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Course Project Week 11,12

• How has the use of debt for financing changed over the past four to five years? Has the change in the use of debt impacted the financial performance (select three financial performance ratios to evaluate)? Provide details and examples in your submission. • What has happened relative to equity? Has there been new sales of equity, stock buy backs? Has the change in the use of equity impacted financial performance (select three financial performance ratios to evaluate)?

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64 views

Course Project Week 11,12

• How has the use of debt for financing changed over the past four to five years? Has the change in the use of debt impacted the financial performance (select three financial performance ratios to evaluate)? Provide details and examples in your submission. • What has happened relative to equity? Has there been new sales of equity, stock buy backs? Has the change in the use of equity impacted financial performance (select three financial performance ratios to evaluate)?

Uploaded by

Nae Insaeng
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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COURSE PROJECT:

Evaluation of financial performances of both Companies and debt


financing and relative to equity by performances ratios:
Other liabilities and Debt turn out to be uncertain for a business if it cannot
certainly accomplish those obligations, moreover with unrestricted cash flow or
by rising capital at an eye-catching price. The chart underneath demonstrate that
Unilever consumed €24.9 b in debt in December 2018, slightly rise in 2019 and
2020 and remain same
in the year of 2017.
Total debt ratio of
Unilever till today is
64%. Though, it does
have €4.20b in cash
offsetting this, foremost
about net debt is around
€20.7b.
Unilever has a wide
coverage of market capitalization of €142.8b, so it might very probable enhance
its balance sheet if the requirement rose.Unilever's debt load comparative to its
incomes power by observing its net debt divided by its earnings before (EBITDA)
and by computing how effortlessly its earnings before interest and tax (EBIT)
shield its interest cover. Unilever's net debt is about 1.48 times compare to its
EBITDA. EBIT shields its interest expense a enormous 26.6 times over. Its
super-conservative use of debt due to achievement of 43% EBIT in the last year,
it at ease to manage its debt. Debt of company can be paid off with cold hard
cash instead of accounting profits. Throughout the last three years, Unilever
shaped robust free cash flow associating to 55% of its EBIT which places the
company in a good situation to pay down debt, when suitable.
Ratios are selected for P$G company described as under:
Proctor and Gamble popularly known as P&G specified and controls its product,
company has grown and prolonged internationally with sturdy roots. But the company
has dropped over 100 branches through the globe in 2014 and then it is focused on the
rest 65 branches, which donates about 95% of the profits of company. 

Debt Ratios of P&G Company:


Ratio/Year 2020 2019 2018 2017 2016
Debt Ratio 74% 59% 55% 54% 54%
Times Interest Earned 32.97 16.75 26.00 32.28 24.51
TTM
To measures the performance of company the debt ratio is a financial ratio which
measures degree of influence of a company. Company P&G’s debt ratio is quite facing
ups and down it is good still quite and the company’s debt ratio standpoints at 54.4%,
53.7%, 55.3%, and 58.7% and 74 rise in the years 2016, 2017, 2018, 2019 and 2020
respectively. The business has showed proficient an optimistic development which is a
worthy sign for the business development and the prices of share rise up also as the
product of the business becomes impacted as positive as well. After the sudden down in
2014 from the year of2016 the company has knowledgeable an improved growth in the
ratios, if it is associated to past years.

Liquidity Ratios of P&G company:


Ratio/Year 2020 2019 2018 2017 2016
Current Ratio 0.84 0.75 0.83 0.88 1.10
Quick Ratio 0.60 0.58 0.66 0.72 0.94
Cash Ratio 0.78 0.34 0.42 0.50 0.43

Performance measurement of a company or company's ability to alter its assets in to


cash are measured on the bases of Liquidity ratios. The current ratio of firm represents
that how much a company has capability to pay for its short-term and long-term
commitments. The Current Ratio of the P&G Company in the last five years from 2016
to 2020 are 1.10, 0.88, 0.83 and 0.75 and rise in ratio of 0.84 respectively. The
performance and growth of the company concerning the current ratio for the last five
years are fairly bad because the ratios are slightly decreasing and fall down shows that
company was not be capable to pay out practically all of firms’ obligations.

If look at the quick ratio is ratio which is used to measures the company’s aptitude to
encounter its short-term requirements by using the most liquid assets. The Quick Ratio
of the P&G company reclines at 0.94, 0.72, 0.66,0.58 and 0.60 in years of 2016, 2017,
2018, 2019 and 20 respectively, it represents that performance of the company is
decreasing and downfall shows that company is not able to pay and meet their
obligations of short-term or long-term.

Though, the cash ratio is the ratio of a corporation's cash equivalents to its current
liabilities and total cash of the company. Cash Ratio of the company reclines at 0.43,
0.50, 0.42 0.34 and 0.78 respectively in the last five years from 2016 to 2020, it
represents that the business has decreased amount of cash and cash equivalents in the
last years of 2016 to 2019 but much more less amount is in the year of 2019 because of
high of current liabilities which required to be paid at this time and because of this the
spill of cash ratio is presenting performance of decreasing in line for the high current
liabilities which required to be paid by the P&G company. Concluded as, the P&G
business has accomplished less for their liquidity ratios which shows noticeable fall.

Measurement of Profitability Ratios of P&G Company:

Ratio/Year 2020 2019 2018 2017 2016


Return on Equity 17.5% 8.3% 18.6% 27.8% 18.3%
Return on Assets 11.42% 3.4% 8.2% 12.7% 8.3%
Profit Margin 27.25% 5.8% 14.6% 23.6% 16.1%

There is also declined growth can be seen in the profitability ratio of the P&G company
which is not well accomplished and the ratio are too bad for the year of 2019 in all three
ratios and also less growth for the nowadays competitors as well. The return on assets
and return on equity are two of the maximum significant measures for the efficiency of
administration, management and supervision at a company; in other approach of
(ROE), the return on equity assistances investors measure the income growth and
generated income of the amount of investments, although return on assets (ROA)
supports investors measure how organization is doing and planning its assets and
resources to produce more income. The Return on Equity ratio for company P&G
reclines at
18.3%, 27.8%, 18.6%, 8.3% and 17.5% ,constant rise and fall from the year 2016 to
2020 but by the end of 2019 was considered as worse due to 8.3% ratio, and for the
Return on Assets reclines at 3.4% by the end of year 2019 and 8.3% in 2016, 12.7% in
2017, 8.2% in 2018 and 11.42% in 2020, there is also sudden rise and falls in the ratio
year after year. And performance measurement for the profit margin reclines at 16.1%,
23.6%, 14.6%, 5.8% and 27.25% in the last five year of 2016 to 2020 respectively, and
less one is the year of 2019. All these ratios has shown that in the little increased and
growth in the three ratios from 2016 to 2017 then decline significantly three ratios in
2018 to 2019 and then again rise these ratios in 2020, as it might be concern about
declines but firm P&G is one for the major and reputable company with string data
needed to manage its policies for the future growth after 2020 as data is rise and on its
stability after 2019. P&G Company’s standard of stock has increased roughly 10% during the
last one year, outstripping the S&P 500's 0.8% slope in excess of the same time
period. Procter & gamble cooperation average share buyback ratio is much higher as
compared to other companies, it touches from -0.7 to 3.1 current ratio. Constant
buybacks also sustained its EPS growth and constricted up its valuations Corporation
prerequisite better policies for successful future.

REFRENCES:

 Here’s Why Unilever (LON:ULVR) Can Manage Its Debt Responsibly.


(n.d.). Simplywall.st. https://simplywall.st/stocks/gb/household/lse-
ulvr/unilever-group-shares/news/heres-why-unilever-lonulvr-can-
manage-its-debt-responsibly
 Unilever (LSE:ULVR) - Share price, News & Analysis. (n.d.). Simply
Wall St. Retrieved April 5, 2021, from
https://simplywall.st/stocks/gb/household/lse-ulvr/unilever-
shares#historical-debt

 Unilever N.V. (NYSE:UN) | Financial Analysis and Stock Valuation.


(n.d.). Stock Analysis on Net. Retrieved April 5, 2021, from
https://www.stock-analysis-on.net/NYSE/Company/Unilever-NV
 ‌nusratjabin2. (2018, August 2). Unilever.
https://www.slideshare.net/nusratjabin2/unilever-108376084
 Procter & Gamble Co. | Financial Analysis and Stock Valuation. (n.d.).
Stock Analysis on Net. Retrieved April 5, 2021, from https://www.stock-
analysis-on.net/NYSE/Company/Procter-Gamble-Co
 ‌Procter & Gamble Financial Ratios for Analysis 2005-2020 | PG. (n.d.).
Www.macrotrends.net.
https://www.macrotrends.net/stocks/charts/PG/procter-gamble/financial-
ratios
 Murphy, C. B. (2020, April 12). Receivables Turnover Ratio. Retrieved from
investopedia: https://www.investopedia.com/terms/r/receivableturnoverratio.asp
 Solvency Ratio vs. Liquidity Ratios: What's the Difference? (2019, August 27).
Retrieved from Investopedia:
https://www.investopedia.com/ask/answers/040115/what-are-differences-
between-solvency-ratios-and-liquidity-ratios.asp

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