more than HUL’s.

Profitability
1. Cost of material consumed of Marico is far higher(1.47 times) than that of HUL.
2. Profit Margin and Tax planning for both the companies is more or less the same.
3. Both the companies stand at similar levels of approximately 17% in terms of PAT margin.

Financial Position
1. Total Fixed Assets of Marico is $35.98 million, whereas for HUL it is $79.98 million.
2. Total Non-Current Assets for HUL are far greater than that of Marico’s.
3. Total equity for Marico stands at $69.83 million and for HUL at $69.6 million.
4. Equity for both the firms is more or less the same.

Year 2018-2019
General: Similarities & Dissimilarities
1. Both the companies are in Fast Moving Consumer Goods (FMCG)
2. Total non-current liabilities of HUL was more than 5 times than that of HUL’s
3. Total expenses of Marico’s are 6% more than HUL’s.

Profitability
1. Cost of material consumed of Marico is far higher (1.47 times) than that of HUL.
2. Profit Margin for both the companies is more or less the same.
3. Tax planning for Marico’s is better than that of HUL
4. Both the companies stand at similar levels of approximately 15% in terms of PAT margin.

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 Financial Position
1. Total fixed assets for HUL stands at $39.25 millions, and Marico’s at $42.96 millions.
2. Both firms have similar amounts invested in fixed assets.
3. HUL’s total equity is $41 millions and Marico’s is $69.83 millions.
4. Marico’s total equity is approximately twice than that of HUL’s.

Horizontal Analysis
Horizontal Analysis is an approach used to analyse financial statements by comparing specific
financial information for a certain accounting period with information from other periods.
Analysts use such an approach to analyse historical trends. Trends or changes are measured by
comparing the current year’s values against those of the base year. The goal is to determine any
increase or decline in specific values. A percentage or an absolute comparison may be used in
horizontal analysis. Horizontal analysis can also be compared with vertical analysis. Whereas
vertical analysis analyses a particular financial statement using only one base financial
statement of the reporting period, horizontal analysis compares a specific financial statement
with other periods or the cross-sectional analysis of a company against another company. In
horizontal analysis, the changes in specific financial statement values are expressed as a
percentage. To calculate the percentage change, first select the base year and comparison year.
Subsequently, calculate the change by subtracting the value in the base year from that in the
comparison year and divide by the base year. The result is then multiplied by 100.

Horizontal analysis of HUL for:

Year 2020-2021 and 2019-2020
Profitability
1. Growth in revenue from operations by 18.59224%
2. However, growth in total income is quite less as compared to revenue from operations due to
30.0.36% decline in other income of the company.
3. Total expenses increase at 18.40286% which is almost equal to increase in revenue from
operations. Major expense that has grown disproportionately higher is employee benefit
expenses (a whopping rise of 31.81549%).
4. However, the total expense growth is greater than the total income growth which results in low
growth rate of PBEIT (Profit Before Exceptional Items and Tax).
Financial Position
1. Assets / Equities and liabilities growth by 247.4952% which is a very good increase. Balance
sheet strengthened.
2. Other financial assets have a major increase in the assets of the company which is 20333.33%.

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3. Owners’ equity has grown by 503.9539%.
4. Growth of total assets is a high 247.4952% against which fixed asset growth is just negligible.

Year 2019-2020 and 2018-2019

Profitability
1. Growth in revenue from operations by 1.467664%.
2. However, growth in total income higher at 1.620037% due to 10.39157% growth in other
income.
3. Total expenses growth at 0.298616% is less than the operational revenue growth. Major
expense that has grown disproportionately higher is finance costs (a whopping rise of
278.5714%).
4. As total income growth is greater than the total expense growth, PBEIT therefore increases
higher at 6.172134%
Financial Position
1. Asset / Equities and Liabilities growth by 9.722922%. Balance Sheet strengthened.
2. Owner’s equity has grown by 4.997985%.
3. Fixed assets growth at 18.37727% which is double than growth of total assets.
4. Other financial liabilities have a major increase in the total equities and liabilities of the
company.

Horizontal Analysis of Marico for:

Year 2020-2021 and 2019-2020
Profitability
1. Total income reduced by 1.80166% which is a bad sign for the company.
2. Total expenses also reduced by 4.12655% which is a good sign for the company.
3. Profit before exceptional items and tax has a growth rate of 8.199493% because reduction in
expenses is far greater than the reduction in income.
4. Total tax expense also increased by 4.526749%.
Financial Position
1. Assets / Equities and Liabilities have reduced by 13.0727%. Not a good sign for the company.
2. Fixed assets growth at 10.36496%.
3. Current investments have a major increase in the total assets of the company whereas short
term provisions have a major increase in the total equities and liabilities of the company.
4. Owner’s equity reduced by 17.8869%

Year 2019-2020 and 2018-2019

Profitability
1. Growth in revenue from operations by 15.03311%.

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2. However, growth in total income higher at 16.41482% due to 38.56919% growth in
other income of the company.
3. Total expenses increase at 17.53158% is more than the operational revenue growth. Major
expense that has grown disproportionately higher is finance cost expense (a whopping rise of
217.88085%).
4. However, the total expense growth is greater than the total income growth which results in low
growth rate of PBEIT (Profit Before Exceptional Items and Tax).
Financial Position
1. Assets / Equities and Liabilities growth by 18.36145%. Balance sheet strengthened.
2. Owner’s equity has grown by 15.38065%.

TREND ANALYSIS OF HUL

Financial Results for the Year
1. Year ended March’21 sales increased 1.59 times over the base year. The expenses increased to
1.54 times. Resulting in to PBT growth of 2.89 times.
2. Not only this, tax increase of 8.41 times further restrained the PAT growth. PAT at 1.95 times
shows a positive growth vis-à-vis the base year.
3. Year March’21 is the best performer out of the 10 years.
Financial Position at Year End
1. Fixed assets growth to 2.67 times over ten years shows a slow yet steady growth in Capex. Yet
the sales growth to 1.59 times clearly signals efficient utilization of fixed assets. This turnover
has remained consistent with the proportional increased expenses and taxes.
2. This consistent well performance has resulted in to total equity grow to 2.26 times in ten years.

Overall Assessment
 Consistent Capex and growth.
 Margins are growing.
 Consistent operations and predictable future growth.

TREND ANALYSIS OF MARICO

Financial Results for the Year

1. Year ended March’21 sales increased 1.82 times over the base year. Additionally, expenses
increased to 1.77 times. Resulting to PBT growth of 2.04 times. Margins getting wider.
2. Not only this, tax increase of only 2.09 times allowed the PAT to grow further. PAT at 1.93
times shows a positive growth vis-à-vis the base year.
3. Year March’20 is the best performer out of the 10 years.

Financial Position at Year End

1. Total Non-Current assets growth to just 1.53 times over ten years shows stagnation in Capex.
However, sales growth to 1.82 times clearly signals efficient utilization of fixed assets. This
turnover has remained consistent with the proportional increased expenses and taxes.
2. This consistent strong performance has resulted in to other equity grow to only 3.30 times.
Throughout the ten years, equity remained more than the base year.

Overall Assessment

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 Consistent Capex and strong growth.
 Margins getting wider.
 Increase in investors.
 Consistent operations and predictable future growth.

CASH FLOW ANALYSIS OF MARICO LTD(2016-20)

Cash Flows from Operating Activities

Operating cash flows of the company are characterized by rationalization of its working
capital. Marico has been able to reduce its inventories to 69 cr. and be able to generate an
increasing trend in the cash from operations with 2020 recording 1,190 cr. The five have been
highly liquid, the profits generated for the respective years have been consistent, ranging
between 13-18crs and they have subsequently produced remarkable cash inflow. For the year
2020 the inflow was the highest, 970 cr. These positive cash inflows have been utilised by
investing in numerous assets to fetch better returns for the company.

 Cash Flows from Investing Activities

Out of operating cash flows of 970 cr, in 2020 the sums aggregating to about 50 cr have been
utilised towards investing activities. These five years have seen an increasing trend in the
interest received from different activities. The investing activities in the last five years have
increased for Marico, in 2020 they were able to outflow 128 cr in investments; Dividends
received from subsidiaries, investment subsidiaries, investments in bank deposits and
redemptions of inter-corporate deposits have led to the improved investment by the company.
Redemption of bank deposits was highest in 2020. This indicates that the potential for the
company's growth is high.

Cash Flows from Financial Activities

In the course of these five years from 2016-2020, Marico’s financial activities have risen and
from spending 534 cr. in 2016, the usage has doubled by 2020 to about 1081 cr. Even though
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the issuance of equity shares has not been a contributor, high levels of dividends paid to
the shareholders and the interest paid by Marico on different borrowings have increased the
cash outflow of the company.

RATIO ANALYSIS FOR HUL

Return on equity (ROE) is a measure of financial performance calculated by dividing net
income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE is considered the return on net assets. ROE is considered a gauge of a
corporation's profitability and how efficient it is in generating profits. Declining ROE from
2020-21 to 2019-20 suggests the company is becoming less efficient at creating profits and
increasing shareholder value. It has declined to 0.17 from 0.84.

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability.

Net asset value, or NAV, is equal to a fund's or company's total assets less its liabilities. NAV,
is commonly used as a per-share value calculated for a mutual fund, ETF, or closed-end fund.
When the value of the securities in the fund goes up, the net asset value goes up. Conversely,
when the value of the securities in the fund goes down, the NAV goes down: If the value of
securities in fund increases, then the NAV of the fund increases.

The debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage and is

calculated by dividing a company’s total liabilities by its shareholder equity. A low debt-to-
equity ratio indicates a lower amount of financing by debt via lenders, versus funding through
equity via shareholders. A higher ratio indicates that the company is getting more of its
financing by borrowing money, which subjects the company to potential risk if debt levels are
too high. There is decline to 0.44 from 1.44 in 2019-20 financial year.

The interest coverage ratio is used to measure how well a firm can pay the interest due on
outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings
before interest and taxes (EBIT) by its interest expense during a given period. There is increase
in the interest coverage ratio to 98.13 from 86.77 in 2019-20 financial year.

The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other payables. A
decrease in current ratio i.e to 1.26 from 1.31 means that there are problems with inventory
management, ineffective or lax standards for collecting receivables, or an excessive cash burn
rate. If a company's current ratio falls below 1, the company likely won't have enough liquid
assets to pay off its liabilities.

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. A quick ratio
greater than 1.0 indicates that a business or individual is able to meet their short-term

16
obligations. A low or decreasing ratio generally indicates that: The company has taken
on too much debt; The ratio is 0.95 in 2020-21.

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure operating
performance. This efficiency ratio compares net sales (income statement) to fixed assets
(balance sheet) and measures a company's ability to generate net sales from its fixed-asset
investments, namely property, plant, and equipment (PP&E). A declining ratio may
indicate that the business is over-invested in plant, equipment, or other fixed assets. The ratio is
0.88 in 20220-21 and 6.87 in 2019-20.

Net worth is also known as book value or shareholders' equity. The balance sheet is also
known as a net worth statement. The value of a company's equity equals the difference between
the value of total assets and total liabilities. A lower equity ratio, on the other hand, makes it
difficult for a company to obtain loan from banks and other financial institutions. If, in any
case, they manage to get a loan, it is at comparatively higher interest rates. It has reduced to
1.44 from 2.44 in financial year 2019-20.

Net profit Margin Ratio is the ratio of net profits to revenues for a company or business
segment. Expressed as a percentage, the net profit margin shows how much profit is generated
from every $1 in sales, after accounting for all business expenses involved in earning those
revenues. A low net profit margin means that a company uses an ineffective cost structure
and/or poor pricing strategies. Therefore, a low ratio can result from: Inefficient management.
High costs – weak pricing strategies. A slight decrease can be observed i.e from 0.50 to 0.52 in
financial year 2020-21.

Market capitalization refers to the total dollar market value of a company's

outstanding shares of stock. Commonly referred to as "market cap," it is calculated by
multiplying the total number of a company's outstanding shares by the current market price of
one share. There has been a decrease to 12.60 from 13.00 in financial year 2019-20.

Ratio Analysis for MARICO Ltd.

Return on equity (ROE) is a measure of financial performance calculated by dividing net
income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE is considered the return on net assets. ROE is considered a gauge of a
corporation's profitability and how efficient it is in generating profits. Declining ROE from
2020-21 to 2019-20 suggests the company is becoming less efficient at creating profits and
increasing shareholder value. It has declined to 0.32 from 0.35.

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability. It is common for a company to report EPS that is adjusted for extraordinary
items and potential share dilution.

Net asset value, or NAV, is equal to a fund's or company's total assets less its liabilities. NAV,
is commonly used as a per-share value calculated for a mutual fund, ETF, or closed-end fund.
When the value of the securities in the fund goes up, the net asset value goes up. Conversely,
when the value of the securities in the fund goes down, the NAV goes down: If the value of
securities in fund increases, then the NAV of the fund increases.

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The debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage and
is calculated by dividing a company’s total liabilities by its shareholder equity. A low debt-to-
equity ratio indicates a lower amount of financing by debt via lenders, versus funding through
equity via shareholders. A higher ratio indicates that the company is getting more of its
financing by borrowing money, which subjects the company to potential risk if debt levels are
too high. There is decline to 0.43 from 0.36 in 2019-20 financial year.

The interest coverage ratio is used to measure how well a firm can pay the interest due on
outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings
before interest and taxes (EBIT) by its interest expense during a given period. There is increase
in the interest coverage ratio to 39.21 from 50.29 in 2019-20 financial year.

The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other payables. A
decrease in current ratio i.e to 2.34 from 2.35 means that there are problems with inventory
management, ineffective or lax standards for collecting receivables, or an excessive cash burn
rate. If a company's current ratio falls below 1, the company likely won't have enough liquid
assets to pay off its liabilities.

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. A quick ratio
greater than 1.0 indicates that a business or individual is able to meet their short-term
obligations. A low or decreasing ratio generally indicates that: The company has taken on too
much debt; The company's sales are decreasing, the company is paying its bills too quickly.
The ratio is 1.31 in 2020-21.

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure operating
performance. This efficiency ratio compares net sales (income statement) to fixed assets
(balance sheet) and measures a company's ability to generate net sales from its fixed-asset
investments, namely property, plant, and equipment (PP&E).

Net worth is also known as book value or shareholders' equity. The balance sheet is also
known as a net worth statement. The value of a company's equity equals the difference between
the value of total assets and total liabilities. A lower equity ratio, on the other hand, makes it
difficult for a company to obtain loan from banks and other financial institutions. If, in any
case, they manage to get a loan, it is at comparatively higher interest rates. It has reduced to
1.43 from 1.36 in financial year 2019-20.

Net profit Margin Ratio is the ratio of net profits to revenues for a company or business
segment. Expressed as a percentage, the net profit margin shows how much profit is generated
from every $1 in sales, after accounting for all business expenses involved in earning those
revenues. A higher net profit margin means that a company is more efficient at converting sales
into actual profit. A slight increase can be observed i.e from 0.12 to 0.07 in financial year
2020-21.

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