FINANCIAL MANAGEMENT

CIA3

A report on sectoral Analysis on Capitalisation, Leverage

and Dividend Policy

Submitted by
SHAMBHAVI SINHA (21211466)
ADITIYA MITTAL (21211405)
ANSH AGARWAL (21211417)
ADVETA CHAUHAN (21211407)
 MARICO LIMITED
INTRODUCTION
Marico Limited is one of India’s leading consumer goods companies operating in the
health, beauty and wellness space. With its headquarters in Mumbai, Marico is present in
over 25 countries across emerging markets of Asia and Africa. It nurtures leading brands
across categories of hair care, skin care, edible oils, healthy foods, hygiene, male
grooming, and fabric care. In 2019-20, the company generated a turnover of INR 73.1
billion (USD 1.03 billion) through its products sold in India and chosen markets in Asia
and Africa. Marico touches the lives of 1 out of every 3 Indians, through its portfolio of
brands such as Parachute, Saffola, Saffola FITTIFY Gourmet, Coco Soul, Parachute
Advansed, Hair & Care, Nihar Naturals, Livon, Set Wet, Set Wet Studio X, Veggie Clean,
Kaya Youth, Travel Protect, House Protect, Mediker, Revive and Beardo. Marico has 8
factories in India located at Pondicherry, Perundurai, Jalgaon, Guwahati, Baddi, Paonta
Sahib and Sanand. The international consumer products portfolio contributes to about
23% of the Group’s revenue, with brands like Parachute, Saffola, Parachute Advansed,
Mediker SafeLife, Just For Baby, HairCode, Fiancée, Caivil, Hercules, Black Chic, Code 10,
Ingwe, X-Men, Sedure, Thuan Phat and Isoplus.
 ANALYSIS
1-Return on Assets ratio -The return on assets ratio measures how effectively a company
can earn a return on its investment on assets. So, In the year 2019 company utilises the
asset maximum and gained the maximum return from past 5 years Though the return on
asset is constantly maintained by the company above 18% but Asset of the company can
be utilized more efficiently.
2- Total Debt to Equity Ratio-The debt-to-equity ratio shows the percentage of company
financing that comes from creditors and investors. A higher debt to equity ratio indicates
that+-more creditor financing (bank loans) is used than investor financing (shareholders).
The debt to equity ratio is calculated by dividing total liabilities by total equity. The debt-
to-equity ratio here is much company not believing in using more shareholders finance
rather than taking loan from the banks
3- Return on Equity- Return on equity measures how efficiently a firm can use the money
from shareholders to generate profits and grow the company. The growth in the year
2019 was high but in 2020 it got down to 28.95 but the company remained in
profitability.
4-Earning per share -Earnings per share 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.2019 was the year in which company earned most of the profit
from shares but then again in 2020 we can see the downfall.
5- Interest Coverage Ratio- The interest coverage ratio is used to determine how easily a
company can pay their interest expenses on outstanding debt. The ratio is calculated by
dividing a company's earnings before interest and taxes (EBIT) by the company's interest
expenses for the same period. The lower the ratio, the more the company is burdened by
debt expense. In 2020 interest coverage ratio of the company was less compared to
other years which means debt expense was more on the company.
6-Profitability ratio- It measures the percentage of net income of an entity to its net
sales. It represents the proportion of sales that is left over after all relevant expenses
have been adjusted. 2019 was one of the best years for the company. Net profit margin
for the company was high compared with the other years. In 2020 company faced some
downfall and net profit ratio decreased
7- Quick Ratio- It reveals a company’s ability to meet short-term operating needs by
using its liquid assets. It is similar to the current ratio, but is considered a more reliable
indicator of acompany’s short-term financial strength.
8-Return on Capital Employed- Return on capital employed or ROCE is a profitability
ratio that measures how efficiently a company can generate profits from its capital
employed by comparing net operating profit to capital employed. In other words, return
on capital employed shows investors how many dollars in profits each dollar of capital
employed generates.
9-Dividend pay-out Ratio-The dividend pay-out ratio is the proportion of earnings paid
out as dividends to shareholders, expressed as a percentage.

The above data represents the WACC of Marico ltd. which is 7.52

FINANCIAL LEVERAGE OF MARICO LTD

FINANCIAL LEVERAGE
MARCH 2022 MARCH 2021 MARCH
20220

FINANCIAL LVERAGE= EBIT/EBT

FL for 2022: 1443/1413= 1.02
FL for 2021: 1393/1371= 1.01
FL for 2020: 1313/1280= 1.02
GRAPHICAL REPRESENTATION
 CONCLUSION

The working capital has likewise improved which demonstrates an excess of current
resources for cover current liabilities which shows a straight impending growth. The net
edge has seen some decrease which demonstrates that the organization can't totally
pass down its swelling related expenses to the clients, yet this is the idea of FMCG
business. Benefit is just accomplished with operational greatness and economies of scale.
Marico has had the option to do this effectively as demonstrated by the expanding
benefit edges over the years. The free income as a level of total compensation has
additionally observed a consistent decay because of expanded working capital. The free
and working income has seen positive development lately. This by and large
demonstrates improving money positions for the organization. Generally, the
effectiveness improved from 2016 to 2020 however again diminished because of
expanded rivalry and expanded dispersion reach of the company. The organization works
in the FMCG Industry which is described by direct development. The valuations, thus, see
a straight pattern alongside the profit of the organization. The offer cost products are
likewise upheld by some major full-scale factors like expanding populace, rising per
capita utilization and higher extra cash. Marico is preferable over its rivals to beat the
COVID-19 circumstance in India. Henceforth the stock can exchange at a higher valuation
soon.
 PEPSICO

INTRODUCTION
In 1965, Donald Kendall, the CEO of Pepsi-Cola, and Herman Lay, the CEO of Frito-
Lay, recognized what they called “a marriage made in heaven,” a single company
delivering perfectly-salty snacks served alongside the best cola on earth. Their vision
led to what quickly became one of the world's leading food and beverage companies:
PepsiCo. PepsiCo products are enjoyed by consumers more than one billion times a
day in more than 200 countries and territories around the world. Pepsi Co generated
more than $70 billion in net revenue in 2020, driven by a complementary food and
beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker, Tropicana
and SodaStream. PepsiCo's product portfolio includes a wide range of enjoyable
foods and beverages, including 23 brands that generate more than $1 billion each in
estimated annual retail sales. Guiding PepsiCo is our vision to Be the Global Leader in
Convenient Foods and Beverages by Winning with Purpose. "Winning with Purpose"
reflects our ambition to win sustainably in the marketplace and embed purpose into
all aspects of our business strategy and brands. Our company is made up of seven
divisions: PepsiCo Beverages North America; Frito-Lay North America; Quaker Foods
North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia
Pacific, Australia/New Zealand and China. Each of these divisions has its own unique
history and way of doing business. PepsiCo Beverages North America (PBNA) Frito-
Lay North America (FLNA) Quaker Foods North America (QFNA) Latin America Europe
Africa, Middle East, South Asia (AMESA) Asia Pacific, Australia/New Zealand, China
(APAC) The roots of PepsiCo Beverages North America (PBNA) go back to 1898, when
Caleb Bradham, an entrepreneur from New Bern, North Carolina created Pepsi-Cola
and began offering it to his pharmacy customers.
10 YEAR FINANCIAL HIGHLIGHT OF PEPSICO
COST OF CAPITAL CALCULATION:

Cost of capital is a company's calculation of the minimum return that would be

necessary in order to justify undertaking a capital budgeting project, such as building
a new factory. The term cost of capital is used by analysts and investors, but it is
always an evaluation of whether a projected decision can be justified by its cost.
Investors may also use the term to refer to an evaluation of an investment's potential
return in relation to its cost and its risks.
As of today, PepsiCo's weighted average cost of capital is 4.81%. PepsiCo's ROIC
% is 11.67% (calculated using TTM income statement data). PepsiCo generates higher
returns on investment than it costs the company to raise the capital needed for that
investment. It is earning excess returns. A firm that expects to continue generating
positive excess returns on new investments in the future will see its value increase as
growth increases.

1. WEIGHTS:

Generally speaking, a company's assets are financed by debt and equity. We

need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, PepsiCo's
market capitalization
(E) is $250109.330 Mil.
The market value of debt is typically difficult to calculate, therefore, book value
of debt (D) to do the calculation. It is simplified by adding the latest two-year
average Short-Term Debt & Capital Lease Obligation and Long-Term Debt &
Capital Lease Obligation together. As of Sep. 2022, PepsiCo's latest two-year
average Short-Term Debt & Capital Lease Obligation was $4497 Mil and its latest
two-year average Long-Term Debt & Capital Lease Obligation was $38198 Mil.
The total Book Value of Debt (D) is $42695 Mil.

a) weight of equity = E / (E + D) = 250109.330 / (250109.330 + 42695) = 0.8542

b) weight of debt = D / (E + D) = 42695 / (250109.330 + 42695) = 0.1458
 2. COST OF EQUITY:

Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula
is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the
Market - Risk-Free Rate of Return)

 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily.
The current risk-free rate is 4.14400000%. Please go to Economic Indicators page for
more information. Please note that we use the 10-Year Treasury Constant Maturity
Rate of the country/region where the company is headquartered. If the data for
that country/region is not available, then we will use the 10-Year Treasury Constant
Maturity Rate of the United States as default.

Beta is the sensitivity of the expected excess asset returns to the expected excess
market returns. PepsiCo's beta is 0.61.

 (Expected Return of the Market - Risk-Free Rate of Return) is also called market
premium. GuruFocus requires market premium to be 6%.

Cost of Equity = 4.14400000% + 0.61 * 6% = 7.804%

3. COST OF DEBT:

GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year
average debt to get the simplified cost of debt.
As of Dec. 2021, PepsiCo's interest expense (positive number) was $1863 Mil. Its total
Book Value of Debt.

(D) is $42695 Mil.

Cost of Debt = 1863 / 42695 = 4.3635%.
Multiply by one minus Average Tax Rate:
latest two-year average tax rate to do the calculation. The calculated average tax
rate is limited to between 0% and 100%. If the calculated average tax rate is higher
than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is
set to 0%.
The latest Two-year Average Tax Rate is 21.345%.
 DIVIDEND POLICY

PepsiCo, Inc. declared a quarterly dividend of

$1.0225 per share of PepsiCo common stock, a 7 percent increase versus the
comparable year-earlier period. Today's action is consistent with PepsiCo's previously
announced increase in its annualized dividend to $4.09 per share
from $3.82 per share, which began with the June 2020 payment. This dividend is payable
on March 31, 2021 to shareholders of record at the close of business on March 5,
2021. PepsiCo has paid consecutive quarterly cash dividends since 1965, and 2020
marked the company's 48th consecutive annual dividend increase.

Conclusion on the Relationship Between Capital Structure, Cost of Capital and

Dividend Determination: Capital Structure and Dividends The combination of
categories of capital that a company uses to finance its operations is called the
capital structure. This is expressed as a ratio such as debt to equity or debt to total
assets. Dividends are payments that shareholders receive as a return on their capital.
How does capital structure affect dividend policy? Dividend policy is directly related
to capital structure theory. When a
 PROCTER AND GAMBLE HYGIENE AND HEALTHCARE LIMITED
INTRODUCTION

Procter & Gamble was founded by William Procter and James Gamble in 1837. It is an
American multinational consumer goods corporation headquartered in Cincinnati, Ohio.
It specializes in a wide variety of personal health/consumer health, and personal care and
hygiene products, these products are organized into several segments including Beauty,
Grooming, Health Care, fabric & Home Care, and Baby, Feminine & Family Care. Foods,
snacks and beverages are also included in the product portfolio. P&G has operations in
some 70 countries worldwide and markets its products in more than 180 countries. It
generates about 45% of its revenue from business in the US and Canada. P&G's
remaining revenue comes from International businesses. To support its operations, the
Cincinnati, Ohio-based company owns some two dozen manufacturing sites across more
than 15 US states. Additionally, it owns about 85 production facilities in 35-plus other
countries.
P&G's primary regional general offices are located in Switzerland, Panama, Singapore,
Dubai, and China while its primary regional shared service centers are in Costa Rica, the
UK, and the Philippines.

ANALYSIS
RETURN ON ASSETS (ROA)
Is an indicator of how profitable a company is relative to its total Assets. The ROA figure
gives investors an idea of how effective the company is in converting the money it invests
into net income. The higher the ROA number, the better, because the company is earning
more money on less investment.

2022 2021 202 2019 201

0 8

12.5% 12.0% 11.1% 3.4% 8.3%

From ROA calculated we can see that in the year 2018, ROA is 8.3%, then it increased to
3.4% in the year 2019, then kept on Increasing to 11.1%, 12.0% and 12.5% from the year
2020-2022, indicating the over investment of Procter and Gamble in assets and failed to
produce the revenue growth. Increase in ROA is a good indicator that the company is
making good profits and it is the good time for the investors to invest in the company.

RETURN ON EQUITY (ROE)

Return on equity (ROE) is a measure of financial performance that measures the
profitability of a company in relation to stockholders’ equity. It represents the
shareholder’s total return on their equity capital. In other ways it measures the profits
made for each dollar from shareholder’s equity.

2022 2021 202 2019 201

0 8

26.07 25.58 24.10 8.64% 17.61

% % % %

From the analysis we can notice that the ROE Increased to 8.64% in 2019 from 24.10%,
this indicates that the company increased its profit generation without needing much
capital. It indicates that the company's management deploys shareholder capital in a
proper manner and the investors will be pleased and will have a high interest in investing
more. Then from 2020, ROE follows the downward movement. Competitors try and
replicate a firm’s special advantages in product offerings, cost efficiencies, innovation,
technology, distribution network and brand. This adversely affected the firm’s ability to
maintain supernormal profit. And also the decrease in ROE was caused by the lower and
decreasing ROA.
PROFIT MARGIN
Profit margin represents what percentage of sales has turned into profits, the percentage
figure indicates how many cents of profit the business has generated for each dollar of
sale. From the analysis we can see that the Procter and Gamble had highest profit margin
for the year 2019, which indicates that the 17.89% percent of the sales was turned into
profit, and in all the five years’ company has managed to maintain a decent which
indicates that the company's financial health is good and has a growth potential.

2022 202 2020 2019 2018

1

48.64 62.88 68.73 129% 42.29%

% % %

RETURN ON CAPITAL EMPLOYED (ROCE)

Return on capital employed (ROCE) can be used in assessing a company's
profitability and capital efficiency. From the above table we can see that there is a
very high increase in Return on capital employed ratio from 42.29% in 2018 to
129% in 2019, this indicates a good sign for the company.

2022 2021 2020 2019 2018

14.43% 14.22% 15.26% 17.89% 16.45%

Higher ROCE indicates that a larger chunk of profits can be invested back into the
company for the benefit of shareholders. However, we can notice that there is a
high decrease of 60.72% in 2020 and then again decreased by 5.85% and 14.24% in
2021 and 2022 respectively which indicates that the company has to make serious
efforts to increase this ratio by either reducing the costs, increasing sales, and
paying off debt or restructuring financing.

DEBT TO EQUITY RATIO

It is a measure of the degree to which a company is financing its operations
through debt versus wholly-owned funds. It reflects the ability of shareholder
equity to cover all outstanding debts in the event of a business downturn. From the
above table we can see that, there is very high increase in ratio from 0.31 in 2016
to 1.21 in 2017, which indicates the aggressive use of debt, riskier from the
investors point of view. In the following years, company managed to lower the
non-current liabilities by paying to micro and small enterprises and clearing their
debts due to which ratio came down to 0.58 in 2020, because a low debt to equity
ratio is preferred for any company, as it indicates Procter and Gamble is less
reliable on debt financing but rather on it's Equity.

2020 2019 201 2017 201

8 6

0.58 0.80 0.77 1.21 0.31

INTEREST COVERAGE RATIO:

Interest coverage is a measure of the production available to the creditors for

payment of interest charges by the company and shows whether the company
has sufficient income to cover its current interest payment with its available
earnings. From the above table we can see that the interest coverage ratio first
decreased substantially from 2018 to 2019, then increased in 2020, increased by
1.46% in 2021 and then again decreased in 2022 by 12.99%. A high interest
coverage ratio implies adequate safety for payment of interest even if there was
a drop in the earnings of the company. But the decrease in interest coverage
ratio indicates that there are more debt expenses.

2022 2021 2020 2019 2018

98.84% 111.83% 110.36% 65.47% 159.34

%
DIVIDEND PER SHARE (DPS)
Dividend per share (DPS) is the sum of declared dividends issued by a company for
every ordinary share outstanding. Dividend per share is 389 per Equity Share for
the financial year 2019 which is the highest dividend paid by the company amongst
all the five years. Dividend per share showed an increasing trend from 2020 to
2021, but the dividend per share decreased to 40 per Equity share in 2020 because
of debt reduction and poor earnings of the company compared to 2019.And in the
year despite the economy was hit by pandemic, company managed to pay a decent
per Equity share to its shareholders.

2022 2021 2020 201 2018

9

105.00 88.00 40.00 389.0 36.00

0

EARNINGS PER SHARE (EPS)

EPS indicates how much money a company makes for each share of its stock, and is
a widely used metric to estimate corporate value. Here, EPS of the Procter and
Gamble have gone up from Rs.130.37 to Rs.133.42,it is mainly due to increase in
profit and net income made by the company and shows that the company is more
valuable and investors are comfortable paying a higher price for shares, though it
decreased to 115.4 in the year 2020, because of the decline in stock price.

2020 201 2018 2017 2016

9

133.42 129.1 115.4 133.31 130.37

2
THE DIVIDEND PAYOUT RATIO
The dividend payout ratio is the ratio of the total amount of dividends paid out to
shareholders relative to the net income of the company. From 2018 to 2022.
Throughout the dividend payout ratio of the company was healthy and beneficial,
and it was highest 291.80% for the year 2019.

2022 2021 2020 201 2018

9

78.70 68.15 34.66 291.80 27.61

% % % % %

From this it can be observed that Procter and Gamble focuses on pleasing the
shareholders, as by the trend we can observe that on an average company is
willing to share more than half of its earnings in the year 2019, 2020 and 2021.
And even though for the year 2021, the economy was impacted by COVID 19.

INTEREST COVERAGE RATIO:

2022 2021 2020 2019 201

8

98.8 111.83 110.36 65.47 159.3

4 4

Interest coverage is a measure of the production available to the creditors for

payment of interest charges by the company and shows whether the company
has sufficient income to cover its current interest payment with its available
earnings. From the above table we can see that the interest coverage ratio first
decreased substantially from 2018 to 2019, then increased in 2020, increased by
1.46 in 2021 and then again decreased in 2022 by 12.99. A high interest coverage
ratio implies adequate safety for payment of interest even if there was a drop in
the earnings of the company.
 WACC
nd Gamble Hygiene and healthcare Limited
INTRODUCTION
Procter & Gamble was founded by William Procter and James Gamble in 1837. It is
an
American multinational consumer goods corporation headquartered in
Cincinnati, Ohio. It
specializes in a wide variety of personal health/consumer health, and personal care and
hygiene
products, these products are organized into several segments including Beauty,
Grooming,
Health Care, fabric & Home Care, and Baby, Feminine & Family Care. Foods, snacks
and
beverages are also included in the product portfolio. P&G has operations in some 70
countries
worldwide and markets its products in more than 180 countries. It generates about 45%
of its
revenue from business in the US and Canada. P&G's remaining revenue
comes from
International businesses. To support its operations, the Cincinnati, Ohio-based company
owns
some two dozen manufacturing sites across more than 15 US states. Additionally, it owns
about
85 production facilities in 35-plus other countries.P&G's primary regional general offices
are
located in Switzerland, Panama, Singapore, Dubai, and China while its primary regional
shared
service centers are in Costa Rica, the UK, and the Philippines.
ANALYSIS
Return on Asset (ROA)
2020 2019 2018 2017 2016
23.69% 25.68% 26.28% 37.30% 19.55%
Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets.
The ROA figure gives investors an idea of how effective the company is in converting the
money
it invests into net income. The higher the ROA number, the better, because the company
is
earning more money on less investment. From ROA calculated we can see that in the
year 2016,
ROA is 19.55%, then it increased to 37.30% in the year 2017, then kept on
decreasing to
26.28%, 25.68% and 23.69% from the year 2018-2020, indicating the over investment of
Procter
Procter and Gamble Hygiene and healthcare Limited
INTRODUCTION
Procter & Gamble was founded by William Procter and James Gamble in 1837. It is
an
American multinational consumer goods corporation headquartered in
Cincinnati, Ohio. It
specializes in a wide variety of personal health/consumer health, and personal care and
hygiene
products, these products are organized into several segments including Beauty,
Grooming,
Health Care, fabric & Home Care, and Baby, Feminine & Family Care. Foods, snacks
and
beverages are also included in the product portfolio. P&G has operations in some 70
countries
worldwide and markets its products in more than 180 countries. It generates about 45%
of its
revenue from business in the US and Canada. P&G's remaining revenue
comes from
International businesses. To support its operations, the Cincinnati, Ohio-based company
owns
some two dozen manufacturing sites across more than 15 US states. Additionally, it owns
about
85 production facilities in 35-plus other countries.P&G's primary regional general offices
are
located in Switzerland, Panama, Singapore, Dubai, and China while its primary regional
shared
service centers are in Costa Rica, the UK, and the Philippines.
ANALYSIS
Return on Asset (ROA)
2020 2019 2018 2017 2016
23.69% 25.68% 26.28% 37.30% 19.55%
Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets.
The ROA figure gives investors an idea of how effective the company is in converting the
money
it invests into net income. The higher the ROA number, the better, because the company
is
earning more money on less investment. From ROA calculated we can see that in the
year 2016,
ROA is 19.55%, then it increased to 37.30% in the year 2017, then kept on
decreasing to
26.28%, 25.68% and 23.69% from the year 2018-2020, indicating the over investment of
Proct
Procter and Gamble Hygiene and healthcare Limited
INTRODUCTION
 Procter & Gamble was founded by William Procter and James Gamble in 1837. It is
an
American multinational consumer goods corporation headquartered in
Cincinnati, Ohio. It
specializes in a wide variety of personal health/consumer health, and personal care and
hygiene
products, these products are organized into several segments including Beauty,
Grooming,
Health Care, fabric & Home Care, and Baby, Feminine & Family Care. Foods, snacks
and
beverages are also included in the product portfolio. P&G has operations in some 70
countries
worldwide and markets its products in more than 180 countries. It generates about 45%
of its
revenue from business in the US and Canada. P&G's remaining revenue
comes from
International businesses. To support its operations, the Cincinnati, Ohio-based company
owns
some two dozen manufacturing sites across more than 15 US states. Additionally, it owns
about
85 production facilities in 35-plus other countries.P&G's primary regional general offices
are
located in Switzerland, Panama, Singapore, Dubai, and China while its primary regional
shared
service centers are in Costa Rica, the UK, and the Philippines.
ANALYSIS
Return on Asset (ROA)
2020 2019 2018 2017 2016
23.69% 25.68% 26.28% 37.30% 19.55%
Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets.
The ROA figure gives investors an idea of how effective the company is in converting the
money
it invests into net income. The higher the ROA number, the better, because the company
is
earning more money on less investment. From ROA calculated we can see that in the
year 2016,
ROA is 19.55%, then it increased to 37.30% in the year 2017, then kept on
decreasing to
26.28%, 25.68% and 23.69% from the year 2018-2020, indicating the over investment
 The above data represents the WACC of P&G which is 6.75%

Financial Leverage
2022 2021 2020 2019 2018
Financial leverage 2.52 2.57 2.59 2.44 2.26

GRAPHICAL REPRESENTATION
CONCLUSION
 As a result of the nationwide lockdown imposed by the Government of India in
view of the Covid-19 pandemic, the operations of the Company were temporarily
disrupted at its manufacturing, warehouse and distribution locations from the
second half of March 2020. Though there is no significant impact of this
pandemic on the Company’s assets, capital and financial resources, profitability
parameters or liquidity positions as at June 30, 2020. After all the calculation
and analysis, we can see that The Procter and Gamble Health and Hygiene
Limited is standing out as the profit margin for the company has increased. Also
the company is paying a good dividend to its shareholders as both the EPS and
DPS But then the ROCE of the company has declined in 2020, which is a negative
sign for the company as it shows inability to utilize its financial resources
efficiently and less generation of cash from the investments. And high Return on
Capital employed indicates more efficient use of capital employed.

RECOMMENDATION AND SUGGESTION

● As the ROA decreased by 1.99%, so the Procter and Gamble should

invest less on its assets and focus more on increasing its revenue.
● To increase the interest coverage ratio, P&G should try to decrease its

operating expenses and try to decrease its borrowing amount and increase
its operating income.
● As the ROE of P&G decreased by 8.71% in 2020, the company should try

to increase its profit margins, as by increasing the profit and distributing

its idle cash.
Again, from the analysis we can see that the Dividend Pay-out ratio has increased
by 10.55% from 2019 to 2020. This is a good sign for the company. A company is
likely to distribute more than half of its earnings as dividends which means that the
company is well established and also it is reinvesting around half of its earnings for
the growth. But with very high dividends, stockholders are attracted, but it may not
be good for the company in the long Ru