Unit 13 Financial Reporting Assignment copy

Unit 13 Financial Reporting Assignment copy

Unit 13 Financial Reporting Assignment copy

Program

Diploma in Business

Unit Number and Title

Unit 13 Financial Reporting

QFC Level

Level 4

Part - 1

Organization is comprised of complex set of activities in which several functions are performed.  The real owner of the organizations is the investors who are the equity share holders. Being an intern in Stock Mann investments company a manager asked me to prepare a report on the financial statement of two companies given during the three years. In order to make effective and valuable decision making investors need to analysis all the possible financial factors given in the financial report. In this report we have taken two Multinational companies with a view to make complete analytical report.  Unilever is a British Dutch multinational company which is having business in consumer goods. The present CEO of company is Paul who is making consistent efforts to make effective use of resources in determined manner. This company is having business all over the world including London, UK, Netherlands, Rotterdam and so many other places, in addition to this Unilever has been offering variety of products including beverages, cleaning agents and personal care products. In terms of stock price company has been running its business very effectively as market value of the share listed on NYSE stock exchange is tremendously very impressive US $42.91. Now on the other part research on the PLC which is an also a British multinational company having its business in media sectors. This company was founded by Samuel with a mission and vision statement of grabbing media and education industry sectors. The key people who are making their vigorous efforts for the betterment of the company are Glen and John. In the recent business report published in the official Gazette of the government it was given that PLC has been ranked as a largest book publisher in the world and consistent increment in the market share of the organization has resulted into high rating for the time being in force. In this report being a Intern of in Stock Mann investments company there is being  made complete analysis on two subjective companies one is Unilever is a British Dutch multinational company and PLC which is a also a British multinational company having its business in media sectors. Therefore with a  view to develop a good understanding upon the internal and  external factors of both companions three years data have een taken into consideration so that growth, productivity, efficiency and other required factors could be indentured in determined manner. In addition to this analysis upon the valuable factors has been made with the assistance of annual report of three years of both given companies. As per the stock price of both companies shown on the NYSE stock exchange it is assumed that   Unilever, a British Dutch multinational company and PLC which is a also a British multinational company  both are on the growth stage and providing high level of return to its investors in significant approach. but as per the details given in the annual report it is also found that PLC which is a also a British multinational company has been facing drastic loss due to adoption of loss making project in its project life cycle. On the other hand that Unilever, a British Dutch multinational company is also showcasing stagnate level of growth since the very long time. Both companies are on the stage of adopting newly developed effective strategies for the betterment of their business life cycle.

Part-2

Task- A Discussion with the team manager

Being an intern of Stock Mann Investments Company there is needed to make complete level of analysis on the given two companies with a view to identify internal and external factors at large. In the complete analysis of all the data given in the three years annual report of PLC British company it is observed that company has been running it  business with negative performance. As the results depicts in the computation of ratio it is found that all the negative results depicting that PLC British company has not been using its resources effectively and deploying owners money in negative manner. On the other hand Unilever is a British Dutch multinational company annual report has been depicting a tremendous growth rate and also distributing high amount of dividend to its share holders. Therefore with the available information and by analyzing internal and external factors we would say that investors should invest their money in Unilever is a British Dutch multinational company for the better return perspective. (Leonenko, et. Al., 2013).

Task- B

As per the collection of data from the three years financial and accounting of both companies named Unilever is a British Dutch multinational company and which is a also a British multinational company. In this analysis it has been observed that both companies have their individual work performance and making their efforts with the view to plunge investor’s money in right and appropriate directions. As starting with the Unilever it is being observed that company has been using an effective stratifies to deploy its finical resources. Company has been seeing a drastic growth in its working system and has beam plugging back all its return back in the process system.  There is below given a wide range of study on the unlevel growth subject to all the other factors given in this analysis (Lewellen,  2010).

Unilever is a British Dutch multinational company: As per the information depicted in the three years annual report of the company it is being observed that revenue of the company was 7,114 t € million) in 2013 which is increased by 7. 47 % in 2014. That increment depicts that company has increased its production very drastically and reducing its cost of production in significant manner. Afterward in 2015 the sales goes down by 5.57 %. This dotard in sales was seen as results of sluggish market and client’s low expectation from the company (Lewellen,  2010).

2014

Increment in the sales  in %

7,114

7,646

532

7.478212

2015

Increment in the sales  in %

7,646

7,220

-426

-5.57154

Moreover EPS of the company is also significantly increased by 6.10 % from 2013 to 2015. This increased shows that company was earning very good amount of profit in the given years. In the end the same downward is seen in the EPS by 5.49 %.

2014

Increment in the EPS  in %

1.71

1.82

0

6.432749

2015

Increment in the sales  in %

1.82

2

0

-5.49451

Net profit after tax- the net profit after tax of the company is seen to be increasing from 2013 to 2014 as the results divulges that company was having high amount of profit in 2014 as compare to 2013. There was seen growth of 4.86 % in the net profit after tax amount of Unilever. Whereas, in the end company fails to prove its self and shown downgrade in its NPAT by 4.12 %. This amount depicts that company was not making positive efforts compare to last years and resulted into loss of 4 .12 % in NPAT.

Net profit margin ratio- This is the ratio computed with the help of profit earned compare to resources of the company. In the year 2013 Unilever is a British Dutch multinational company was having 0.739246556 % profit margin ratio which consistently went down to 0.721292179 % in 2014. This downward resulted into loss of company earning capacity and showcasing loss in its brand image. In addition to this Unilever was earning 0.728947368% net gross profit in 2015 which is slight up from the 201 data comparatively. Therefore with the depiction of the results it could be said that company was main ting its earning capacity effectively and showcasing stagnate results in determined manner (Patents Court 2014).

Net Profit Margin ratio

0.739246556

0.721292179

0.728947368

Balance sheet: It is comprised of full set of assets and liabilities engaged in the all the set of activities of the organization behaviour. It is observed that Unilever has been increasing its assets and liabilities in significant manner and deploying more assets in its production process. As per the results acquired it is given that current assets of the company has been increasing with slight amount and remained stagnate during 2014 and 2015

Current Assets

12,122

12,347

12,347

On the other hand with the view to reduce the liabilities of the company has paid significant amount of liabilities. The changes that have been seen in the current liabilities are that present company has drastically made its current liabilities less.

Current Liability

Current  Liabilities

17,382

5,536

4,789

Total share holders’ equity- The data given in the annual return of the company shows that total shareholding of equity in 2013 was 14,344 Million which went down due to the less creditability of the company in the market to 13,651 the company with a view to arrange the fund come up with FPO in the security market and resulted into total equity share of 15,439 in 2015 (Unilever 2010).

Share Holder

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Total share holders’ equity

14,344

13,651

15,439

Noncurrent liabilities- this is the amount of money taken by the organization for the long term purpose. High amount of borrowing form the external sources may results into financial management in determined manner. Therefore company needs to take losses after considering the gearing ratio. Noncurrent liabilities of the company in 2013 are 13,316 Million which increased to 16,197 million in 2014. In the later year top management paid off some of the part of noncurrent liabilities by issuing shares in the given market segment. Now company has 14,122 million long term debts.

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Noncurrent liabilities

13,316

16,197

14,122

Total assets of the company- This results collected from the three year annual report depicts that company has increased its assets throughout the time with a view to earn more profit and increase the production of the value chain activities. The increment of the total assets is gradually taking high with the increasing demand of the industry form the company working system Surrendering, et. Al., 2015).

Total Assets

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Total Assets

45,513

48,027

52,298

Ratio analysis: This level of information of the Unilever depicts that company has been making consistent efforts for the growth of the business and plugging back all the profit earned by the company in its operational activities. Company has positive view point of drastic increase in the dammed of the product in the near future.

Current ratio- Unilever current ratio depicts the relation between its current assets and current liabilities. As the working capital is the utmost required to make production process effective. Company has .77 current ratio in 2013 which were increased to 2.2 in 2014 with the engagement of more current assets in its operating activities then this ratio consistently increased and its results into 2.57 in 2015. Ideally current ratio of the industry is 1.25:1.

Creditor’s turnover ratio- in order to reduce the blockage of cash Amount Company like to keep their credit turnover ratio more so that less money could be blocked in purchasing raw material. Unilever has consistent creditor turnover ratio of .21 in both years 2013 and 2014 which was increased to .56 in 2015. This result shows that company strategically deploying its cash amount in the operational activities of the business. This will also reduce the cost of capital of the company in the long term.

Receivable turnover ratio- This ratio is also useful for reducing the cash chain involved time period. Unilever has been increasing its receivable turnover ratio and it results into high amount of sales on credit basis. Therefore company could face high bad debts and increment in its nonperforming assets. Receivable turnover ratio of the company is 1.47 in 2013 which was increased to 1.52 in 2014 which is consistently increasing in 2015 as well.

Solvency ratio- This ratio depicts Unilever financial risk in paying off its debts in timely manner. Unlevel has been increasing its debts portion by issuing more debts and other instruments to outsiders. The increment could be captured during last year’s. But during the three years company have stable solvency ratio

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Solvency Ratio

0.115549403

0.114831241

0.10063482

Assets turnover ratio- Unilever has been showcasing very stable results during three years. As the assets turnover ratio of the company depicts that company capacity to deploy all its assets for the given level of production. This ratio could be used to identify the actual efficiency of the company with the given assets. There are no such imperative changes during the years.

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Assets turnover ratio

0.156306989

0.159202115

0.138054993

Dividend payment of the company is also very stable as in the year 2013 company was offering 1.05 per  share dividend to its share holders which was increased to 1.12 per share in 2014 . While in 2015 the same was increased to 1.19 per share with the increment of its gross profit in 2015.

While on the other hand Price earnings ratio of the company depicts the negative downfall in its ratio as in 2013 company was having 0.050802139 which went down in 0.040316942 in 2015.

Analysis of , a British Dutch multinational company: With the wide range of study upon the factors or data shown in the three years financial report of the business it is found that company was having negative outcomes out of deployment of assets in determined manner. This is also observed that revenue of the company has been drastically gone down (Unilever, 2010).

Analysis upon the Profit and loss account of : Revenue of the company in 2013 was 5,069 € million which then went down due to the sluggish economic factors in the given 2014. Afterward there was seen more downfall in the sales of the company. end up with selling 5,069€ million goods and services in 2015.

Revenue

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Revenue

5,069

4,540

4,468

Net profit after tax of the company is interrelated with the cost of goods sold and revenue of the company in the given time manner. As in 2013 company was having 539€ million amount of net profit which then went down to 470 € million in 2014. Board of directors and other key persons made an effective strategic plan by reducing the cost of goods sold and increase the net profit after tax by significant manner. In 2015 company was having 823 € million profit which is far enough high as compare to other previous years (Weber, et. Al., . 2016).

NPAT

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

NPAT

539

470

823

 

Balance sheet analysis: This analysis depicts the person efficiency to evaluate the how far company has been deploying its assets in order to make more production. It is also found that there is drastic increment in total assets of the company as in 2013 company was having 45,513 € million total assets which increased by 9.75 % in 2015. Now person have total asset of 52,298 € million in 2015 and this level of increment is done with a view to increase the profit and gross earnings ratio in determined manner.

Assets

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Total Assets

45,513

48,027

52,298

 

Ratio analysis: Ratio depicts the actual relation between two factors. This is helpful to determine the nexus between two correlated factors in significant approach. There are various ratio have been calculate with a view to evaluate the companies efficiency in determined manner (, 2014).

Quick ratio- This ratio helps in determining the liquidity position to pay off its immediate debts. As per the data given it is observed that company has negative quick ratio since very long time. And during the three years quick ratio are – 1.22 in 2013 which decreased to .77 in 2015. However, position is not that much satisfactory in terms of paying debts.

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Quick Ratio

-1.272687986

-1.376771834

-0.746722601

Current ratio- this ratio depicts the relation between current assets and current liabilities. is having negative current ratio and showcasing high amount of current liabilities over current assets.

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Current Ratio

-5.335782195

-5.645633288

-6.474567383

Net profit margin ratio- This ratio depicts the efficiency of the company in earning the profit over the production. However during the three years is having stagnate amount of net profit margin of .10 over its sales.

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Net Profit Margin ratio

0.10633261

0.103524229

0.184198747\

Solvency ratio- This ratio divulges the actual financial risk which could be threaten to working system. This is related with company debts and equity structure and how good making an equilibrium in both aspects. During the three years company’s solvency ratio is depicting the positive results as in 2013 there is 0.01184277 which significantly decrease to 0.015736739 in 2015

Particular

2013 ( Amount € million)

2014 ( Amount € million)

2015 ( Amount€ million)

Solvency Ratio

0.01184277

0.009786162

0.015736739

Dividend payout ratio- Person is stakeholder’s oriented organization and distributing high amount of dividend to its shareholders.  However in 2015 company offer nil amount of dividend as coma pies is expanding its business and plugged back its profit in several set of activities.

Assets turnover ratio- This ratio shows ’s efficiency to deploy its assets for the given level of turnover. As the data shown assets are significantly going down while in the production of goods are not much satisfactory as per the results of the company.

Need help?

Get Complete Solution From Best Locus Assignment Experts.

Place an order

Conclusion

In the end it is observed with the adamantine study over all the financial aspect of both companies and observed that Unilever is the best company to make investment as that company is offering high level of profit in a very short span of time. In addition to this report provides three year financial data with utmost effective analysis upon all the internal and external factors. Therefore it is observed that before making any investment decision an investors must focus on the company’s financial nod determine whether its depicts the true and fair view. By concluding this report it would be said that analyzing the financial report of the organization before taking investment decision is very vigilant steps in security market. Therefore it is required to understand all the financial aspect of the company in significant approach. In the end with the brief study of three years financial report of both organization and Unilever it is said that one should make investment in Unilever PLC in order to make more investment return.

References

"Abstract of the British association of head and neck oncologists 29th anuual general meeting at the royal society of medicine, London, 25 April 1997", 1997, Clinical Oncology,vol. 9, no. 3, pp. 199-202.
"Unilever", 2010, Nation's Restaurant News, vol. 42, no. 5, pp. 40.
"Unilever", 2010, Nation's Restaurant News, vol. 44, no. 23, pp. 76.
"Predicting returns with financial ratios", Journal of Financial Economics, vol. 74, no. 2, pp. 209-235.
Delen, D., Kuzey, C. & Uyar, A. 2013, "Measuring firm performance using financial ratios: A decision tree approach", Expert Systems with Applications, vol. 40, no. 10, pp. 3970-3983
Drew, J. & Dollery, B. 2016, "How High Should They Jump? An Empirical Method for Setting Municipal Financial Ratio Performance Benchmarks", Australian Journal of Public Administration, vol. 75, no. 1, pp. 53-64.
James III, R.N. & Garrett, S. 2013, "Financial Ratios and Perceived Household Financial ", Journal of Financial Therapy, vol. 4, no. 1.
Leonenko, N.N., Meerschaert, M.M. & Sikorskii, A. 2013, "Fractional diffusions",Journal of Mathematical Analysis and Applications, vol. 403, no. 2, pp. 532-546.
Lewellen, J. 2010Lakshmi, T.M., Martin, A. & Venkatesan, V.P. 2016, "A Genetic Bankrupt Ratio Analysis Tool Using a Genetic Algorithm to Identify Influencing Financial Ratios", IEEE Transactions on Evolutionary Computation, vol. 20, no. 1, pp. 38-51.
Patents Court 2014, "SHANKS v UNILEVER PLC", Reports of Patent, Design and Trade Mark Cases, vol. 131, no. 11, pp. 829-864.