CIKITUSI JOURNAL FOR MULTIDISCIPLINARY RESEARCH ISSN NO: 0975-6876

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF HINDUSTAN

UNILEVER LIMITED
SHARMILA.P
Assistant Professor, PG & Research Department of Commerce
Sree Narayana Guru College, K.G.Chavadi, Coimbatore – 641 105

Abstract
Finance is the life-blood of business. It is rightly termed as the science of money. Finance is very
essential for the smooth running of the business. Finance controls the policies, activities and
decision of every business. Financial performance helps to measure the overall performance of
the company. This research paper examines the financial performance of Hindustan Unilever
Limited (HUL) using ratio analysis such as Liquidity, Solvency, Profitability and Trend analysis
of the company. To analysis the financial performance of the company last five years data is
collected for the study.
Introduction
Hindustan Unilever Limited (HUL) is an Indian consumer goods company based in Mumbai,
Maharashtra. It is a subsidiary of Unilever, a British-Dutch company. HUL's products include
foods, beverages, cleaning agents, personal care products and water purifiers.
HUL works to create a better future every day and helps people feel good, look good and
get more out of life with brands and services that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos,
skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water
purifiers, the Company is a part of the everyday life of millions of consumers across India. Its
portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair
& Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit.
Review of literature
Roopa et al., (2017) in her “study on financial performance of select IT and ITeS Companies
listed in NSE, India.” The objective of their study is liquidity, solvency, activity and
profitability position to evaluate the financial performance. ROI, EPS and dividend paid by
big companies is more in terms of high and average values. The risk and return relationship
analysis shows big companies provide high return to moderate risk, medium companies have

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low risk and low return but small companies are more uncertain with high risk and moderate
return. The study concluded it has been found that big companies are better performers and
medium companies are consistent performers.
Rajesh (2017) in this “study on financial performance of care it solution private limited”.
The objective of this study is liquidity, stability and profitability position, common size, and
financial strength of the company. The gives a clear idea of the financial performance of the
company over last 5 years. It can be suggested that the company improve their customer
services and technology they will come up with the standard level. The study conclude that
findings and recommendations which would be useful for the development and improvement
to the company.
Pavithra et al., (2017) in her “study on the analysis of financial performance with reference
to Jeppiaar Cements Pvt Ltd”. The study has been carried out for the period of 5 years and it
is not sufficient enough to analyze the entire aspect of the company. The objective of their
study is overall profitability position, trend financial analysis of the company. It can be
suggested that the company must be made more vigilant to maintain or improve the present
situation because if there is any further fall in the current ratio. It may be a serious problem
for the company. The study concluded that company overall financial performance normal.
The current assets have to properly maintain to bring the current ratio to the normal.
OBJECTIVES OF THE STUDY
The study has the following objectives.
 To know the short term and long term financial position of the company.
 To determine the profitability of the company.
 To calculate the trend analysis of the company.
RESEARCH METHODOLOGY
RESEARCH
According to Clifford Woody research comprises defining and redefining problems,
formulation hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.

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RESEARCH DESIGN
A research design is the arrangement of activities for the collection and analysis of the
data in a manner that aim to combine relevance to the research purpose with economy in
procedure. It is the structure of investigation to obtain answers to research questions. It includes
the outline of what the investigator will do from writing the hypothesis and their operational
implications to final analysis of data.
SOURCE OF DATA
SECONDARY DATA
The secondary data are those which have already been collected by someone else and
which have already been passed through the statistical process. Thus the data has been
collected through company document, annual reports and records. Source like magazines,
books, articles, journals, etc,.
TOOLS USED FOR THE STUDY
The following tools have been applied in the study.
 Ratio analysis: Liquidity, Solvency and Profitability ratios.
 Trend analysis.
LIMITATIONS OF THE STUDY
1. The study is based on historical data. The study depends on the secondary data obtained
from www.money control .com
2. Accounting techniques used for the study like ratio analysis have its own limitations. It is
calculated from past data.
3. Only 5 years performances are analyzed so the results cannot be generalized to all
financial years of the company.
RATIO ANALYSIS
Ratio analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm’s financial performance in several key areas. The computation of ratios
facilitates the comparison of firms which differ in size. Ratios can be used to compare a firm’s
financial performance with industry averages. In addition, ratios can be used in a form of trend
analysis to identify areas where performance has improved or deteriorated over time.

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CURRENT RATIO
(IN CRORES)
YEAR CURRENT ASSETS CURRENT CURRENT RATIO
LIABILITIES
2012-13 7,569.99 7,655.86 0.99
2013-14 8,852.47 8,518.54 1.04
2014-15 9,263.55 8,782.82 1.05
2015-16 9,530.00 6,652.00 1.43
2016-17 9,390.00 7,202.00 1.30
Secondary Data
INTERPRETATION
From the above table the highest current ratio of 1.43 is found for the year 2015-16 and
lowest current ratio of 0.99 is found for the year 2012-13. In the table it is clear that, in all the
five years study period, the current ratio is below the standard ratio of 2:1. But there is a increase
trend from 2012-13 to 2015-16. But again in the year 2016-17 in there is a significant decrease in
current ratio, indicating that the company must concentrate on maintaining the standard ratio of
current assets.
QUICK RATIO
(IN CRORES)
YEAR TOTAL QUICK CURRENT QUICK RATIO
ASSETS LIABILITIES
2012-13 1,707.89 7,655.86 0.22
2013-14 2,220.97 8,603.84 0.26
2014-15 2,537.56 8,782.82 0.29
2015-16 1,064.52 9,137.15 0.12
2016-17 1,671.00 7,202.00 0.23
Secondary Data
INTERPRETATION
From the above table the highest quick ratio of 0.29 is found for the year 2014-15 and
lowest quick ratio of 0.12 is found for the year 2015-16. In the table it is clear that, in all the five
years study period, the quick ratio is below the standard ratio of 1:1. There is fluctuating in the
quick ratio. It shows the unsatisfactory position and hence the company should increase the
liquidity position.
ABSOLUTE LIQUID RATIO
(IN CRORES)
YEAR ABSOLUTE CURRENT ABSOLUTE
LIQUID ASSETS LIABILITIES LIQUID RATIO
2012-13 1,707.89 7,655.86 0.22
2013-14 2,220.97 8,603.84 0.26

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2014-15 2,537.56 8,782.82 0.29

2015-16 1,064.52 9,137.15 0.12
2016-17 1,671.00 7,202.00 0.23
Secondary Data
INTERPRETATION
From the above table the highest absolute liquid asset ratio of 0.29 is found for the year
2014-15 and lowest current ratio of 0.12 is found for the year 2015-16. In the table it is clear that,
in all the five years study period, the absolute liquid ratio is below the standard ratio of equal or
near to the rule of thumb for 0.5:1. The ratio of absolute liquid is not satisfactory. Because it is
much lower than the standard ratio.
EQUITY OR PROPRIETARY RATIO
(IN CRORES)
YEAR TOTAL EQUITY TOTAL ASSETS EQUITY RATIO
2012-13 216.25 11,512.47 0.019
2013-14 216.27 12,998.40 0.017
2014-15 216.35 13,634.06 0.016
2015-16 216.39 14,167.03 0.015
2016-17 216.00 14,751.00 0.015
Secondary Data
INTERPRETATION
From the above table the highest equity or proprietary ratio of 0.019 is found for the year
2012-13 and lowest equity or proprietary ratio of 0.015 is found for two years 2015-16 and 2016-
17. The equity ratio is slightly decreasing year by year. This ratio indicates the extent to which
the assets of the company can be lost without affecting the interest of creditors of the company.
INTEREST COVERAGE RATIO
(IN CRORES)
Year EBIT Interest expense Interest Coverage
Ratio
2012-13 19.88 25.15 79.05
2013-14 25.34 36.03 70.33
2014-15 30.03 16.82 178.53
2015-16 31.04 15.00 206.93
2016-17 30.36 22.00 138.00
Secondary Data
INTERPRETATION
From the above table the highest interest coverage ratio of 206.93 is found for the year
2015-16 and lowest interest coverage ratio of 70.33 is found for the year 2013-14. It is seen that

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the highest ratio may not be good for the firm, because it may imply that firm is not using debt as
a source of finance so as to increase the earning per share.
TREND ANALYSIS
The financial statement may be analyzed by computing trends of series of information. This
method determines the direction upwards or downwards and involves the computation of the
percentage relationship that each statement item bears to the same items in base year. The
information for a number of years is taken up and one year, generally the first year, is taken as a
base year. The figures of the base year are taken as 100 and trend ratios for other year are
calculated on the basis of base year. The analyst is able to see the trend figures, whether upward
and downward.
FORMULA
Y = a + bx
∑y = Na + b ∑x
∑xy = a∑x + b∑x2
∑y = Na + b∑x
INVESTMENT
(IN CRORES)
YEAR ACTUAL VALUE TREND VALUE
2012-13 2,330.66
2013-14 3,094.12
2014-15 3,277.93
2015-16 2,966.55
2016-17 3,779.00
2017-18 20,829.22
2018-19 25,897.67
2019-20 30,966.12
Secondary Data
INTERPRETATION
The above table shows the investment from the year 2012-13 to 2016-17 and trend value
estimated from the year 2012-13 to 2017-18. The highest value of investment under the trend
value 15,760.77is found for the year 2016-17 and the lowest trend value 9,581.47 is negative
amount found for the year 2012-13. It is seen that the table, the trend value is increasing year by
year.

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The trend analysis is mainly give importance for pre determination for future activities.
This study is analysis for forecasting investment in 2019-20.
OPERATING PROFIT
(IN CRORES)
YEAR ACTUAL VALUE TREND VALUE
2012-13 4,003.75
2013-14 4,475.26
2014-15 5,208.24
2015-16 5,749.00
2016-17 6,047.00
2017-18 38777.15
2018-19 48400.15
2019-20 58023.15
Secondary Data
INTERPRETATION
The above table shows the operating profit from the year 2012-13 to 2016-17 and trend
value estimated from the year 2012-13 to 2017-18. The highest value of operating profit
under the trend value 19,531.15 is found for the year 2016-17 and the lowest value of
18,960.85 negative amounts is found for the year 2012-13. It is seen that the table, the trend
value is increasing for all years.
The trend analysis is mainly give importance for pre determination for future activities. This
study is analysis for forecasting profit in 2019-20.
FINDINGS
 The highest current ratio of 1.43 is found for the year 2015-16 and lowest current ratio of
0.99 is found for the year 2012-13. The year 2016-17 in there is a significant decrease in
current ratio.
 The highest quick ratio of 0.29 is found for the year 2014-15 and lowest quick ratio of
0.12 is found for the year 2015-16. There is fluctuating in the quick ratio.
 The highest absolute liquid asset ratio of 0.29 is found for the year 2014-15 and lowest
current ratio of 0.12 is found for the year 2015-16. The ratio of absolute liquid is not
satisfactory.

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 The highest equity or proprietary ratio of 0.019 is found for the year 2012-13 and lowest
equity or proprietary ratio of 0.015 is found for two years 2015-16 and 2016-17. The
equity ratio is slightly decreasing year by year.
 The highest interest coverage ratio of 206.93 is found for the year 2015-16 and lowest
interest coverage ratio of 70.33 is found for the year 2013-14.
 The highest value of investment under the trend value 15,760.77is found for the year
2016-17 and the lowest trend value 9,581.47 is negative amount found for the year 2012-
13.
 The highest value of operating profit under the trend value 19,531.15 is found for the
year 2016-17 and the lowest value of 18,960.85 negative amounts is found for the year
2012-13.
SUGGESTIONS
 The company should maintain the share capital to pay dividend to the shareholders.
 The company can concentrate more on reserves for the expansion of the business in the
future.
 In the current assets should be increased to improve the liquidity position of the company.
CONCLUSION
Hindustan Unilever Ltd is a leading FMCG company in India and from last five consecutive
years has shown accelerated growth in portfolio. Customers in India are also spending more in
their standard of living is growing. HUL has placed itself successfully in the position of market
leader in FMCG products. Though there was some downfall in sales and profit of the company in
the beginning of this decade but after that HUL has shown considerable rise in both sales and
profit. The future of the company is also looking bright as FMCG market in India is still
expanding and so we can safely conclude that HUL will be able to secure its number one
position in FMCG product.
REFEENCE
 Amalendu Bhunia (2011), “A study on financial performance analysis- a case study,
current research journal of social science, volume No 3, issue No 3, ISSN No: 2041-S
 Arvind (2013), “A Study on Financial Performance Of Sakthi Finance Ltd”. Asia Pacific
Journal of Marketing and management Review, Volume No: 2 (7), ISSN No: 2319-2836.

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 Ashok kumar (2015),” financial performance of select sugar companies in tamil nadu.
International journal of advance research in computer science and management studies,
volume no-3, Issue-2, ISSN 2321-7782.
 Ayad shaker sultan (2014),” a study on financial performance of Baghdad soft drink
industry”. Research journal of finance and accounting. Volume No5, Issue No 4, ISSN
2222-1697.
 Balaji (2015), “A Study on Financial Performance Analysis at Neycer India Ltd”.
International Journal of pure and Applied Researches, Volume No:1 (1),
 Dhanalakshmi (2016), “ a study on performance analysis of nestle india ltd. International
journal of recent research in commerce economics and management. Volume no 3, issue
no 4, pp (166-174), issn 2349-7807

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