UNILEVER PAKISTAN FOODS

LIMITED
Analysis of Financial Statements and Reporting
FINAL PROJECT

Group members:
Danyal Kamal
Eman Shafiq
 Executive Summary

 Founded in 1948
 Engages in the manufacture and selling of
consumer and commercial food products under
the brand names of Rafhan, Knorr, Energile,
Glaxose-D etc.
 Deals in home and personal care products
 Market share: 40%
 Parent company: Unilever PLC
 Financial performance analyzed from 2017-2022
 Competitor analysis with local/international
brands
 Common size statement of P/L

• Profits after taxation figures increased significantly for 2020, 2021, and 2022
• The cost of sales has fluctuated a little from 42% to 45%.
• Distribution costs have decreased since 2017.
• Over all company is handling its operations pretty well causing lower fluctuation in the
company's annual profit and loss.
 Common-size Statement of financial position

• Cash balance of the company

decreased from 2018 to 2019 but
then increases from 2020(12%) to
2021(32%) but sharp decrease in
2022(13%).
• Share capital of the company has
not even changed the slightest bit
in the past six years.
• Company's non-current assets
have increased by more than 100%
in the past six years.
 Balance Sheet analysis

• Cash balance of the company decreased from 2018 to 2019 but then
increases from 2020(12%) to 2021(32%) but sharp decrease in
2022(13%).
• Share capital of the company has not even changed the slightest bit in
the past six years.
• Company's non-current assets have increased by more than 100% in the
past six years.
 Trend Analysis - Statement of P/L

 Revenue and profit after taxation have an increasing

trend from 2017 to 2022.
 Largest increase in sales of 42.58% in 2022
 Company has control over its operating expenses and is
operating well in the past few years.
 Expenses

 Higher portion of expenses is contributed because of

the higher cost of sales
 Justifiable because the increase in revenue
simultaneously increases the cost of sales of the year.
 Distribution cost is the second highest expense after the
cost of sales.
Income statement Horizontal analysis

 Administrative and other operating costs have doubled for 2021 to 2022.
 The cost of sales has not changed in a very big proportion as in 2017 it was
44.98% and in 2022 it was 42.21%
 Cash Flow analysis

 Company has higher inflow from operating activities

 Overall cash flows are increasing from 2017 to 2022
 Profitability analysis

For every one rupee of sales, 0.42 rupee was earned by

the firm as gross profit.
 Short-term liquidity analysis

 The current ratio is the highest in 2022, standing at a positive

1.20, and is seeing an increasing trend over the past 5 years
 The quick ratio is the highest in 2022 at 0.94 which is still not
efficient enough but we can see an upward trend if we compare
it to the rest of the years, meaning the company is likely to
cross above 1 in the coming years.
 Cash to current liabilities stands at 0.22 in 2022
 Cash flow from operations to sales stands at 0.32 and is
increasing over the span of 5 years, meaning the company has
the ability to turn sales into available cash.
 Short-term liquidity analysis

1.40

1.20 Current Ratio

1.00 Quick / Acid Test Rotlo

0.80 Cash to current liabilities

0.60 Cash flow from operations to sales

0.40

0.20

0.00
2022 2021 2020 2019 2018 2017
 Capital Structure and Solvency
Financial leverage ratio lnterest cover ratio
0.35 800.00

0.30 700.00

0.25 600.00

0.20 Financial leverage ratio 500.00

lnterest cover ratio
0.15 400.00
300.00
0.10
200.00
0.05
100.00
0.00
2022 2021 2020 2019 2018 2017 0.00
2022 2021 2020 2019 2018 2017

 Company is 10% owned by long-term debts and 90%

from equity. Company is relying more on its equity than
its debts
 The interest coverage ratio is at 588.11 in 2022 which
means the company can easily pay interest on its
outstanding interest (very low chance of bankruptancy)
 Investment ratios
Earnings per share (EPS)
1,400.00

1,200.00

1,000.00

800.00 Earnings per share (EPS)

600.00

400.00

200.00

0.00
2022 2021 2020 2019 2018 2017

 The main reason of increasing EPS is that the company's

outstanding shares have not increased in the past few
years.
 Price earning ratio decreased.
 Dividend yield/Dividend payout decreased means lesser
dividends paid.
Operating performance and asset utilization ratios

 Inventory turnover shows a decreasing trend of inventory turnover till 2021. Later, in 2022
it increased to 47.
 Debtor’s turnover ratio has shown a fluctuating trend in the past few years. It has been
increasing till 2020. Later it decreased leading to 10 in 2022. It is a ratio that analyses the
measure of a company’s ability to collect cash. The company’s turnover ratio decreased in
2021 however it was able to increase its ratio in 2022.
 The creditor turnover ratio has been on almost the same trend for the past six years. The
creditor’s turnover ratio is a measure of how often a particular company pays off its debts
to suppliers within a given accounting period.
 The total asset turnover ratio has been decreasing for the past few years. It helps investors
understand how effectively companies are using their assets to generate sales. Company
assets have been increasing in the past few years, more increase compared to increase in
sales. This explains the decrease in the total asset turnover ratio.
 Competitor analysis – Profitability and
45
liquidity
40
35
30
25
gross profit
20 ebitda margin
15
10
5
0
1.4
unilever nestle national

1.2

0.8
current ratio
0.6 acid test ratio

0.4

0.2

0
unilever nestle national
 Competitor analysis – Operating
performance and EPS
100
90
80
70
60
50 inventory turnover
asset turnover
40
30
20
10
0
unilever nestle national
earnings per share
1400

 1.37 Asset turnover (most 1200

efficient) 1000

800 earnings per share

 National has the highest 600

demand 400

200

0
unilever nestle national
 Debt-Equity
debt-equity
10
9
8
7
6 debt-equity
5
4
3
2
1
0
unilever nestle national

 Comparing debt to equity, Unilever stands at 0.1%

while Nestle stands at 8.6% and National Foods stands
at 5.4%
 From Investor’s POV

You should invest because:

 EPS is high (Rs.1200 per share) and still increasing
 Low dividend yield means company is reinvesting more
money back to its business (expansion)
 From Creditor’s POV

You should be hesitant to lend because:

 Although Current ratio is 1.20, Quick ratio is below 1
(0.94) but likely to cross 1 in the coming years.
 Overall evaluation

 After conducting the ratio analysis i.e. liquidity, profitability,

solvency capital structure and operating performance ratios
we conclude that company moving in the right direction
and has done better than the competitors in the industry.
 Company’s income through sales and other income have
increased. Company’s profit before and after tax and
shareholders’ equity that is retained earnings is increasing
which have increased shareholders wealth and share price
of the company.
THANK YOU