FINANCIAL PERFORMANCE ANALYSIS:

COMPARISON OF NATIONAL AND MULTI-NATIONAL CORPORATIONS

ITC Ltd, DABUR (India) Ltd, P&G AND HINDUSTAN UNILEVER Ltd.

INTRODUCTION:
FINANCIALPERRFORMANCE ANALYSIS WHY FMCG SECTOR? WHICH COMPANIES ARE CONSIDERED AND WHY? DIFFERENT STEPS INVOLVED IN MAKING TTHIS FINANCIAL ANALYSIS

OBJECTIVES
To study and compare the change in ratios of the aforementioned National and MultiNational Corporations To analyze the changes occurred in the ratios between the two corporations over a period of five years. Interpretation and graphical representation of the obtained outcome

RESEARCH METHODOLOGY
SAMPLE SECONDARY DATA TOOLS

ANALYSIS AND INTERPRETATION:

We have considered ROI ,ROE, NPR AND STR as some of the vital scales for comparing the financial performance of ITC,DABUR,P&G. We have excluded Hindustan Unilever from the comparison as it shifted to IFRS but analysis has been held for it separately. The relevant calculations have been tabulated and recorded in excel for the ease of comparison and graphical representation. It can be inferred from these graphs that there have been many variations with respect to the components taken into consideration based on the values obtained.

RETURN OVER INVESTMENT

As the graph very clearly elucidates it can be stated that P & G has been prospering with respect to investments over the 5 years with the trend being above average most of the time leading to wise returns on the capital employed except for a drop of below average in the 5th year.

RETURN OVER EQUITY

As per the above graph we can see a spike in the ROE of Dabur during 2012-2013 from absolutely nothing to a value of 20.2 which clearly explains that the dividend yield of each shareholder has increased immensely.

NET PROFIT RATIO

As observed from the above plot it is quite evident that except for Dabur in the year 2012-2013 all other firms have been successful in converting most of their sales into profits and ITC has undisputedly outperformed with a trend line way above average, constantly increasing over the last five years.

STOCK TURNOVER RATIO

As per the graph P & G has been maintaining adequate balance over its trading in the past 5 years as the trend line is almost parallel with the average line. ITC has been under trading during the same period of time. Whereas the trend line of Dabur has been steeply declining which expresses its inefficiency in trading.

HINDUSTAN UNILEVER

HUL has experienced a dip in its operating ratio between 2010-2011 however it has successfully recovered to a soaring value of 0.29 which is closest to 0.34, highest recorded. It is observed that the gross profit and net profit have followed the same pattern over a period of time

SOLVENCY

The ROE trend most clearly indicates that the number of shareholders have increased as a result of which the available profit is shared multifold. The ROI has increased during the year 2011 -2012 however there is a fall in the return very immediately the next year which means there have been futile investments made. Correspondingly we see there is a dip in ROA wherein the assets have not been able to back the business.

ACTIVITY

The DTR is high and then managed to stabilize by reducing to a value of 11.1 correspondingly the CTR has increased to a value more than half of DTR which is good sign. The STR over a period of five years is seen to be increasing but has decreased to 6.64 from 7.23 in the year 2013 leading to lesser trade of goods manufactured.

LIMITATIONS OF THE REPORT:

The analysis is restricted for a period of five years.

Assumed that 5 years are a responsible period to get fault accurate picture of policies and practices of the management of each of the firm.
4 Firms of which 2 national and 2 multinational have been taken into consideration and hence no general opinion can be obtained. Hindustan Unilever follows IFRS standard of accounting and it cannot be compared to the other 3 firms. The analysis is based on annual reports of the company. Full information on the working of each firm is unavailable.

CONCLUSION