Ratio Analysis

LIQUIDITY RATIO
Current ratio
The Current Ratio formula is:

Current ratio = Current Assets/Current Liabilities

Calculation:
2013 (Euros millions)

2012 (Euros millions)

Current Assets = 12147

Current Assets = 12122

Current Liabilities = 17382

Current Liabilities = 15815

Current Ratio (Times) = 12122/17382= 0.69

Current Ratio (Times) = 12147/15815= 0.77

Comparison:
The analysis of current ratio shows that the company was almost in equal condition in both years
to meet its obligations. It has a current ratio of 0.77 in 2012. However, it deteriorated in 2013 to
0.69. Unilever has more current liabilities than current assets in both years. It shows that
company is unable to meet its debts as they fall due.

Quick ratio
Quick Ratio = Current Assets - Inventories/Current Liabilities =
Calculations
2013 (Euros millions)

2012 (Euros millions)

Current Assets = 12122

Current Assets = 12147

Current Liabilities = 17382

Current Liabilities = 15815

Stock = 3937

Stock = 4436
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Ratio Analysis

Quick Ratio = 0.47

Quick Ratio = 0.48

Comparison:
Unilever having quick ratio of 0.47:1 in 2013 and 0.48:1 in 2012 shows that in 2013 the
Company had less cash to meet its liabilities as compared to 2012. We conclude that in both
years of 2011 and 2012 the company got low quick ratio as a whole and had no enough quick
assets to meet its current liabilities.

Debt Ratio
Debt Ratio = Total Liabilities/Total Assets
Calculations
2013 (Euros millions)

2012 (Euros millions)

Total Liabilities = 31169

Total Liabilities = 31007

Total Assets = 45513

Total Assets = 46166

Debt Ratio = 0.68

Debt Ratio = 0.67

Comparison:
The debt ratio of Unilever conclude that in 2013 a little bit more of the assets were financed
through debts (0.68:1) i.e. 68% , while in 2012 less assets were financed through debts (0.67:1)
i.e. 67% and rest are financed by owners. Maximum normal value of debt to total assets ratio is
0.6-0.7. This shows that the company had more financial leverage in 2013 than in 2011.

Ratio Analysis

PROFITABILITY RATIOS
Net profit margin
Net Profit Margin = Net Profit/Revenue *100
Calculations
2012 (Rupees in 000)

2011 (Rupees in 000)

Net income = 4842

Net income = 4480

Revenue = 49797

Revenue = 51324

Net Profit Margin = 9.72%

Net Profit Margin = 8.73%

Comparison:
The Net Profit Margin of Unilever was high in 2013 than in 2012 which conclude that the
company was better able to control its pricing policies, cost structure and production efficiency
in 2013 than in 2012. The higher the margin is, the more effective the company is in converting
revenue into actual profit.

Operating profit Margin

Operating Profit Margin = Operating Income/Revenue *100
. Calculations
2013 (Euros millions)

2012 (Euros millions)

Operating Income = 7517

Operating Income = 6989

Revenue= 49797

Revenue = 51324

Operating Profit Margin = 15.1%

Operating Profit Margin = 13.6%

Ratio Analysis

Comparison:
Operating Profit Margin represents pure profits earned on each sale i.e. profits earned on
operations ignoring interests, taxes and preferred stock dividends. So Unilever earned a high
Operating Profit Margin in 2013 (15.1%) than in 2012 (13.6%) so operating profit margin in
2013 is preferred because if the operating margin is increasing, the company is earning more per
euro of sales. A high operating profit margin means that the company has good cost control
and/or that sales are increasing faster than costs, which is the optimal situation for the company.

Earnings per Share (EPS)

Earnings per Share = Earnings Available to Common Shareholders/No. of
outstanding shares of common stock
Calculations
2013 (Euros millions)

2012 (Euros millions)

Earnings available to common shareholders

= 4842

Earnings available to common shareholders =

4480

Weighted average number of Ordinary shares

outstanding during the year = 2886

Weighted average number of Ordinary shares

outstanding during the year = 2886

Earnings per Share = 1.67

Earnings per Share = 1.55

Comparison:
EPS shows the profitability of a company by indicating the amount earned by the common stock
holders of each share. So this concludes that Unilever had a better and prospective stockholders
share and management in 2013 than in 2012.

Ratio Analysis

Return on Assets (ROA)

Return On Assets = Earnings Available to Common Shareholders/Total Assets =
Net Income/Shareholders Equity
Calculations
2013 (Euros millions)

2012 (Euros millions)

Earnings available to common shareholders

= 4842

Earnings available to common shareholders =

4480

Total Assets = 45513

Total Assets = 46166

Return On Assets = 10.6

Return On Assets = 9.7

Comparison:
ROA ratio shows the profit earned by a company on its per amount of assets. So this concludes
that Unilever had a high ROA in 2013 than in 2012. This shows that Unilever had an effective
management in generating profits with its available assets in 2013 than in 2012. The higher the
ROA number, the better, because the company is earning more money on less investment.

Return on Equity (ROE)

Return on Equity = Earnings available to common shareholders/Shareholders
Equity
Calculations
2013 (Euros millions)

2012 (Euros millions)

Earnings available to common shareholders

= 4842

Earnings available to common shareholders =

4480

Shareholders Equity = 14344

Shareholders Equity = 15159

Return On Equity = 33.7%

Return On Equity = 30%

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Ratio Analysis

Comparison:
ROE measures the return earned on the common stockholders investment in the company. So
Unilever had a better management in 2013 than in 2012. An increasing ROE suggests that a
company is increasing its ability to generate profit without needing as much capital. A high ROE
in 2013 indicates how well a company's management is deploying the shareholders' capital. In
other words, the higher the ROE, the better.