FIN60104 Introduction to Finance

INDIVIDUAL ASSIGNMENT

ASIF UDDIN
0341135
SECTION 05
 ASIF UDDIN TUTORIAL GROUP 5

0341135
IBM
Introduction to Finance Rabiatul Munirah
FIN60104
Individual assignment

02/06/20
Asif Uddin

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 0341135

Introduction to Finance FIN60104

Rabiatul Munirah

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 A) INTRODUCTION.

Unilever was established on September 2, 1929, by the merger of the Dutch margarine
maker Margarine Unie and the British soapmaker Lever Brothers. Multinational
purchaser products organization co-headquartered is located in London, England, and
Rotterdam, Netherlands. Its items incorporate are nourishment, caffeinated drink,
frozen yogurt, and refreshments, cleaning specialists, beauty products items, and
personal care products. Unilever is one of the most established global organizations;
its products are accessible in around 190 nations.

Moreover, Unilever possesses more than 400 brands and it is mainly composed of
four fundamental divisions – Foods, Refreshment (drinks and dessert), Home Care,
and Beauty and Personal Care. It has innovative work offices which include research
and development facilities in different country these are: China, India, Netherlands,
The United Kingdom, and The United States. (Anon (2020) Unilever refer to
reference 1)

Board of directors are the people who is elected by a company’s shareholder, their
responsibilities is to supervise and run the organization.

Non-Executive Board of director are the members of a company who are not part of
an executive team, but they are involved in policymaking and planning exercises.

Furthermore, Unilever has two holding organizations: Unilever N.V., which has its
enrolled and administrative center in Rotterdam, Netherlands, and Unilever PLC,
which has its enlisted office at Port Sunlight in Merseyside, United Kingdom, and its
administrative center at Unilever House in London, United Kingdom. The two
organizations work as a solitary business, with a typical governing body.

BOARD DIRECTORS OF UNILEVER

2016
EXECUTIVE DIRECTORS. NON-EXECUTIVE
DIRECTORS.

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 1. DAVID BLANCHARD Chief R&D Officer 1. Marijn Dekkers

2. MARC ENGEL 2. Nils Andersen

Chief Supply Chain Officer

3. KEVIN HAVELOCK President, 3. Laura Cha

Refreshment

4. ALAN JOPE 4. Vittorio Colao

President, Personal Care

5. RITVA SOTAMAA Chief Legal Officer 5. Louise Fresco

6. NITIN PARANJPE President, Home Care 6. Ann Fudge

7. LEENA NAIRChief Human Resources 7. Judith Hartmann

Officer

8. KEES KRUYTHOFF President, North 8. Mary Ma

America

9. AMANDA SOURRY President, Foods 9. Strive Masiyiwa

10. KEITH WEED 10. Youngme Moon

Chief Marketing & Communications Officer

11. JAN ZIJDERVELD President, Europe 11. John Rishton

12. Feike Sijbesma

(refer to reference 2)

2017 BOARD DIRECTORS OF

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UNILEVER.

EXECUTIVE DIRECTORS. NON-EXECUTIVE

DIRECTORS.

1. DAVID BLANCHARD Chief R&D 1. Marijn Dekkers

Officer

2. MARC ENGEL 2. Nils Andersen

Chief Supply Chain Officer

3. ALAN JOPE 3. Laura Cha

President, Personal Care

4. RITVA SOTAMAA Chief Legal Officer 4. Vittorio Colao

5. NITIN PARANJPE President, Home 5. Ann Fudge

Care

6. LEENA NAIRChief Human Resources 6. Judith Hartmann

Officer

7. KEES KRUYTHOFF President, North 7. Mary Ma

America

8. AMANDA SOURRY President, Foods 8. Strive Masiyiwa

9. KEITH WEED 9. Youngme Moon

Chief Marketing & Communications Officer

10. HANNEKE FABER President, Europe 10. John Rishton

(refer to reference 3) 11. Feike Sijbesma

2018 BOARD DIRECTORS OF

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UNILEVER.

EXECUTIVE DIRECTORS. NON-EXECUTIVE DIRECTORS.

1. AMANDA SOURRY President, 1. John Rishton

Fods

2. KEITH WEED 2. Feike Sijbesma

Chief Marketing & Communications
Officer

3. HANNEKE FABER President, 3. ANDREA JUNG

Europe

4. DAVID BLANCHARD Chief 4. Marijn Dekkers

R&D Officer

5. MARC ENGEL 5. Nils Andersen

Chief Supply Chain Officer

6. RITVA SOTAMAA Chief Legal 6. Laura Cha

Officer

7. NITIN PARANJPE President, 7. Vittorio Colao

Home Care

8. LEENA NAIRChief Human 8. Judith Hartmann

Resources Officer

9. KEES KRUYTHOFF President, 9. Mary Ma

North America

10. Strive Masiyiwa

11. Youngme Moon

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(refer to reference 4)

2019 BOARD DIRECTORS OF

UNILEVER.

EXECUTIVE DIRECTORS. NON-EXECUTIVE DIRECTORS.

1. Graeme Pitkethly Marijn Dekkers

Chief Financial Officer

2. Conny Braams Laura Cha

Chief Digital and Marketing Officer

3. Marc Engel Vittorio Colao

Chief Supply Chain Officer

4. Sunny Jain Judith Hartmann

President, Beauty & Personal Care

5. Leena Nair Strive Masiyiwa

Chief HR Officer

6. Fabian Garcia Youngme Moon

President, North America

7. Hanneke Faber John Rishton

President, Foods & Refreshment

8. Peter Ter Kulve Feike Sijbesma

President, Home Care

9. Sanjiv Mehta ANDREA JUNG

President, South Asia

10. Nitin Paranjpe Susan KIsby

Chief Operating Officer

11. Richard Slater

Chief R&D Officer

12. Ritva Sotamaa

Chief Legal Officer & Group Secretary

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 (refer to reference 5)

B&C) Financial performance & Recommendations

Liquidity ratio is the ratio that indicates whether the business can pay its debt or not if the ratio is greater
than 1 then the company is in good condition as the company can pay its debts. Liquidity ration can be
current ratio, quick ratio or cash ratio.

i. Liquidity 2019 2018 2017 2016

ratio
RM (000) RM (000) RM (000) RM (000)

Current Ratio: 16430/20978 15481/19772 16983/23177 13884/20556

Current Asset/
Current liabilities = 0.78: 1 = 0.78: 1 = 0.73: 1 = 0.68: 1

Quick Ratio: 16430 – 4164 15481 – 4301 16983 – 3962 13884 – 4278
/20978 / 19772 /23177 /20556
Current Asset –
Inventories /
Current liabilities = 0.58: 1 = 0.57: 1 = 0.56: 1 = 0.47: 1
Cash ratio

Cash + Cash 5072 / 20978 3910 / 19772 3694 / 23177 3682 / 20556
equivalents) /
Current liabilities = 0.24: 1 = 0.20: 1 = 0.16: 1 = 0.18: 1

Current Ratio: Shows the relationship between the current asset of the business and
its current liabilities. If the ratio is greater than 1 then the company can pay its debt to
the creditors, here it is clear from the chart that for the last 4 years the current ratio is
less than 1 which means the business does not have enough cash to pay the debts to
the creditor.

Quick Ratio: Also known as the Acid-test ratio, where the inventory is subtracted
from the current asset to shows the number of trade receivables and cash left to pay
their current liabilities. If the ratio is greater than 1 then the company can pay its debt
to the creditors, here it is clear from the chart that for the last 4 years the current ratio
is less than 1 which means the business does not have enough cash to pay the debts to
the creditor.

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 Cash Ratio: Helps to know whether the company has sufficient cash to meet its short-
term necessity. If the ratio is greater than 1 then the company can pay its debt to the
creditors, here it is clear from the chart that for the last 4 years the current ratio is less
than 1 which means the business does have enough cash to pay the debts to the
creditor.

Asset Management Ratio helps a business to identify how efficiently and effectively a business can
perform to maximize sales

{Cost of goods sold (Anon (2020) Koyfin refer to reference 7)}

ii. Asset 2019. 2018 2017 2016

Management
ratio

RM (000) RM (000) RM (000) RM (000)

Inventory Turnover = 32644 / 4164 28769 /4301 30547 / 3962 30229 / 427
COGS / Inventory.
= 7.8 times = 6.7 times = 7.7 times = 7.1 times

Total Asset Turnover: 51980 / 64806 50982 / 59456 53715 / 60285 52713 / 564
Sales/ Total Asset
= 0.80 times = 0.86 times = 0.89 times = 0.93 time

Receivables Turnover = 51980 / 4916 50982 / 4350 53715 / 3439 52713 / 332
Sales / Account
receivable = 10.6 times = 11.7 times = 15.6 times = 15.8 time

Payables Turnover = 32644/ 9190 28769 / 9121 30547 / 8217 30229 / 859
COGS / Account
payable. = 3.6 times = 3.2 times = 3.7 times = 3.5 times

 Inventory Turnover helps the business to see how many times the inventory
is replaced during the year here according to the chart in the year 2016, 7.1
times in 2017 7.7 times in 2018 6.7 times and in 2019, 7.8 times
 Total Assets Turnover helps the investor to see the efficiency of a company's
use of its assets in generating sales revenue, here in 2016 it is 0.93 times,
0.89 in 2017, 0.86 in 2018 and 0.80 times in 2019

 Receivables Turnover helps the business to claim the money from the debtor
that is owed the less the ratio is better here it is 15.8 times in 2016, 15.6 times

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 in 2017,11.7 times in 2018 and 10.6 times in 2019 that’s means a reduction
happened in the last 4 years which is good for the business

 Payables Turnover helps the business how much the company is owed to the
suppliers or others, the high the ratio is better as the company can use the
finance as an opportunity cost rather than paying early, here in 2016 it was 3.5
times,3.7 in 2017, 3.2 times in 2018 and 3.6 times in 2019.

iii. Financial 2019 2018 2017 2016

Leverage
RM (000) RM (000) RM (000) RM (000)

Debt to Equity: 50920 / 13192 47164 / 11572 45898 / 13629 39440 / 16354
Total debt / Total
Equity = 3.9 times = 4.1 times = 3.4 times = 2.4 times

Debt ratio: (64806 – 13192) / (59456 - 11572) / (60285 – 13629) / (56429 – 16354) /
(Total Assets – 64806 59456 60285 56429
total equity) /
Total Asset = 0.80 times = 0.81 times = 0.77 times = 0.71 times

Equity
Multiplier: Total
Asset / Total 64806 / 13192 = 59456 / 11572 = 60285 / 13629 = 56429 / 16354 =
Equity = 1+ debt 1+ 3.9 = 4.9 1+4.1 = 5.1 1+3.4 = 4.4 1+2.4 = 3.4
equity

Financial leverage helps the business to know if the business can take any further loans to buy asset
or to increase capital

• Debt to Equity helps to know how a company can or cannot finance its operation,
the lower the ratio is better for business here from 2016-2019 the ratio is more 1.5 as
1.5 is an ideal debt to equity, as a result, the company is not able to generate cash to
satisfy its debt.

• Debt Ratio helps to give overall information about debts which have been used to
finance its operation. A good debt ratio is 40% from 2016 to 2019 we can see the ratio
is higher which means this is a disadvantage for the company.

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 • Equity Multiplier helps to know how much assets are financed by the
shareholders a higher ratio means the current shareholders own fewer assets than the
current creditors from 2016 to 2019 we can see the ratio is higher which means this is
a disadvantage for the company.

iv. Profitabilit 2019 2018 2017 2016

y Ratio
RM (000) RM (000) RM (000) RM (000)

Profit Margin: Net 5625 / 51980 9389 / 50982 6053 / 53715 5184 / 52713
Income / Net Sales
= 10.8% = 18.4% = 11.3% = 9.8%

Return on Asset: 5625 / 64806 9389 / 59456 6053 / 60285 5184 / 56429
Net Income / Total
Asset = 8.7% = 15.8% = 10% = 9.2%

Return on Equity : 5625 / 13192 9389 / 11572 6053 / 13629 5184 / 16354
Net Income / Total
Equity = 42.6% = 81% = 44.4% = 31.7%

Profitability Ratio helps to find out how much profit or loss a business made during the year

• Profit Margin shows how much profit is earned by the business during the year
from 2016 to 2019 the business is doing quite good as the percentage is above 10%

• Return on Asset shows how efficient the business is using the asset to make a
profit as for the last 4 years the return is more than 5% which is good for the company
as it considers good returns.

• Return on Equity helps the investor to know how much they will get if they
invested, the more the ratio is better for a company from 2016 to 2019 the ratio is
good which is an advantage for the company as new investors will be keen to invest
money in the business.

D) Self – direct learning

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This subject’s assignment really helped me to learn and utilized how to measure
different companies performance by the financial ratios and to compare the results
with others companies as to decrease any potential loss in the future, as the financial
results will help’s to determine to invest in the better company which have good
financial results ratio in the hope of profit in the future, moreover this subject also
taught me simple interest and compound interest which is very crucial for a business
and individuals , as the business or induvial will know how much money will be
needed to buy an assets or other things in the future or will also help to know how
much they will get return from the investment after a certain period.

Honestly the subject is very interesting to study and certainly it will help a student to
learn the core of a business which a student will be benefitted in the future.

INCOME STATEMENT

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BALANCE SHEET

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 2019 2018 2017 2016

REFERENCE:

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 1. Anon (2020) Unilever. Available from: https://en.wikipedia.org/wiki/Unilever
[Accessed 8 May 2020].

2. Anon (2020) 2016 annual report. Available from:

https://www.unilever.com/Images/unilever-annual-report-and-accounts-
2016_tcm244-498880_en.pdf [Accessed 8 May 2020].

3. : Anon (2020) 2017 annual report. Available from:

https://www.unilever.com/Images/unilever-annual-report-on-form-20-f-
2017_tcm244-516429_en.pdf [Accessed 8 May 2020].

4. Anon (2020) 2018 annual report. Available from:

https://www.unilever.com/Images/unilever-annual-report-and-accounts-
2018_tcm244-534881_en.pdf [Accessed 8 May 2020].

5. Anon (2020) 2019 annual report. Available from:

https://www.unilever.com/Images/unilever-annual-report-and-accounts-
2019_tcm244-547893_en.pdf [Accessed 8 May 2020].

6. are, W. (2020) Our leadership. Available from:

https://www.unilever.com/about/who-we-are/our-leadership/ [Accessed 8
May 2020].

7. Anon (2020) Koyfin | Advanced graphing and analytical tools for investors.

Available from: https://www.koyfin.com/company/UN/cost_of_goods_sold
[Accessed 8 May 2020].

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