Anju M Final Project

Project Report On
“A STUDY ON EFFECTIVENESS OF DU-PONT ANALYSIS ON PROFITABILITY

AT HINDUSTAN UNILEVER LIMITED COMPANY”
Submitted to Bangalore City University

In partial Fulfilment of the Requirement for the Award of the
Post-Graduation Degree of
MASTER OF COMMERCE – 2019-2021
Submitted by
ANJU. M
Reg No: CM198002
Under the Guidance of

Dr. DHAKSHAYINI . K.N M.Com, MBA. M.Phil, Ph. D
Associate professor, Department of Commerce-PG
NAGARJUNA DEGREE COLLEGE

Ramagondanahalli, Yelahanka, Bangalore-64
Affiliated to
Bangalore Central University
2019-2021
DECLARATION
I hereby declare that the dissertation entitled “A STUDY ON

EFFECTIVENESS OF DU-PONT ANALYSIS ON PROFITABILITY AT
HINDUSTHAN UNILEVER LIMITED COMPANY” is an original and
Bonified work carried out by me under the supervision of DR. DHAKSHAYINIK
NHODofM.COM Nagarjuna Degree College for the Partial fulfilment of the
award of M. Com Degree of Bangalore City University.
I also declare that no part of this representation has been previously published
or submitted as a project representation for any Degree, Diploma, and
Associateship, Fellowship or any other similar title.
Date:
Place: ANJU. M
RegNo:CM198002
NAGARJUNADEGREECOLLEGE
RAMAGONDANAHALLI,YELAHANKA,BANGALORE–64
Department of Commerce-PG
GUIDE CERTIFICATE
Thisistocertifythattheprojecttitled“A STUDY ON EFFECTIVENESS OF DU-

PONT ANALYSIS ON PROFITABILITY AT HINDUSTHAN UNILEVER
LIMITED COMPANY” is based on the original work conducted byMiss.
ANJU.M, IV Semester M.Com bearing Register No: CM198002 under my
guidance and supervision.
This project report has not been found for the award of any other
Degree/Diploma by the Bangalore City University or any other Institution of
Higher /Education in the earlier period.
Place:
Date:
DR. DHAKSHAYINI K N
HOD, Department of Commerce (M.Com)
Nagarjuna Degree Collage

ACKNOWLEDGEMENT
I would like to express my sincere gratitude to all those who have been
instrumental in the presentation of this project.
I am very much grateful to Bangalore City University for giving this
opportunity. I am very much grateful to DR. HARISH BABU. S the
principal of Nagarjuna Degree College, Bangalore for his continuous
support.
I would like to thank DR. DHAKSHAYINI .K N HOD of M.Com

,Nagarjuna Degree College, and Bangalore for her continuous support. The
encouragement and guidance given by the DR. DHAKSHAYINI K N my
guide has made this a personally rewarding experience, I thank her for
support and inspiration, without which understanding of the
projectwouldhavebeenexponentiallydifficult.
I am grateful to the manager of HINDUSTAN UNILEVER LIMITED

COMPANY for their encouragement and invaluable assistance.Last, but not
the least, I would like to thank my parents and all my friends fortheir
wholehearted support and encouragement in the successful completion of the
project.
Date:
Place: ANJU. M
RegNo:CM198002
TABLE OF CONTENTS
SL.NO TITLE PAGE NO.
1 CHAPTER-1: INTRODUCION
1.1 INTRODUCTION
1.2 MEANING OF DU-PONT ANALYSIS
1.3 DEFINATION
1.4 FORMULA AND CALCULATION OF DUPONT ANALYSIS
1.5 OBJECTIVES OF DU-PONT ANALYSIS
1.6 IMPORTANCE OF DU-PONT ANALYSIS
1.7 COMPONENTS OR MODELS OF DU-PONT ANALYSIS
1.8 DU-PONTS ROE FORMULA
1.9 THREE STEP AND FIVE-STEP DU-PONT MODEL
1.10 ADVANTAGES AND DISADVANTAGES OF DU-PONT

ANAYSIS
1.11 PRINCIPLES OF DUPONT ANALYSIS
1.12 FORMULA FOR DUPONT MODEL

1.13 USE OF DU-PONT ANALYSIS
1.14 DU PONT ANALYSIS CHART
1.15 RETURN ON EQUITY
1.16 POTENTAIL OF ROE
1.17 RETURN ON ASSET
1.18 RETURN ON SALES
1.19 RATIO ANALYSIS
1.20 CLASSIFICATION OR TYPES OF RATIO
2 CHAPTER – 2 RESEARCH DESIGN
2.1 TITLE OF THE STUDY
2.2 REVIEW OF LITERATURE
2.3 STATEMENT OF PROBLEM
2.4 SCOPE OF THE STUDY
2.5 OBJECTIVE OF THE STUDY
2.6 RESEARCH METHODOLOGY
2.7 LIMITATIONS
2.8 CHAPTER SCHEME
3 CHAPTER – 3 COMPANY PROFILE
3.1 INTRODUCTION
3.2 HISTORY
3.3 HEADQUATORS
3.4 RESEACRH FACILITIES
3.5 SUSTANABL LIVING
3.6 BRAND AND PRODUCTS
3.7 SOURCES
3.8 CHAIRMAN SPEAKS
3.9 SWOT ANAYSIS
3.10 COMPITATORS OF HUL
3.11 SEGMENTAL UPDATES
3.12 AWARDS
3.13 INNOVATION
3.14 CHALLENGES FOR HUL
3.15 STRATEGIES FOLLOWED BY HUL
3.16 CORPORATE SOCIAL RESPONSIBITIES POLICY
4 CHAPTER – 4 DATA ANALYSIS& INTERPRETATION
5 CHAPTER – 5 SUMMARY OF FINDINGS, SUGGESTION AND
CONCLUSION
5.1 FINDINGS
5.2 SUGGESTIONS
5.3 CONCLUTION
LIST OF TABLES
4.1 RETURN ON ASSET(ROA) OF HINDUSTAN UNILEVER LIMITED
4.2 RETURN ON EQUITY (ROE) OF HINDUSTAN UNILEVER LIMITE
4.3 RETURN ON INVESTMENT OF HINDUSTAN UNILEVER LIMITE
4.4 PRIOFITABILITY RATIO (INCOME) OF HINDUSTAN UNILEVER

LIMITED
4.5 PROFIT MARGIN OF HINDUSTAN UNILEVER LIMITED
4.6 ASSET TURNOVER RATIO OF HINDUSTAN UNILEVER LIMITED
4.7 EQUITY MULTIPLIER RATIO OF HINDUSTAN UNILEVER LIMIT
4.8 DU PONT ANALYSIS OF HINDUSTAN UNILEVER LIMITED
4.9 CURRENT RATIO OF HINDUSTAN UNILEVER LIMITED
4.10 QUICK RATIO OF HINDUSTAN UNILEVER LIMITED
4.11 NETWORKING CAPITAL RATIO OF HINDUSTAN UNILEVER

LIMITED
4.12 STATEMENT OF PROFIT MARGIN OF HINDUSTAN UNILEVER

LIMITED
4.13 STATEMENT OF INVESTMENT TURNOVER (ASSET

TURNOVER)OF HINDUSTAN UNILEVER LIMITED
4.14 SUMMARY OF DU PONT ANAYSIS

LIST OF CHARTS
5.1 RETURN ON ASSET(ROA) OF HINDUSTAN UNILEVER LIMITED
5.2 RETURN ON EQUITY (ROE) OF HINDUSTAN UNILEVER LIMITE
5.3 RETURN ON INVESTMENT OF HINDUSTAN UNILEVER LIMITE
5.4 PRIOFITABILITY RATIO (INCOME) OF HINDUSTAN UNILEVER

LIMITED
5.5 PROFIT MARGIN OF HINDUSTAN UNILEVER LIMITED
5.6 ASSET TURNOVER RATIO OF HINDUSTAN UNILEVER LIMITED
5.7 EQUITY MULTIPLIER RATIO OF HINDUSTAN UNILEVER LIMIT
5.8 DU PONT ANALYSIS OF HINDUSTAN UNILEVER LIMITED
5.9 CURRENT RATIO OF HINDUSTAN UNILEVER LIMITED
5.10 QUICK RATIO OF HINDUSTAN UNILEVER LIMITED
5.11 NETWORKING CAPITAL RATIO OF HINDUSTAN UNILEVER LI
5.12 STATEMENT OF PROFIT MARGIN OF HINDUSTAN UNILEVER

LIMITED
5.13 STATEMENT OF INVESTMENT TURNOVER (ASSET

TURNOVER)OF HINDUSTAN UNILEVER LIMITED
5.14 SUMMARY OF DU PONT ANAYSIS

EXCUTIVE SUMMARY
Fast Moving Consumer Goods (FMCG) industry plays an important role in economic
development of a country. The FMCG system of India is featured by a large group of FMCG
companies, serving many kinds of consumer and durables goods for the people. The
Hindustan Unilever Ltd. popularly known as HUL or erstwhile as HUL is one of the leading
FMCG Company in India. Hindustan Unilever Limited (HUL) is India's largest fast moving
consumer goods company with a heritage of over 80 years in India and touches the lives of
two out of three Indians. The objective of this research is to measure the financial
performance of Indian leading HUL companies for the period of 2017 to 2021. Financial ratio
Balance sheet,profit and loss account, Cash flow of HUL. Required information derived from
these financial statements were summarized and used to compute financial ratios for the five-
year period.
DU-PONT analysis is used to evaluate the component part of a company’s ROE (Return On
Equity. It allows an investor to determine the financial activities are contributing to changes
in ROE. An investor can use an analysis to compare the operational efficiency of two similar
firms. DU-PONT analysis is comprehensive because it covers the level of efficiency of the
company in the use of its assets and can measure the level of profit on the sale of products
produced by the company.
A graphical representation is provided in order to compare financial ratios such as

profitability, liquidity, assets turnover,ROA,ROE,ROI ratios, and also researcher used the
DuPont technique of financial analysis for the period 2017 to 2021. The DuPont analysis is
basically based on two tier i.e. profit margin and assets turnover. For DuPont Analysis, the
data requirements were collected from secondary sources, like financial statements of the
company.
[Type the document title]
NAGARJUNA DEGREE COLLEGE

CHAPTER – 1
INTRODUCTION
“A STUDY ON EFFECTIVENESS OF DU-PONT ANALYSIS ON PROFITABILITY AT
HINDUSTAN UNILEVER LIMITED COMPANY”
INTRODUCTION:
DUPONT is the method of measuring the performance model was created by DUPONT
Corporation in 1920s. It is also known as “DuPont identity”. DUPONT Mode (Return on
Equity) = net Profit Margin *Asset turnover ratio* Equity multiplier, DUPONT model is a
tool to start off with financial statement analysis because it is based on return on equity.
Return on Equity (ROE) is the crucial ration which indicates the rate at which owner capital
is increasing. DUPONT ratio is made up of 3 major components i.e, Profitability, Operating
efficiency and leverage.
DU-PONT analysis is used to evaluate the component part of a company’s ROE (Return On
Equity. It allows an investor to determine the financial activities are contributing to changes
in ROE. An investor can use an analysis to compare the operational efficiency of two similar
firms. DU-PONT analysis is comprehensive because it covers the level of efficiency of the
company in the use of its assets and can measure the level of profit on the sale of products
produced by the company.
DUPONT analysis takes into account three indicators to measure firm profitability: ROS,
ROE and ROA. Return on Sales (ROS): Measures how profitable a firm’s sales are after all
expenses, including taxes and interest. Return on Equity (ROE): It is a basic test that shows
whether the management is growing effectively a company’s value at an acceptable rate. It
also measures the rate of return that the firm earns on stockholder’s equity. Return on Assets
(ROA): It measures the effectiveness and reveals how much profit a company earns for its
assets.
MEANING OF DU-PONT ANALYSIS:
A Du-Pont is used to evaluate the component part of a company’s return on equity (ROE).
This allows an investor to determine what financial activities are contributing the most to the
charges in ROE. An investor can use analysis like this to compare the operational efficiency
of two
similar firms. Managers can use DU-PONT analysis to identify strengths and weaknesses that
should be addressed.
NAGARJUNA DEGREE COLLEGE Page 1

The Du-Pont analysis also called the Du-Pont model is a financial ratio based on the return on
equity ratio that is used to analysis a company’s ability to increase its return on equity. In
other words, this models breaks down the return on equity ratio to explain how companies
can increase can increase their return for investors.
DEFINATION:
The Du-Pont analysis is defined as “It is a framework for analyzing fundamental performance
popularized by the Du-Pont analysis corporation. Du-Pont analysis is a useful technique used
to decompose the different drivers of return on equity (ROE). The decomposition of ROE
allows investors to focus on the key metrics of financial performance individually to identify
strength the and weakness.”
According to “CFO Magazine” a finance executive at E.I. DuPont de Nemours and co of

Wilmington, Delaware, created DuPont system of financial analysis in 1919 and firstly it was
used by the DuPont Corporation of USA in 1920. DuPont Analysis is also known as DuPont
identity, DuPont equation, DuPont model or DuPont method. The DuPont analysis is
basically based as two tier i.e., net profits margin and assets turnover.
The Du-Pont analysis is an extended form of return on equity (ROE) of a company which
analyzes the net profit margin, assets turnover and financial leverage. ROE measures the rate
of return for ownership interest (shareholder’s equity) of common stock owners. It measures
the efficiency of a firm at generating profit from each unit of shareholder equity also known
as net assets or assets minus liabilities (Geethalakshimi&Jyothi, 2016). The model was
created by F. Donaldson Brown who came up with the model when he was assigned to clean
up the finances in General Motors and has ever since been an important model for financial
analysis (Sheela &Karthikeyan, 2012). It was developed by the Du-Pont Corporation in 1920.
It is used to analyze a company’s ability to increase its return on equity and helps the
investors to know how the companies increase their return. The investors are looking to
analyze what is causing the current ROE. If a company earns low ROE than management use
Du-Pont analysis could be utilized to know the problem area, once the area is found,
management can take corrective action as soon as possible. The Du-Pont analysis offers a
wider picture of the return the company earning on its equity. It tells a company where
strength lies and where there is a space for improvement. It is a useful system of analysis,
which considers important relationships based on information found in financial statements, it
has been adopted by many firms in some

form or the other (Chandra, 2017). The Du-Pont analysis depends on three main components
of ROE i.e. Net Profit Margin, Total Assets Turnover and Financial Leverage. Du-Pont
analysis takes into account three indicators to measure firm profitability i.e. ROS, ROA and
ROE (Soliman, 2008). On the basis of these three components, the company can raise its
ROE by maintaining a high profit margin, increasing assets turnover and leverage assets more
effectively. According to the original Du-Pont method, an engineer at Du-Pont noticed that
the product of two ratios i.e. net profit margin and total assets turnover equals to Return on
Assets (ROA). The elegance of ROA being affected by a profitability measure and an
efficiency measure led to the Du-Pont method becoming a widely used tool of financial
analysis (Liesz, 2002). Du-Pont model advocates that Return on Investment (ROI) is the best
measure of overall financial performance. The return on investment shows the earning power
of the company. In the words of Nissim and Penman, (cited in Soliman, 2008) Du-Pont
analysis provides an approach to equity valuation using the residual income 64 framework
that gives a simple direct mapping of financial ratios to equity valuation. The formula of Du-
Pont model is as follows:
Return on Equity= Net Profit Margin × Assets Turnover × Financial Leverage
FORMULA AND CALCULATION OF DUPONT ANALYSIS
The DuPont analysis is an expanded return on equity formula, calculated by multiplying the
net profit margin by the asset turnover by the equity multiplier.
DuPont Analysis=Net Profit Margin ×AT ×EM
where:
Net Profit Margin=Net Income/Revenue
AT=Asset turnover
Asset Turnover=Sales/ Average Total Assets
EM=Equity multiplier
Equity Multiplier =Average Total Assets/ Average Shareholder’s Equity
Or Equity Multiplier= Total Assets/ Shareholders capital
1.5OBJECTIVES OF DU-PONT ANALYSIS

● Examine the performance of mobile manufacturing firms on the basis Du-Pont

analysis.
● Use of financial ratio’s in evaluating the business model followed.
● Evaluating which type of model is more suitable for mobile manufacturing industry.
IMPORTANCE OF DU-PONT ANALYSIS:
The Du-Pont analysis is a convenient and helpful tool that helps an investor look at the more
detailed aspects of a company’s financial health and help them make more informed
investment decisions. The Du-Pont system is important because it provides a complete
overall picture of any company’s financial health and performance, as compared to the
common and limited valuation tools.
●In addition to informing about the return on investment for shareholders, Du-Pont analysis
also includes three important indicators of the firm’s performance, which provide an in-depth
insight into the companies wellbeing. These are profitability measured by profit margin,
operational efficiency measured by asset utilization and financial leverage measured by the
assets/equity multiplier. If the ROE is higher due to the increasing operational efficiency, it is
favorable for financial analysts. However, if du-point indicates that ROE is increasing only
because of increased financial leverage, then it becomes a risky investment as the increase
equity returns are not a result of increased profit but of increased debts.
●Du-Pont analysis helps a company understand its strong factors and helps analyze the
reasons behind this growth so that a healthy performance can be retained.
●It also helps to identify the weak performance indicators, thus helping the company to
understand and improve. Du-Pont analysis helps investors identify the source of increased or
decreased equity returns.
●The dew point analysis is important determines what is driving a company’s ROE, profit
margin shows the operating efficiency, assert turn over shows the assert use efficiency, and
leverage factor shows how much leverage is been used.
●Du- Pont analysis allows analysts to dissect a company, efficiently determine where the
company is weak strong and quickly know what areas of the business to look at for more
answers. The Du- Pont analysis uses both the income statement as well as the balance sheet
to perform the examination.

●The Du-Pont system is important because it provides a complete, overall picture of any
company’s financial health and performance, as compared to the common and limited equity
valuation tools. The Du-Pont analysis allows an investor to asses which financial activities
contribute the most to the ROE changes. An investor may use these analyses to compare two
identical firms operating performance. Du-Pont analysis is done to check whether the ROE
which the company has quoted is for real or is there anything fishy. Du- Pont ROE
decomposition helps you to understand how the company is creating value for shareholders.
●Du-Pont analysis is a great tool to understand the bolder picture of return on equity of the
company. It gives you insights on where the strength of the company lies and where work
need to be done. Du-Pont analysis breaks down the components of return on equity formula
to reveal the different ways in which a business can alter its return on equity. ROE measures
how much shareholders earned for their investment in the company.
COMPONENTS OR MODELS OF DU-PONT ANALYSIS:
⮚ Profit margin
⮚ Total assert turnover
⮚ Equity multiplier
1. NET PROFIT MARGIN:
The Net Profit Margin (NPM) of a company shows how much earning is generated from a
single rupee of sales. The measurement of net profit margin reveals the amount of profit that
a business can earn from its total sales. It is used to measure the profitability of a firm. It
depends upon the amount of competition faced by the firm. In this competitive world, the
lower margin would be there whereas a firm with high profit margin indicates that they have
a product or service with a best price. The companies must be able to charge their products in
such a way as to drive volume. Return On Equity (Du-Pont model) Net Profit Margin,
Operating Efficiency (Net Profit *100/ Total Sales Asset Turnover), Asset Use Efficiency
(Total Sales/Total Assets Equity Multiplier Financial Leverage Total Asset's/ Shareholder's
Fund65) The net profit margin is different and varies from company to company. Therefore,
it is important to compare the ROEs and other financial ratios of different firm in same
industry as similar business constraint will be exit for each of the firm in that industry.
FORMULA:

NET PROFIT MARGINE = NET PROFIT AFTER TAX/ NET SALES × 100
2. TOTAL ASSERT TURNOVER
The Asset Turnover (AT) shows how much sales a firm generate from every rupee of an
asset. The companies with low profit margins tend to have high asset turnover and those who
have high profit margin have low asset turnover. The companies dealing in retail business
tend to have a very high turnover ratio because of cutthroat competition in pricing. The asset
turnover ratio helps to measure effectiveness of management. By improving asset
management policies, a firm can increase it equity returns
This ratio depicts the efficiency of the company in using its asserts. This is calculated by
dividing sales by total assets. This ratio differs across industries but is useful in comparing
firms in the same industry. If the companies assert turnover increases this positively impacts
the ROE of the company.
FORMULA
ASSET TURNOVER = SALES / TOTAL ASSETS
3. EQUITY MULTIPLIER:
Equity Multiplier Equity multiplier (EM) is a financial leverage ratio which measures the
amount of a firm’s assets that are financed by its shareholders by comparing total assets with
shareholder’s equity. It shows the percentage of assets that are financed by the owners. It is
an indicator of company risks to creditors. If the company relies too heavily on debt financing
than it will have high debt service costs and will have to raise more funds in order to pay its
obligations. The creditors and investors use equity multiplier to measure how leverage a
company is. The firm can increase its ROE by increasing its equity multiplier.
FORMULA:
EQUITY MULTIPLIERS = TOTAL ASSETS/ SHAREHOLDER’S EQUITY

DU-PONTS ROE FORMULA
There are a few changes in the calculation part when calculating ROE under the two
approaches. Basically slater pharmacy.com in this analysis, the three components discussed
above are taken into account for calculation the simple ROE helps in the understanding the
return generated by the company on its equity. But the reasons behind that is understood by
the Du-Pont analysis.
In simple ROE, we calculate
ROE = Net income /Total equity, but while calculating DU-Pont ROE, we include a few
more factors and calculated as it follows,
Du-Pont ROE = [net income / sales] × [net sales / total asserts] × [total assert /total
equity]
OR Profit margin × total assert turnover× equity multiplier
This helps in understanding the components is impacting ROE more
THREE STEP AND FIVE-STEP DU-PONT MODEL:
3 Step and 5 step DuPont Analysis
The 3 step have been discussed above, which is calculated as
ROE= (Net Income/ Sales) * (Net Sales/Total Assets) * (Total Assets/Total Equity)
OR (Profit Margin * Total) / (Asset Turnover * Equity Multiplier)
However, the 5 step DuPont analysis has two additional components;
ROE = (Net Income/ Pretax Income) * (Net Sales/Total Assets) * (Total
Assets/Total Equity) * (Pretax Income/ EBIT) * (EBIT/Sales)
OR ROE = Tax Burden * Asset Turnover * Equity Multiplier * Interest Burden *

Operating Margin

DuPont Analysis is equally useful when analyzing a debt free company. The above formula
remains the same, with just one exception- the financial leverage component is taken as 1 and
the rest remains the same. Therefore, the DuPont analysis can be performed on all kinds of
companies. It gives a broader view of the Return on Equity of the company. It highlights the
company’s strengths and pinpoints the area where there is a scope for improvement. Say if
the shareholders are dissatisfied with lower ROE, the company with the help of DuPont
Analysis formula can assess whether the lower ROE is due to low-profit margin, low asset
turnover or poor leverage.
Once the management of the company has found the weak area, it may take steps to correct
it. The lower ROE may not always be a concern for the company as it may also happen due to
normal business operations. For instance, the ROE may come down due to accelerated
depreciation in the initial years.
The DuPont equation can be further decomposed to have an even deeper insight where the
net profit margin is broken down into EBIT Margin, Tax Burden, and Interest Burden.
Return on Equity = EBIT Margin X Interest Burden X Tax Burden X Asset Turnover
Ratio X
Financial Leverage
ROE = (EBIT / Sales) x (EBT / EBIT) x (Net Income / EBT) x (Sales / Total Assets) x
(Total Assets / Total Equity)
ADVANTAGES AND DISADVANTAGES OF DU-PONT ANAYSIS
Advantages
❖ Safe handling by skilled technicians
❖ All work done at Du-Pont’s primary manufacturing facility
❖ Safe and legal disposal of contaminants
❖ Regenerated fluid equal to original finished product specs

❖ Du-Pont analysis is a potentially help full tool for analysis that investors can use to
make more informed choice their equity holdings.
❖ The Du-Pont analysis is the fuller picture of a company overall financial health and
performance that it provides compared to more limited equity valuation tools.
❖ It provided more accurate assessment of the significance of changes in a company’s

ROE by focusing on various means that a company has to increase the ROE figures.
❖ Du-Pont analysis helps investors pin point the source of increase or decrease the
equity returns. Du-Pont analysis is an excellent technique to determine the strengths and
weaknesses of a company. Each weak financial ratio used in the model can be decomposed to
get deeper insight into the source of weakness. When sources of weakness are identified,
management can take some action (e.g. improve expense control, asset management, or
marketing) to improve the return on equity ratio.
Disadvantages
❖Du-Pont model is that relies heavily on accounting data from a financial statement, some of
which can be manipulated by companies so they may not be accurate.
❖It is very expensive in nature
❖Du-Pont analysis is that it uses accounting data disclosed in financial statements. which can
be manipulated by management to side some weakness thus to get correct results, accurate
accounting data must be inputted
❖Inherent to all financial ratio analysis system. It works best to compare companies of the
same size working in the same industry
❖Does not include the cost of capital.
❖The biggest drawback of the of the Du-Pont analysis is that while expansive it still relies on
accounting equitation and data that can be manipulated. Plus, even with its
comprehensiveness, the Du-Pont analysis lacks context as to why the individual ratios are
high or low, or even whether they should be considered high or low at all.This analysis uses

accounting data from the financial statement in its analysis which can be manipulated by the
management to hide discrepancies.
PRINCIPLES OF DU-PONT ANALYSIS
Return on assets, net profit margin, and total assets turnover are among the most commonly
used ratios in the firm’s earning ability estimation process. Separately these ratios measure
firm’s profitability and activity from different views. The DuPont company was the first to
break the calculation of the return on assets ratio in two separate parts: calculation of the net
profit margin and the total asset turnover. Doing this they developed their own formula,
which demonstrated the correlation between these three ratios. This formula looks as follows:
Net Income Before No Controlling Interest and Nonrecurring Items ÷ Average Total
Assets = Net Income Before No Controlling Interest and Nonrecurring Items ÷ Net Sales
× Net Sales ÷ Average Total Assets
The main goal of such decomposition is to reveal the basic factors of efficiency. For example,
slow asset turnover may witness the influence of firm’s bad asset management on the total
return on assets, and thus notify the company’s management to make some decisions on
improvement. In other words, DuPont return on assets can be described with the following
formula:
Return on Assets (ROA) = Net Income ÷ Sales × Sales ÷ Total Assets
FORMULA FOR DU-PONT MODEL
As we read above that DuPont Model overcomes the drawbacks of ROE. Therefore, let us
arrive at the formula for DuPont model.
Equation 1
ROE = Net Income / Average Equity Shareholders
Equation 2
On multiplying and dividing the equation 1 with net sales and average total assets
ROE = Net Income / Average Equity Shareholders x Net Sales / Net Sales x Average
Total Assets / Average Total Assets
Equation 3

(On multiplying the equation 1 and 2, we get)
ROE = Net Income / Net Sales X Net Sales / Average Total Assets X Average Total
Assets / Average Equity Shareholders
 Profit margin is also known as net profit margin. The net profit less preference
dividend must be used for calculation.
 Average total assets are the total of the assets at the beginning and at the end of the
period, divided by 2.
 The shareholder’s equity and total asset value can be found in the balance sheet. The
net sales and net income are available in the income statement.
The above formula can be broken down into a simpler form. Let us understand the
interpretation of DuPont Model formula.
 Operational efficiency measures the profit margin. The formula is = Net Income /
Sales
 Asset turnover measures the asset utilization. The formula is = Net Sales / Assets
 Equity multiplier measures the financial leverage. The formula is = Assets /

Shareholders Equity
On the basis of the above three points of interpretation, the DuPont Model calculates the
performance of a company. In addition, the DuPont analysis suggests that how a company
can raise its return on equity with efficient use of assets or increasing the turnover of the
company or by maintaining a higher profit margin.
USE OF DU-PONT ANALYSIS
The DuPont analysis is useful for making the right investment decisions. It helps in
understanding the position of a company in a better way. Like for example, if the company is
earning good profits due to the high margin on sales or efficient utilization of assets, the
operational efficiency or asset turnover ratio shall improve. This means that the company is
performing well and the investors can invest in such company. While if the financial leverage
increases leading to higher return on equity suggests that increase in profits is not due to good
strategy but due to financial strategy. Hence, it is a risky investment.
Example of DuPont Analysis

Suppose there are two companies and we have to find out which company presents a better
investment opportunity?
Ratio Company X Company Y
1.Operating Profit Margin

0 .40 0.24
Ratio
2.Asset Turnover Ratio 0.20 0.20
3.Financial Leverage 4 6.66
ROE (1*2*3) .32 .32
In the above case, both the companies are having Return on Equity as .32. Therefore, this
may lead to the conclusion in investor’s mind that both the companies are same in terms of
investment. However, this is not the case. The operating margin on company X is better in
comparison to company Y. Therefore, investment in company X shall be much safer.
DUPONT ANALYSIS CHART

RETURNS ON EQUITY (ROE)
Return on equity (ROE) measures the rate of return on the ownership interest or shareholders’
equity of the common stock owners. It is a measure of a company’s efficiency at generating
profits using the shareholders stake of equity in the business.
In other words, return on equity is an indication of how well a company uses investment
funds to generate earnings growth. It is also commonly used as a target for executive
compensation, since ratios such as ROE tends to give management an incentive to perform
better. Return on equity between 15% and 20% are generally considered to be acceptable.
FORMULA:
Return on equity is equal to net income, after preferred stock dividends but before common
stock dividends, divided by total shareholder equity and excluding preferred shares.
ROE = NET INCOME (AFTER TAX)/SHAREHOLDER EQUITY
Expressed as a percentage, return on equity is best used to compare companies in the same
industry. The decomposition of return on equity into its various factors presents various
factors presents various ratios useful to companies in fundamental analysis.
ROE = NET PROFIT /EQUITY = NET PROFIT/PRETAX PROFIT × PRETAX

PROFIT/ EBIT × EBIT/ SALES × SALES/ ASSETS × ASSETS/ EQUITY
The practice of decomposing return on equity is sometimes referred to as the “Du-Pont

System”.
POTENTIAL OF ROE
Just because a high return on equity is calculated does not mean that a company will see
immediate benefits. Stock prices are most strongly determined by earnings per share (EPS) as

opposed to return on equity. Earnings per each outstanding share of a company’s stock. EPS
is equal to profit divided by the weighted average of common shares.
Earnings Per Share = profit/ weighted average common shares
The true benefit of a high return on equity comes from a company’s earnings being
reinvested into the business or distributed as a divided. In fact, return on equity is presumably
irrelevant if earnings are not reinvested or distributed.
The ROE is useful for comparing the profitability of a company to that of other firms in the
same industry.There are several variations on the formula that investors may use:
● Investors wishing to see the return on common equity may modify the formula above by
subtracting preferred dividends from net income and subtracting preferred equity, giving the
followings:
Return on common equity (ROCE) = Preferred dividends/ common equity
● Return on equity may also be calculated by dividing net income by average shareholders’
equity. Average shareholders’ equity is calculated by adding the shareholder’s equity at the
beginning of a period to the shareholder’s equity at periods to the shareholder’s equity at
periods end and dividing the result by two.
● Investor may also calculate the change in ROE for a period by first using the shareholder’s
equity figures from the beginning ROE. Then the end-of-period shareholder’s equity can be
used as the denominator the ending ROE. Calculating both beginning and ending ROEs
allows an investor to determine the change in profitability over the period.
RETURN ON ASSETS (ROA)
Return on assets is an indicator of how profitability a company is relative to its total assets.
ROA gives an idea as to how efficient management is at using its assets to generate earning.
Calculated by dividing a company’s annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as “return on investment”.
The formula for return on assets is:
NET INCOME / TOTAL ASSET

ROA tells you what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. This is why
when using ROA as a comparative measure, it is best to compare measures, it is best to
compare it against a company’s previous ROA number or the ROA of a similar company.
The assets of the company are comprised of both debt and equity. Both of these type of
financing is used to fund the operations of the company. The ROA figure gives investors an
idea of how effectively the company is converting the money it has to invest into net income.
The higher the ROE number, the better, because the company is earning more money on less
investment.
For Example:
If one company has a net income of $1 million and total assets of $5 million, its ROA is 20%
however, if another company earns the same amount but has total assets of $10 million, it has
an ROA of 10% based on this example the first company is better at converting its investment
into profit. When you really think about it managements most important job is to make wise
choices in allocating its resources. Anybody can make a profit by throwing a ton of money at
a problem, but very few managers good at making large profit with low investment.
RETUEN ON SALES (ROS):
Return on sales is a ratio used to evaluate a company’s operational efficiency. This measure
provide insight into how much profit is being produced per dollar of sales. An increasing
ROS indicates that a company is growing more efficiency, while a decreasing ROS could
signal impending financial troubles. ROS is very closely related to a firms operating profit
margin
ROS=OPERATING PROFIT/NET SALES
When calculating return on sales, investors might notice that some companies report net sales
while others report revenue. Net sales is total revenue minus the credits or refunds paid to
customers for merchandise returns. Net sales will likely be listed for companies in the retail
industry, while others will list revenue. Below are the steps to calculate return on sales.
1. Locate net sales on the income statement, but it can also be listed as revenue.

2. Locate operating profit on the income statement. Be sure not to include non-operating
activities and expenses, such as taxes and interest expenses.
3. Divide operating profit by net sales.
Return on sales is a financial ratio that calculates how efficiently a company is generating
profits from its top-line revenue. It measures the performance of a company by analyzing the
percentage of total revenue that is converted into operating profits.
The calculation shows how effectively a company is producing its core products and services
and how its management runs the business. Therefore, ROS is used as an indicator of both
efficiency and profitability. Investors, creditors, and other debt holders rely on this efficiency
ratio because it accurately communicates the percentage of operating cash a company makes
on its revenue and provides insight into potential dividends, reinvestment potential, and the
company's ability to repay debt.
ROS is used to compare current period calculations with calculations from previous periods.
This allows a company to conduct trend analyses and compare internal efficiency
performance over time. It is also useful to compare one company's ROS percentage with that
of a competing company, regardless of scale.
The comparison makes it easier to assess the performance of a small company in relation to a
Fortune 500 company. However, ROS should only be used to compare companies within the
same industry as they vary greatly across industries. A grocery chain, for example, has lower
margins and therefore a lower ROS compared to a technology company.
Return on sales and operating profit margin are often used to describe a similar financial
ratio. The main difference between each usage lies in the way their respective formulas are
derived. The standard way of writing the formula for operating margin is operating income
divided by net sales. Return on sales is extremely similar except the numerator is usually
written as earnings before interest and taxes (EBIT) while the denominator is still net sales.
Ratio Analysis
A ratio is an arithmetical expression of the relationship of one number to another. When the ratios
are calculated on the basis of accounting information then they are called as accounting ratios. An
arithmetical relationship between the two accounting variables is known as accounting ratios.
Classification or Types of Ratios:

There are four main types of ratios which can be further classified. The detailed
classification of ratios used in this study has been discussed as follows:
1) Liquidity Ratios
2) Solvency Ratios
3) Profitability Ratio
1) Liquidity Ratios:
Liquidity refers to the ability of a concern to meet its current obligations as and when
these become due (Gupta & Sharma, 2014). The liquidity ratios analyze the ability of
a company to pay off both its current liabilities as they become due as well as their
long term liabilities as they become current. The liquidity ratios show the cash levels
of a company and the ability to turn other assets into cash to pay off liabilities and
other current obligations. The liquidity of a company not only shows that how much
cash a business has, in fact, it shows how easy it will be for a company to raise
enough cash or convert assets into cash. The liquidity has two dimensions i.e.
quantitative and qualitative aspects. The quantitative aspect includes quantum,
structure and utilization of liquid assets whereas in qualitative aspect, the ability to
meet its Types of Ratios Liquidity Ratios Solvency Ratios Activity Ratios
Profitability Ratios 52 all present and potential demands on cash from any source in a
way that the cost gets minimizes and the value of the firm gets maximized. The excess
liquidity reflects lower profitability, deterioration in managerial efficiency, increased
speculation and unjustified expansion, extension of too liberal credit and dividend
policies whereas too little liquidity leads to frustration of business objections, reduced
rate of return, business opportunity missed, and weakening of morale. The important
ratios to measure the liquidity position of the firm are:
Classification of Liquidity Ratios
1) Current Ratio
2) Quick Ratio
3) Absolute Ratio
4) Net Working Capital Ratio
 Current Ratio or Working Capital Ratio

The current ratio is a measure of a company’s ability to pay off the obligations within the
next twelve months. This ratio is used by creditors to evaluate whether a company can be
offered short term debts. It also provides information about the company’s operating cycle. It
is also popularly known as Working capital ratio. It is obtained by dividing the current assets
with current liabilities.
Current ratio is calculated as follows:
Current ratio = Current Assets / Current Liabilities
 Quick Ratio or Acid Test Ratio
Quick ratio is also known as Acid test ratio is used to determine whether a company or a
business has enough liquid assets which are able to be instantly converted into cash to meet
short term dues. It is calculated by dividing the liquid current assets by the current liabilities
It is represented as
Quick Ratio = (Cash + Marketable securities + Accounts receivable) / Current liabilities
 Cash Ratio or Absolute Liquidity Ratio
Cash ratio is a measure of a company’s liquidity in which it is measured whether the

company has the ability to clear off debts only using the liquid assets (cash and cash
equivalents such as marketable securities). It is used by creditors for determining the relative
ease with which a company can clear short term liabilities. It is calculated by dividing the
cash and cash equivalents by current liabilities.
Cash ratio = Cash and equivalent / Current liabilities
 Net Working Capital Ratio
The net working capital ratio is used to determine whether a company has sufficient cash or
funds to continue its operations. It is calculated by subtracting the current liabilities from the
current assets.
Net Working Capital Ratio = Current Assets – Current Liabilities
Importance of Liquidity Ratio
Here are some of the importance of liquidity ratios:

1. It helps understand the availability of cash in a company which determines the short
term financial position of the company. A higher number is indicative of a sound
financial position, while lower numbers show signs of financial distress.
2. It also shows how efficiently the company is able to convert inventories into cash. It
determines the way a company operates in the market.
3. It helps in organising the company’s working capital requirements by studying the
levels of cash or liquid assets available at a certain time.
2) Solvency Ratios:
Solvency refers to the ability to meet its long term obligations. It shows a company‟s
ability to make payment and pay off its long term obligations to creditors, banks and
bondholders. There are many people who are confused about solvency ratios and
liquidity ratios. Although both the ratios measure the ability of a company to pay off
its obligations solvency ratios focuses on long term obligations whereas liquidity
ratios focus on short term obligations. The long term obligations of a firm are
debenture holders, financial institution providing long term loans, and long term
creditors selling goods on instalment basis. The long term creditors of a firm are
interested in knowing the firm ability to pay regular interest on long term borrowings,
repayment of the principal amount at the maturity, and the security of their loans. The
long term solvency ratios show a firm ability to meet the fixed interest and costs and
repayment schedule associated with its long term borrowings. These ratios are also
called leverage ratios which measure the company’s ability to sustain operation
indefinitely by comparing debt level with equity, assets, and earning. The important
ratios of measuring solvency position of the firm are:
Classification of solvency ratio:
1. Debt to equity ratio
2. Debt Ratio
3. Proprietary Ratio or Equity Ratio
4. Interest Coverage Ratio
 Debt to equity ratio

Debt to equity is one of the most used debt solvency ratios. It is also represented as
D/E ratio. Debt to equity ratio is calculated by dividing a company’s total liabilities

with the shareholder’s equity. These values are obtained from the balance sheet of the
company’s financial statements.
It is an important metric which is used to evaluate a company’s financial leverage.
This ratio helps understand if the shareholder’s equity has the ability to cover all the
debts in case business is experiencing a rough time.
Debt to equity ratio = Long term debt / shareholder’s funds
Or Debt to equity ratio = total liabilities / shareholders’ equity
A high debt-to-equity ratio is associated with a higher risk for the business as it
indicates that the company is using debt for fuelling its growth. It also indicates lower
solvency of the business.
 Debt Ratio
Debt ratio is a financial ratio that is used in measuring a company’s financial
leverage. It is calculated by taking the total liabilities and dividing it by total capital.
If the debt ratio is higher, it represents the company is riskier.
The long-term debts include bank loans, bonds payable, notes payable etc.
Debt ratio is represented as
Debt Ratio = Long Term Debt / Capital or Debt Ratio = Long Term Debt / Net Assets
Low debt to capital ratio is indicative of a business that is stable while a higher ratio
casts doubt about a firm’s long-term stability. Trading on equity is possible with a
higher ratio of debt to capital which helps generate more income for the shareholders
of the company.
 Proprietary Ratio or Equity Ratio
Proprietary ratios are also known as equity ratio. It establishes a relationship between
the proprietor’s funds and the net assets or capital.
It is expressed as
Equity Ratio = Shareholder’s funds / Capital or Shareholder’s funds / Total Assets
 Interest Coverage Ratio

The interest coverage ratio is used to determine whether the company is able to pay
interest on the outstanding debt obligations. It is calculated by dividing company’s
EBIT (Earnings before interest and taxes) with the interest payment due on debts for
the accounting period.

Interest coverage ratio = EBIT / interest on long term debt

Where EBIT = Earnings before interest and taxes or Net Profit before interest and tax.
A higher coverage ratio is better for the solvency of the business while a lower
coverage ratio indicates debt burden on the business.
3) Profitability Ratios
Profitability ratios help in assessing the adequacy of profits earned by the company
and also to discover whether profitability is increasing or declining. It compares
income statement, account and categories to show firm’s ability to generate profits
from its operation. It focuses on firm’s returns on investment in inventory and other
assets. Profitability ratios show how well a firm can achieve profits from their
operations. The profitability of a company helps in taking decisions and in making
policies. It shows the combined effect of liquidity, debt management, and assets
management on operating results. It can be measured through sales, capital employed,
total assets employed, shareholder’s fund etc. The important profitability ratios are:
Classifications of Profitability Ratio
1. Gross Profit Ratio

2. Operating Ratio
3. Operating Profit Ratio
4. Net Profit Ratio
5. Return on Investment (ROI)
6. Return on Net Worth
7. Earnings per share
8. Book Value per share
9. Dividend Pay-out Ratio
10. Price Earnings Ratio
 Gross Profit Ratio
Gross Profit Ratio is a profitability ratio that measures the relationship between the gross
profit and net sales revenue. When it is expressed as a percentage, it is also known as the
Gross Profit Margin.
Formula for Gross Profit ratio is

Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
A fluctuating gross profit ratio is indicative of inferior product or management practices.
 Operating Ratio
Operating ratio is calculated to determine the cost of operation in relation to the revenue
earned from the operations.
The formula for operating ratio is as follows
Operating Ratio = (Cost of Revenue from Operations + Operating Expenses)/
Net Revenue from Operations ×100
 Operating Profit Ratio
Operating profit ratio is a type of profitability ratio that is used for determining the operating
profit and net revenue generated from the operations. It is expressed as a percentage.
The formula for calculating operating profit ratio is:
Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100
Or Operating Profit Ratio = 100 – Operating ratio
 Net Profit Ratio
Net profit ratio is an important profitability ratio that shows the relationship between net sales
and net profit after tax. When expressed as percentage, it is known as net profit margin.
Formula for net profit ratio is
Net Profit Ratio = Net Profit after tax ÷ Net sales
Or Net Profit Ratio = Net profit/Revenue from Operations × 100
It helps investors in determining whether the company’s management is able to generate

profit from the sales and how well the operating costs and costs related to overhead are
contained.
 Return on Capital Employed (ROCE) or Return on Investment (ROI)

Return on capital employed (ROCE) or Return on Investment is a profitability ratio that

measures how well a company is able to generate profits from its capital. It is an important
ratio that is mostly used by investors while screening for companies to invest.
The formula for calculating Return on Capital Employed is:
ROCE or ROI = EBIT ÷ Capital Employed × 100
Where EBIT = Earnings before interest and taxes or Profit before interest and taxes
Capital Employed = Total Assets – Current Liabilities
 Return on Net Worth
This is also known as Return on Shareholders’ funds and is used for determining whether the
investment done by the shareholders are able to generate profitable returns or not. It should
always be higher than the return on investment which otherwise would indicate that the
company funds are not utilised properly.
The formula for Return on Net Worth is calculated as:
Return on Shareholders’ Fund = Profit after Tax / Shareholders’ Funds × 100
Or Return on Net Worth = Profit after Tax / Shareholders’ Funds × 100
 Earnings Per Share (EPS)
Earnings per share or EPS is a profitability ratio that measures the extent to which a
company earns profit. It is calculated by dividing the net profit earned by outstanding shares.
The formula for calculating EPS is:
Earnings per share = Net Profit ÷ Total no. of shares outstanding
Having higher EPS translates into more profitability for the company.
 Book Value Per Share
Book value per share is referred to as the equity that is available to the the common
shareholders divided by the number of outstanding shares
Equity can be calculated by:

Equity funds = Shareholders funds – Preference share capital
The formula for calculating book value per share is:
Book Value per Share = (Shareholders’ Equity – Preferred Equity) / Total Outstanding
Common Shares.
 Dividend Pay-out Ratio
Dividend pay-out ratio calculates the amount paid to shareholders as dividends in relation to
the amount of net income generated by the business.
It can be calculated as follows:
Dividend Pay-out Ratio (DPR): Dividends per share / Earnings per share
 Price Earnings Ratio
P/E ratio is calculated as follows:
P/E Ratio = Market value per share ÷ Earnings per share
This is also known as P/E Ratio. It establishes a relationship between the stock (share) price
of a company and the earnings per share. It is very helpful for investors as they will be more
interested in knowing the profitability of the shares of the company and how much profitable
it will be in future. It shows if the company’s stock is overvalued or undervalued.

CHAPTER – 2
Research Design
RESEARCH DESIGN
TITLE OF THE STUDY

HINDUSTHAN UNILEVER LIMITED COMPANY”
REVIEW OF LITERATURE:
Literature review plays an important role in the overall research process. It starts off from the
beginning of the research process. Literature review continues till the research work is
concluded. A researcher is expected to consult the relevant literature using various sources in
order to identify the research gap in the subject area. The research gap exist in the review
shows the scope of the present study. The proposed study is expected to bridge some of the
gap in the existing literature review as far as possible. Power sector in India has undergone
significant progress after Independence and has been a subject of serious discussion and
debate both in academic and policy making process. Development of power sector is the key
to economic development. The power sector has been receiving adequate priority ever since
the process of planned development began in 1950. Though there are a large number of
studies available to review the power sector reform across various countries, it is useful to
consider studies which are highly relevant to the study area. Therefore, brief review of some
of the studies is undertaken in this chapter. This chapter is divided into two sections: general
review of literature and specific review of literature. In general review of literature, different
sectors of an economy have been covered by the researcher in relation to the financial
performances of the companies and in specific review of literature, researcher covers the
studies done on power sector.
Rakesh and Kulkarni (2012): analysed the Gujarat industry working capital evaluation on
selected five company for the eleven years and performed ratio analysis descriptive statistics
etc. The study concluded with all the company financial performance with sound effective as
well as current and quick ratio, current asset on total asset, sales turnover etc. are analyzed
with the help of hypothesis and used ANOVA.
NAGARJUANA DEGREE COLLEGE Page 25

Rakesh Kumar Manjhi and Kulkarni. S. R (2012): Working capital structure and liquidity
analysis; An empirical research on Gujarat Textile Manufacturing Industry, Indian Journal of
finance.
According to Rogova (2014): Du-Pont analysis effectively revealed factors of efficiency

which had in turn, impacted on the investment appeal of Russian oil-extracting companies. It
was found that a strong advantage of ROE was the possibility of its disaggregation into
different profitability ratio wit ROE indicating profitability and efficiency from the
shareholder’s point of view.
Khatik& Singh (2006):Khatik& sing conducted the two tier analysis of Bharat Heavy
Electrical Limited (BHEL) in India for the period 1993 -94 to2002 -03. They highlighted that
the two – tier analysis or DuPont chart is an important tool for internal and external
improvement in operations of the business activities. This tier has two tier i.e. assets turnover
and profit margin. The authors concluded that return on investment of BHEL satisfactory but
there is also slightly need to control an operating cost so that the profit can be increased.
Ramu&Satyanarayana (2009):Ramu&Satyanarayana conducted the Financial Performance

Analysis of HDFC using DuPont Analysis for the period 2008-09 to 2017 -18. In this paper
they used the DuPont system of financial analysis which is based on analysis of return on
equity. The authors were found that the financial performance of HDFC is relatively steady
and reflects minimum volatility in the return on equity.
Chandra (2005): In his book titled, Financial Management – Theory and practice, pointed
out that the DuPont company of the US pioneered a system of financial analysis which has
received widespread recognition and acceptance.
Pandey (2005): In his book titled, Financial Management, highlighted the DuPont Analysis
is the important tool of evaluating the firm’s earning power. For knowing the earning power
of firm Return on Capital Employed (ROCE) should be computed.
Soliman (2008): In his study on “The Use of Du Pont Analysis by Market Participants”,
explores the Du Pont components and contributes to literature along three dimensions. The
paper contributes to the financial statement analysis literature on stock market’s use of
accounting information by examining immediate and future equity return and to the literature
on analyst’s processing of accounting information by testing immediate and delayed response
of analyst’s.

Sheela and Dr.Karthikeyan (2012) in a study entitled “Financial Performance of

Pharmaceutical Industry in India using Du Pont Analysis” analysed the financial performance
of Pharmaceutical Industry taking top three companies i.e. Cipla, Dr.Reddy‟s Laboratories,
and Ranbaxy for a period of ten years from 2003 to 2012. The researcher used ROE and ROA
ratios by applying Du Pont analysis. ROE is a basic 73 test which represented how effectively
a company’s management uses investor’s money and ROA offers a different take on
management effectiveness and reveals how much profit a company earns for every dollar of
its assets. The researcher concluded that in order to get the common basis of comparison
between several companies and to compose ranks the relative sizes for measuring efficiency
are necessary when calculating the ratios.
Milan B. Undavia (2016) He stated in his paper an alternative measure of financial

performance in an investment centre is segment Residual Income or Economic Value Added.
Economic Value Added was developed to promote value-maximizing behaviour in corporate
managers. It is a single, value-based measure that was intended to evaluate business
strategies, capital projects and to maximize long-term shareholder’s wealth. EVA is a better
system, than ROI, to encourage growth in new products, new manufacturing facilities. EVA
measurement also requires a company to be more careful about resource mobilization,
resource allocation and investment decision. It effectively measures the productivity of all
factors of all production.
Hisami & Faith, (2016) in his paper he stated that the traditional as well as value-based are
the two main classes of performance appraisal indexes of companies inside capital market.
Under traditional appraisal indexes like revenues, dividend per share (DPS), return on equity
(ROI), return on assets (ROA), cash flow (CFs) etc. of the investment in capital market were
common over a long time period until value-based indexes were proposed which leads to
company’s performance appraisal. In traditional approach performance value is determined
by only accounting profit which seems not a favourable method on account as it ignores the
charges of securing investment capital which are main resources of organizations. Economic
value added index is just about the newest value-based indexes. According to this index
value, the company depends on return asplied capital charges. Therefore, the difference
among economic value added and traditional indexes is its attempt of this method to consider
all financing costs.

Collier, McGowan and Muhammad, 2006ROA impacts both profitability and efficiency,
operating decisions of a firm in terms of planning and control will, thus, focus on increasing
ROA, but the first modification of the DuPont model shifted the focus from ROA to ROE,
incorporating debt or “leverage” as a third area of attention. This modification made the
DuPont model a powerful tool for strategic decision making within an organization to
increase ROE
Liesz and Maranville, 2008 he latest modification of the DuPont model incorporates a
combination of five ratios to determine ROE. With the focus of annual statements from a managerial
perspective being to assess a firm’s financial performance, the significance of operating decisions
(profitability and efficiency) and financing decisions (leverage) upon ROE continues to be important,
and recent evidence has shown that Investment Management and Financial Innovations, Volume 13,
Issue 2, 2016 30 this modified DuPont approach can be used to identify the causes of financial
problems within manufacturing companies
Blessing and Onoja (2015) agree that profitability, assets, liabilities and equities are
significant ways of evaluating performance reports of companies and for making investment
decisions. They note a general belief that published financial statements have failed in their
responsibility to provide credible information for investors and other users of financial
statements.
McGowan and Stambaugh, 2012The DuPont system of financial analysis is based on return
on equity, with the components of this ratio being the net profit margin, the total asset
turnover and the equity multiplier
Agala, Jadhav and Borhade, 2014Ratios are used to establish the relationship between two
variables and how they influence one another, and ratio analysis offers a means by which the
financial and operational ills of a business enterprise can be effectively diagnosed
Demmer (2015) notes that changes in profit margin provide incremental information
forpredicting changes in future return on assets, and Soliman (2008) cites DuPont
components as yielding important information about the operating characteristics of a firm.

STATEMENT OF PROBLEM:
Du-Pont analysis is a method of measuring company’s profitability. Du-Pont analysis is an

element which is often being applied to firm’s financial statements in order to measure its
profitability through Profitability ratios, ROA, ROE, ROI and Net Profit margin. Du-Pont
analysis is used to estimate the changes in profitability and measures the effect of company’s
decisions. The present study is an attempt to evaluate the effectiveness of Du-Pont analysis
on profitability at Hindustan Unilever Limited Company.
SCOPE OF THE STUDY:
Du-Pont analysis is used to evaluate the profitability using ROE and ROA. The Du-Pont
analysis is a framework for analysing the fundamental performance of a business and is used
in the present study to evaluate the operational efficiency of company’s profitability. The
study is proposed to use different drives of the ROE, ROA ratios to evaluate and measure the
effectiveness of profitability of HUL Company.
OBJECTIVES OF THE STUDY:
1) To study the ROA, ROE, ROI and Profitability ratios of Hindustan Unilever Limited.
2) To analyse the effectiveness of DU-PONT analysis on profitability of Hindustan
Unilever Limited.
3) To evaluate the overall effect of DU-PONT analysis on profitability, liquidity and
growth of the Hindustan Unilever Limited.
RESEARCH METHODOLOGY
Data will be collected for the research project in these two ways:
PRIMARY DATA
The data is collected and consulted from officials of HULfor the support of the study.
SECONDARY DATA
The information is also collected from various secondary sources like financial statement as
well as financial report of Hindustan unsilver limited company, website of the company etc.
Data about Du-Pont analysis will be collected through various books, journals, articles and
magazines will also be referred.

LIMITATIONS OF THE STUDY:
1. There is limited time for the study.
2. They would not provide in detail/in-depth information since companies are working
through online.
3.Lack of gathering required information to complete the project due to the quarantine in the
country.
CHAPTER SCHEME:
CHAPTER 1: INTRODUCTION
CHAPTER 2: RESEARCH DESIGN
CHAPTER 3: COMPANY PROFILE
CHAPTER4: DATA ANALYSIS AND INTERPRETATION
CHAPTER5: FINDINGS SUGGESTIONS AND CONCLUTION

CHAPTER – 3
Company Profile
COMPANY PROFILE
INTRODUCTION:
Hindustan Unilever Limited (HUL) is India's greatest Fast-Moving Consumer Goods

Company with a heritage of over 80 years in India. On some random day, the vast majority of
Indian family units utilize our items to feel better, look great and get increasingly out of life –
giving us a one of a kind chances to fabricate a more promising time to come. HUL attempts
to make a superior future consistently and enables individuals to feel better, look great and
get increasingly out of existence with brands and administrations that are beneficial for them
and useful for other people. With more than 35 brands traversing 20 particular classifications,
for example, cleansers, cleansers, shampoos, healthy skin, toothpastes, antiperspirants,
beautifying agents, tea, espresso, bundled sustenance’s, frozen yogurt, and water purifiers,
the Company is a piece of the regular day to day existence of a large number of shoppers
crosswise over India. Its portfolio incorporates driving family unit brands, for example, Lux,
Lifebuoy, Surf Excel, Rin, Wheel, Fair and Lovely, Pond's, Vaseline, Lakmé, Dove, Clinic
Plus, Sunsilk, Pepsodent, Closeup, Ax, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall's and
Pureit. The Company has about 18,000 employees and has a sales of INR 34619 crores
(financial year 2017-18). HUL is a subsidiary of Unilever, one of the world’s leading
suppliers of Food, Home Care, Personal Care and Refreshment products with sales in over
190 countries and an annual sales turnover of €53.7 billion in 2017. Unilever has over 67%
shareholding in HUL.

HISTORY:
In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap
bars, embossed with the words "Made in England by Lever Brothers". With it, began an era
of marketing branded Fast Moving Consumer Goods (FMCG). Soon after followed Lifebuoy
in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918
and the famous Dalda brand came to the market in 1937.
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing
Company, followed by Lever Brothers India Limited (1933) and United Traders Limited
(1935). These three companies merged to form HUL in November 1956; HUL offered 10%
of its equity to the Indian public, being the first among the foreign subsidiaries to do so.
The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company
had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was
formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition.
The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in
1972, and in 1977 Lipton Tea (India) Limited was incorporated.
Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold
through an international acquisition of Chesebrough Pond's USA in 1986.
Since the very early years, HUL has vigorously responded to the stimulus of economic
growth. The growth process has been accompanied by judicious diversification, always in
line with Indian opinions and aspirations.

The liberalisation of the Indian economy, started in 1991, clearly marked an inflexion in
HUL's and the Group's growth curve. Removal of the regulatory framework allowed the
company to explore every single product and opportunity segment, without any constraints
on production capacity.
Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the

most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills
Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL and yet
another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever
Limited, to market Lakme's market-leading cosmetics and other appropriate products of both
the companies. Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its
50% stake in the joint venture to the company.
HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994,
Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL
has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory
represents the largest manufacturing investment in the Himalayan kingdom. The UNL factory
manufactures HUL's products like Soaps, Detergents and Personal Products both for the
domestic market and exports to India.
The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods
and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods,
with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the
UB Group and the Dollops Icecream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation
companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India
and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling
greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed
BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company
entered into a strategic alliance with the KwalityIcecream Group families and in 1995 the
Milkfood 100% Icecream marketing and distribution rights too were acquired.
Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998.
The two companies had significant overlaps in Personal Products, Speciality Chemicals and

Exports businesses, besides a common distribution system since 1993 for Personal Products.
The two also had a common management pool and a technology base. The amalgamation was
done to ensure for the Group, benefits from scale economies both in domestic and export
markets and enable it to fund investments required for aggressively building new categories.
In January 2000, in a historic step, the government decided to award 74 per cent equity in
Modern Foods to HUL, thereby beginning the divestment of government equity in public
sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic
extension of the company's wheat business. In 2002, HUL acquired the government's
remaining stake in Modern Foods.
In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the
Amalgam Group of Companies, a leader in value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti
was started in 2001. It is a rural initiative that targets small villages populated by less than
5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it
benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over
100,000 villages across 15 states and reaching to over 3 million homes.
In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush
product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home
business was launched in 2003 and this was followed by the launch of ‘Pureit’ water purifier
in 2004.
In 2007, the Company name was formally changed to Hindustan Unilever Limited after
receiving the approval of shareholders during the 74th AGM on 18 May 2007. Brooke Bond
and Surf Excel breached the Rs 1,000 crore sales mark the same year followed by Wheel
which crossed the Rs2,000 crore sales milestone in 2008.
On 17th October 2008, HUL completed 75 years of corporate existence in India. In January
2010, the HUL head office shifted from the landmark Lever House, at Backbay Reclamation,
Mumbai to the new campus in Andheri (E), Mumbai. On 15th November, 2010, the Unilever
Sustainable Living Plan was officially launched in India at New Delhi.

In March, 2012 HUL’s state of the art Learning Centre was inaugurated at the Hindustan
Unilever campus at Andheri, Mumbai. In April, 2012, the Customer Insight & Innovation
Centre (CIIC) was inaugurated at the Hindustan Unilever campus at Andheri, Mumbai
HUL completed 80 years of corporate existence in India on October 17th, 2013. In 2013,
HUL launched ‘Prabhat’ (Dawn) - a Unilever Sustainable Living Plan (USLP) linked
program to engage with and contribute to the development of local communities around its
manufacturing sites. Also, Unilever’s first aerosol plant in Asia was inaugurated
inKhamgaon, Maharashtra in 2013.
In 2014, The ‘Winning in Many Indians’ operating framework, piloted in 2013, launched
nationally. Sales offices expanded from four to seven with the launch of offices in Lucknow,
Indore and Bangalore in addition to the existing sales offices in Delhi, Kolkata, Mumbai and
Chennai. In 2015, HUL acquired Indulekha, a premium hair oil brand with strong credentials
around Ayurveda. In 2016, HUL unveiled ‘Suvidha’ a first-of-its-kind urban water, hygiene
and sanitation community centre in Azad Nagar, Ghatkopar, one of the largest slums in
Mumbai.
A new state-of-the-art manufacturing facility was commissioned in Doom Dooma Industrial

Estate, Assam on 11th March 2017. In 2018, HUL signed an agreement with Vijaykant Dairy
and Food Products Limited (VDFPL) and its group company to acquire its ice cream and
frozen desserts business consisting of its flagship brand ‘Adityaa Milk’ and front end
distribution network across geographies.
In 2020, HUL announced acquisition of VWash, the market leader in female intimate hygiene
category to enter into the currently underpenetrated and rapidly growing market segment.
In 2020, with the Merger of GSK Consumer Healthcare with Hindustan Unilever Limited,
Iconic health food drink brands – Horlicks and Boost enter the foods & refreshment portfolio
of HUL, making it the largest F&R business in India.

Headquarters:
Hindustan Unilever's corporate headquarters are located at Andheri, Mumbai. The campus is
spread over 12.5 acres of land and houses over 1,600 employees. Some of the facilities
available for the employees include a convenience store, a food court, an occupational health
center, a gym, a sports & recreation center and a day care center. The Campus is designed by
Mumbai-based architecture firm Kapadia Associates.
The campus received a certification from LEED (Leadership in Energy and Environmental
Design) Gold in the 'New Construction' category, by Indian Green Building Council (IGBC),
Hyderabad, under license from the United States Green Building Council (USGBC)
The company's previous headquarters was located at Back Bay Reclamation, Mumbai at the
Lever House, where it was housed for more than 46 years.
Research facilities:
The Hindustan Unilever Research Centre (HURC) was set up in 1966 in Mumbai, and
Unilever Research India in Bangalore in 1997. In 2006, the company's research facilities
were brought together at a single site in Bangalore.

Sustainable living:
Unilever launched Sustainable Living Plan on 15 November 2010 in London, Rotterdam,

New York and New Delhi simultaneously.
Brands and products:
HUL is the market leader in Indian consumer products with presence in over 20 consumer
categories such as soaps, tea, detergents and shampoos amongst others with over 700 million
Indian consumers using its products. Sixteen of HUL's brands featured in the ACNielsen
Brand Equity list of 100 Most Trusted Brands Annual Survey (2014), carried out by Brand
Equity, a supplement of The Economic Times.
Food Homecare
 Annapurna salt and Atta (formerly  Active Wheel detergent

known as Kissan Annapurna)  Cif Cream Cleaner
 Bru coffee, Horlicks (Health Drink)  Comfort fabric softeners
 Brooke Bond (3 Roses, Taj Mahal,  Domex disinfectant/toilet cleaner
Taaza, Red Label) tea  Rin detergents and bleach
 Kissan squashes, ketchups, juices  Sunlight detergent and colour care
and jams ,Lipton ice tea  Surf Excel detergent and gentle
 Knorr soups & meal makers and wash
soupy noodles ,Magnum (ice cream)  Vim dishwash,Magic – Water Saver
 Kwality Wall's frozen dessert
Personal care Water purifier
 Aviance Beauty Solutions  Pureit

 Axe deodorant and aftershaving
lotion and soap
 LEVER Ayush Therapy ayurvedic

health care and personal care

products
 International breeze,Brylcreem hair
cream and hair gel
 Clear anti-dandruff hair products
 Clinic Plus shampoo and oil
 Close Up toothpaste
Source:
Each of their divisions – Home Care, Beauty & Personal Care, Foods, and Refreshment –
include a portfolio of brands that serve consumers across the length and breadth of India.
With more than 44 brands across 14 distinct categories including Fabric Solutions, Home and
Hygiene, Life Essentials, Skin Cleansing, Skin Care, Hair Care, Colour Cosmetics, Oral
Care, Deodorants, Tea, Coffee, Ice Cream & Frozen Desserts, Foods, Health Food Drinks
(HFD), the Company is part of the daily life of millions of consumers.
The portfolio includes leading brands such as Surf excel, Rin, Wheel, Sunlight, Vim, Pureit,
Lux, Lifebuoy, Dove, Fair & Lovely, Pond’s, Vaseline, Clinic Plus, Sunsilk, Indulekha,
Lakmé, Pepsodent, Closeup, Axe, Brooke Bond, Lipton, BRU, Kwality Wall’s, Knorr and
Kissan.
Effective 1st April 2020, the Company, after the merger of the business of GlaxoSmithKline
Consumer Healthcare Limited (GSK CH), has also acquired iconic brands like Horlicks and
Boost, amongst others. Their products are available in over eight million outlets across India.
Brands of HUL

CHAIRMAN SPEAKERS:
The year 2020-21 has been challenging for each one of us. The Covid-19 pandemic has had a
significant impact on lives, livelihoods, and the business. Operational challenges mounted
due to restricted movement and disrupted supply lines during the first few months of the
pandemic. As the second wave of the pandemic unfolds with predictions of a third wave in
the offing, our focus continues to be on our people’s health & safety, ensuring uninterrupted
supplies of Covid relevant portfolio, meeting the demand arising out of evolving consumer
needs, caring for the communities in which we operate, and finally, protecting our business
model.
The relentless commitment and dedication of every member of the Hindustan Unilever family
helped the business overcome many challenges in the past year. As a result, we have been
able to bring down the curtains on the financial year 2020-21 with a robust set of numbers.
We reported a turnover of `45,311 crores growing by 18% and Domestic Consumer Growth*
was 6%. Profit after tax at `7,954 crores was up 18%. We managed Covid challenges well
and sustained strong cash generation. The Board of Directors has proposed a final dividend of
`17 per share, subject to approval of shareholders at the AGM. Together with interim
dividend of `14 per share, the total dividend for the financial year ending 31st March, 2021
amounts to `31 per share. During the year, special dividend of `9.5 per share was also paid. If
we add up, the total dividend payout during the year will be over `9,500 crores. Last year saw
significant change in what consumers buy and where they shop — from online shopping to a
rising concern about health, hygiene, sanitation, and nutrition. Our brands strived to meet
these changing needs by launching innovations, building awareness through communication,
shifting to newer ways of reaching consumers and connecting with communities through

purpose-led initiatives. In the pandemic, the humble bar of soap became the first line of
defense resulting in an unprecedented demand for Skin Cleansing and hand hygiene products.
To serve the people of our country, Lifebuoy launched 15 new product variations in the hand
hygiene portfolio within just 30 days. We completed the acquisition of female intimate
hygiene brand VWash that is off to a good start. This year, we launched our Positive Beauty
vision, to drive positive change for people and the planet through our brands. We took a
decisive step to embrace diversity and promote inclusion across our Beauty and Personal care
portfolio and renamed the iconic Fair & Lovely brand to Glow & Lovely. Dove furthered this
vision through its Stop theBeautyTest campaign and Clinic Plus, on Women’s Day, launched
its new campaign pledging to educate 1,00,000 women across our ecosystem to stand up
against domestic violence. As people continued to stay home, our Home Care portfolio had a
major role to play. We launched the Surf excel Active Hygiene and introduced the Lifebuoy
Laundry Sanitizer. We saw a significant rise in dishwasher sales in the country. Vim
launched a new ‘matic’ range for dishwasher users and also addressed the growing need for
hygiene with the launch of the anti-bacterial variant in bars and liquids.
SWOT ANALYSIS:
STRENGTHS:
1) Brand visibility – From soap to mineral water, HUL is shaping the life of 1.3
billion people daily. Being in consumer goods market with its 20 consumer categories such as

soap, tea, detergents, shampoo etc. & each having large assortments, helped HUL in
occupying the large shelf space of Grocery /departmental stores which itself explains the
acceptance/demand of their products in the market.
2) Market leader in consumer goods: According to Nielsen data 2 out of three Indian
consumers use HUL products. HUL used selective targeting strategy to emerge as a market
leader in the Indian market.
3) Innovative FMCG Company: Hindustan Unilever Research centre (HURC),Mumbai &

Unilever Research India, Bangalore ,both research facilities were bought together in a single
site in Bangalore in 2006.Employees in this facility continuously working &
developing innovations in products & manufacturing processes which is helping the HUL to
set it as front-runner in the consumer goods market.
4) Extensive & integrated distribution system: HUL’s brands are now household name
which is only possible due to its 4 tier distribution system namely
a) Direct Coverage through common stockist within a town of population under 50000
people.
b) Indirect coverage: Villages closer to larger urban markets have been targeted.
c) Streamline: Leveraging the rural wholesale market to reach markets inaccessible by road.
d) Project SHATKI AMMA: It targeted the very small villages (2000 population) & tapped
into pre-existing women’s SHG (self-help groups). Markets have been segmented based on
their accessibility & business potential.
5) High Brand awareness: By signing popular celebrities for the advertisements of their
products HUL has created positive word of mouth over the ages which helped them in social
acceptance of their products intelligently targeted & meant for different income groups.
6) Product line: It offers product categories namely oral care, personal care, household
surface, fabric care and pet nutrition etc. having deep assortments across the product
categories.

7) Financial position: Having more than 80 years of experience in the consumer goods
market & backed by Unilever who owns 67% controlling share in HUL, it is financially
strong.
8) Market share: Through high penetration in the market, HUL had managed to hold their
high market share in different product categories.
9) Share of Wallet: Whether one buys surf /wheel /Rin detergent it will go to HUL’s
pockets. HUL strategy to offer different products for different income groups (selective
targeting) has been successful in having share of wallet of a consumer.
WEAKNESSES:
1) Decreasing Market share: Competitors focusing on a particular product & eating up

HUL’s share, like Ghadi&Nirma detergent eating up HUL’s wheel detergent market share.
2) Large number of brands in different product categories: Sometimes having broad

brand portfolio can lead to confused positioning. Price positioning in some categories allows
for low price competition like AMUL captured Kwality’s market share.
OPPORTUNITIES:
1) Expanding market: By penetrating more in the rural markets through its project Shakti
AMMA and transition of unorganized business to organized one will lead to further
expansion of the consumer goods market.
2) Awareness in usage rate of consumer goods: People getting more aware and conscious
about the usage may be through advertising /word of mouth /doctor prescription ,is resulting
in increase in usage rate of the these products.
3) Increasing Income levels: Due to stable political scenario, improved literacy rate &
controlled inflation, disposable income of the people is increasing thereby resulting into
upsurge in demand & changing their lifestyle.

THREATS:
1) Competition in the market: With increasing number of local & national players it’s
becoming very hard for the companies to differentiate themselves from others. There is also
threat from counterfeit products destroying its brand image in the market.
2) Price of commodities: Increasing price of commodities will result in further increase in

the price. Further increase in price will result in decrease in sales, margins & brand switching.
3) Buyers power: With highly diversified consumer goods market where there are lots of
brands claiming different sorts of benefits, it’s very difficult for consumers to stick to a
particular brand & hence results into brand switching where consumer got power to select a
brand based on several factors like availability, reference group recommendation, preference
& price.
COMPITATORS OF HUL:
1. Marico
2. L'Oréal
3. Nirma Ltd
4. ITC Limited
5. Colgate-Palmolive
6. Procter and Gamble
7. Dabur India
Segmental Updates
Home Care division sustained its robust volume-driven and profitable growth during the year.
Fabric Solutions business delivered a strong performance with a focus on premiumization

with Surf excel and Rin liquids. To strengthen the premium portfolio further, it launched
‘Love & Care’, an expert Fabric Solutions brand.

They drove market development across Home and Hygiene business with Vim and Domex.
While Vim continued to upgrade existing bar consumers to liquid and drive adoption of bars
in rural India, Domex launched a powder format in select geographies to address the need for
affordable and efficacious sanitation solutions.
This year, they also launched Pureit Copper+, an innovation inspired by the age-old tradition
of storing water in copper vessels, which adds the goodness of copper to RO purified water.
The Foods & Refreshment division witnessed competitive and profitable growth across
categories.
The Jams and Ketchup business continued to deliver good growth and in Spreads, they
launched the iconic Hellmann’s Mayonnaise in Kolkata this year. With on-trend, superior
product offering, Tea continued to deliver robust, volume-led growth.
The Ice Cream and Frozen Desserts business delivered strong growth on the back of
innovations that catered to both global and local palates. For instance, it launched the
Cornetto Brownie Silk, Magnum Hazelnut, a Sundae Cup alongside flavors crafted to address
local tastes such as Aamras, DryfruitRabriKulfi, and Tender Coconut tub.
They successfully completed the integration of the GlaxoSmithKline Consumer Healthcare

Limited (GSK CH) business into HUL. The merger, one of the biggest in the Indian FMCG
space was completed virtually while the entire nation was under lockdown.
The merger brings to HUL household brands such as Horlicks and Boost that are deeply in
sync with their beliefs on purpose and just like their Water, Sanitation, and Hygiene (WASH)
agenda, in clear alignment with both the Sustainable Development Goals and the
Government’s thrust on ‘PoshanAbhiyan’ alongside ‘Swachh Bharat’. The merger between
the two companies presents them with an opportunity to combine their respective strengths
and work towards further strengthening their position in Foods, Nutrition, and Refreshment.
Awards:
The Institute of Competitiveness, India, has recognized Hindustan Unilever Limited's Project
Shakti for ‘Creating Shared Value’ and bestowed upon the company the Porter Prize for
2014. It ranked number one on the Forbes list of ‘Most Innovative Companies’ across the
globe for 2014 and was ranked number three on Fortune India's list of India's most admired

companies in a list compiled with the help of a global management consultancy Hay Group.
It received an award from Dun & Bradstreet Corporate Awards in 2014. and was Client of the
Year at Effie’s 2013 – 2014. It also received an award as a 'Conscious Capitalist of the Year'
at the 2013 Forbes India Leadership Awards. HUL won 12 awards overall with 4 Golds, 4
Silvers and 4 Bronzes at the 2013 Emvies Awards. In 2013, HUL ranked number two on the
on Fortune India's 2013 '50 Most Admired Companies list'. and was declared the fourth most
Respected Company in India in a survey conducted by Business World in 2013. As per a
2015 Nielsen Campus Track-business school survey, Hindustan Unilever emerged among the
top employers of choice for B-school students graduating that year. It has often been called a
'Dream Employer' for application by B-School students in India.
In 2012, HUL was recognized as one of the world's most innovative companies by Forbes.
With a ranking of number 6, it was the highest ranked FMCG company. Hindustan Unilever
Limited (HUL) won the first prize at FICCI Water Awards 2012 under the category of
'community initiatives by industry' for Gundar Basin Project, a water conservationist
initiative. Hindustan Unilever Limited won 13 awards at the Emvies 2012 Media Awards
organized by the Advertising Club Bombay in September 2012. The company received four
awards at the Spikes Asia Awards 2012, held in September. The awards included one Grand
Prix one Gold Award and two Silver Awards.
HUL's Chhindwara Unit won the National Safety Award for outstanding performance in
Industrial Safety. These awards were instituted by the Union Ministry of Labor and
Employment in 1965.HUL was one of the eight Indian companies to be featured on the
Forbes list of World's Most Reputed companies in 2007.
In July 2012 Hindustan Unilever Limited won the Golden Peacock Occupational Health and
Safety Award for 2012 in the FMCG category for its safety and health initiatives and
continuous improvement on key metrics. Hindustan Unilever Limited is rated as best 3Ci
Company which is registered with National Industrial Classification Code 15140.
Pond's Talcum Powder's packaging innovation has secured a Silver Award at the prestigious
24th DuPont Global Packaging Award, in May 2012. The brand was recognized for cost and
waste reduction. In May 2012, HUL & Star Bazaar received the silver award for 'Creating
Consumer Value through Joint Promotional and Event Forecasting' at the 13th ECR Efficient
Consumer Response Asia Pacific Conference.

In 2011, HUL was named the most innovative company in India by Forbes and ranked 6th in
the top 10 list of most innovative companies in the world. Hindustan Unilever Ltd received
the National Award for Excellence in Corporate Governance 2011 of the Institute of
Company Secretaries of India (ICSI) for excellence in corporate governance.
In 2012, Hindustan Unilever emerged as the No. 1 employer of choice for B-School students
who will graduate in 2012. In addition, HUL also retained the 'Dream Employer' status for
the 3rd year running.
Hindustan Unilever ranked No. 2 in Fortune India's Most Admired Companies list, which
was released by Fortune India in partnership with the Hay Group. The company received the
highest scores for endurance and financial soundness.
HUL was ranked 47th in The Brand Trust Report 2014 published by Trust Research
Advisory. 36 HUL brands also featured in the list including Lux, Dove, Lipton, Vim, Kissan,
Bru, Rexona, Close Up, Clinic Plus, Pond's, Knorr, and Pepsodent among others.
HUL emerged as the top 'Dream Employer' as well as the top company considered for
application in the annual B-School Survey conducted by Nielsen in November 2010. This
was the second successive year that HUL has been rated as the top 'Dream Employer' in
India. HUL has also emerged as the top employer of choice among the top six Indian
Institutes of Management (IIMA, B, C, L, K and I).
HUL won three awards at the 'CNBC Awaaz Storyboard Consumer Awards' in 2011 – Most
Recommended FMCG Company of the Year; Most Consumer Conscious Company of the
Year and Digital Marketer of the Year. The company was felicitated in April 2010 for
receiving the highest number of patents in the year 2009 at Annual Intellectual Property
Awards 2010.
In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25
years by Business world, one of India's leading business magazines. The rating was based on
a compilation of the magazine's annual survey of India's most reputed companies over the
past 25 years. HUL is one of the country's largest exporters; it has been recognized as a
Golden Super Star Trading House by the Government of India.
Innovation:

In their scientific innovation to meet consumer needs they will respect the concerns of their
consumer and of society. They will work on the basis of sound science applying rigorous
standards of product safety
CHALLENGES FOR HUL:
 Creating a different mind set

 Make something from waste
 Deal with a difficult visitor
 Helps to improve nation’s nutrition
 Turn a problem into solution
 Give life an extra flavor
 Consumer Behavior
 Changing habits
 Confused with competitor’s product
 Traditional habits
 Global Exposure
 Go future – Go faster
 Challenges conventional wisdom
STRATEGIES FOLLOWED BY HUL:
 Restructured in two divisions

 Food
 Home \ Personal care products
 Improvement in portfolio products

 400 products selected

 Manufacturing reorganized in regional network
 IT systems reconfigured
 Change in job management structure
 Reduction in managerial job classes
 Develop deep level expertise
3.16Corporate Social Responsibility Policy
A. Context
Hindustan Unilever Limited (HUL) is committed to operate and grow its business in a
socially responsible way. Over the years we have strived to serve the communities through
various initiatives. In the last 10 years, through Unilever Sustainable Living Plan (USLP) we
have made a positive impact on the environment and the society in which we operate. The
multi-stakeholder model was at the heart of USLP. It has been game-changing for our
business and people. However, we need to do much more, considering the pressing
challenges facing the world such as climate change and inequality, businesses need to play a
significant role in addressing them.
We need to bridge the divide to a fairer, more socially inclusive world. A world where we all
live with, rather than at the expense of, nature and the environment.
B. Company’s objectives and philosophy:
This Corporate Social Responsibility (CSR) Policy of the Company, as recommended by the
Corporate Social Responsibility Committee (CSR Committee) and approved by the Board of
Directors (Board), outlines a clear agenda through which we will continue to contribute to the
communities directly. The objective of this policy set the direction for the CSR activities of
the Company and defines the governance and monitoring framework for ensuring the
effectiveness of the policy.
Our multi-stakeholder model is being embedded into the business completely, so the business
can continue to be a force for good. The Unilever Compass, our sustainable business strategy,
is set to help us deliver superior performance by being a purpose-led, future-fit business. It
will guide us drive sustainable and responsible growth in the years to come. Within this, there
is a comprehensive and ambitious set of commitments and actions to:

 Improve the health of the planet;

 Improve people’s health, confidence and wellbeing; and
 Contribute to a fairer, more socially inclusive world.
We have embraced Compass strategy (Link : https://www.unilever.com/planet-and-society/)
which contributes to the health of the planet and the society.
C. Regulatory framework:
The Companies Act, 2013 together with the rules notified thereunder (‘the Act’) and
Schedule VII to the Act provides a framework for companies to define the focus areas in the
CSR space. The law also guides companies to apply the scope as defined under Schedule VII
liberally. Further, the Act also provides instructions on agencies eligible for implementation
through which the Companies may spend its CSR expenditure. HUL’s CSR Policy, focus
areas and the implementing agencies shall therefore remain within the boundary set by the
law.
D. Focus Areas
The current CSR activities in which Company is engaged with, along with their execution
modalities and implementation schedules is appended below as Annexure A. Annexure A
provides details of the initiatives that are covered under activities listed in the Schedule VII
of the Companies Act, 2013 and are considered for the purpose of computing prescribed CSR
spends. These activities undertaken by the Company are not expected to lead to any
additional surplus beyond what would accrue to the Company in the course of normal
operations. The Company may take up other CSR activities as may be appropriate from time
to time, in accordance with the approval of the CSR Committee and the Board.
The Policy issued pursuant to the Corporate Social Responsibility Policy Rules, 2013 as
amended has been recommended by the CSR Committee of the Board and adopted by the
Board of Directors. It can be downloaded from our corporate website – www.hul.co.in.
E. Governance Mechanism:
We follow structured governance procedures to monitor CSR activities. Our CSR Policy is
governed by the Board of Directors of the Company. The Board has constituted a CSR

Committee of minimum three directors comprising an Independent Chair and a majority of

Independent Directors to monitor the Policy and the programmes from time to time.
I. Board of Directors
 The Board monitors and reviews the performance and impact of the CSR
programmes, provides input and course corrections if required and satisfies itself that
the CSR funds so disbursed are aligned to the CSR Policy of the Company and have
been utilized for the purposes and in the manner as approved by it.
 The CFO shall certify to the fact that CSR funds so disbursed have been utilised for
the purposes and in the manner approved by the Board.
II. CSR Committee of the Board of Directors
The CSR Committee provides oversight and guidance on CSR performance and monitors
compliance with the CSR Policy, commitments and the applicable CSR provisions. The role
& responsibilities of CSR Committee shall be as set out in the Act and the terms of reference
of CSR Committee.
F. CSR obligations, selection, implementation and monitoring of activities:

HUL’s CSR Policy is supported by the following principles:
1. We are committed to conducting our operations with integrity and respect, in the
interest of our stakeholders, and in line with our Code of Business Principles.
2. We believe growth and environmental sustainability need not be conflicting. Our
business model is designed to deliver sustainable growth. The inputs to the model are
our brands, our people and our operations. The outputs to the model are sustained
growth, lower environmental impact and positive social impact.
3. We collaborate and engage with different stakeholders including Governments,
NGOs, IGOs, Suppliers, Farmers, and Distributors to tackle the challenges faced by
the society.
I. CSR Obligations:

In accordance with Section 135(5) of the Companies Act, 2013 (the Act), HUL is committed
to spend 2% of its average net profits made during the three immediately preceding financial
years in some of the identified activities that are listed in Schedule VII (as amended) to the
Act. This will include the spends through activities undertaken by Hindustan Unilever
Foundation (HUF), our not-for-profit subsidiary Company, aimed at building capacities to
conserve water and to further community development initiatives. Such CSR expenditure
shall also include all direct and indirect expenditure incurred towards CSR programs as may
be admissible under the regulatory framework. The overall amount to be committed towards
CSR will be approved by the Board of Directors as a part of its Annual Action Plan. If HUL
spends any amount over and above such 2% of average net profits, the same is to be
considered as excess CSR expenditure which can be set-off in the immediate succeeding
three financial years’ subject to the conditions as prescribed under the Act.
In order to compute whether HUL has under spent or over spent, the project cost and
administrative overheads not exceeding 5% of the total CSR expenditure of the Company for
the financial year shall be considered.
II. Selection:
The CSR activities can be undertaken either directly or through an implementing agency. The
Implementing Agency should meet the statutory eligibility criteria laid down under the
Companies Act, 2013. Additionally, the Company shall conduct appropriate due diligence of
the implementation agency before associating the agency. Such due diligence shall inter alia
cover aspects of financial position of the agency, credibility, history and experience in the
relevant area, any potential conflict of interest and existing and past litigations.
III. Implementation and Monitoring:
The CSR activities undertaken by the Company either directly or through an implementing
agency shall be periodically monitored. While monitoring, the Company shall ensure the
Implementing Agency or the vendor, follow ethical practices and endeavour to ensure all
payments made to the Implementing Agency or the vendor to be milestone based. The
Monitoring process adopted by the Company may include obtaining of reports of different
kind, self-declaration, On-site visit, etc.The impact assessment shall be conducted for eligible
CSR projects or programs as mentioned under the Act.

IV. Annual Action Plan:
All the guiding principles as required to be followed for implementing and monitoring the
CSR Activities shall also be followed while formulating the Annual Action Plan. The Annual
Action plan shall be simple, action oriented, measurable, relevant and time bound.

CHAPTER – 4
Data Analysis & Interpretation
DATA ANALYSIS & INTERPRETATION
INTRODUCTION
Data analysis is an essential element in the research process. After gathering the data, the next
coherent step is to evaluate and interpret the information in order to arrive at a realistic solution to
the problem. The data has been gathered to understand and analyse the objectives and it
emphaseslargely on theconcept of DU-PONT Analysiswith help of ROA, ROE, Profitability ratio
of a company.
The study is mainly focused on the Effectiveness of DU-PONT Analysis on Profitability of HUL
Co., It considers income statement, Balance sheet and financial ratio’s to evaluate the company's
profitability. The collected data has been presented through tables, charts and figures and
interpretation have drawn from therein.
OBJECTIVE 1: To study the ROA, ROE, ROI and Profitability ratios of Hindustan Unilever
Limited.
Return on Assets
Return on assets is one of the indicator to express the profitability a company and is relative to its
total assets. ROA gives an idea as to how efficient management can use its assets to generate the
earnings. ROA is calculated by dividing a company’s Annual earning by its Total assets and it is
expressed as a percentage. ROA displays how much profit a firm earns for every dollar to its
assets, which is a different perspective on managerial effectiveness.
ROA= (Net Profit / Total Asset) * 100

Table no.4.1
Return On Assets (ROA) of Hindustan Unilever Limited
YEAR Return on Assets (%)

2021 11.67
2020 34.37
2019 33.78
2018 30.53
2017 30.43
Analysis:
From 2017 to 2021, Hindustan Unilever Limited's ROE is shown in the table above. The previous
five-year ratio has been calculated, and it is approximately 30.43% in 2017, 30.43% in 2018,
33.78% in 2019, 34.37% in 2020, and 11.67% in 2021. The data presented above is simplified
further in the bar graph below.
Chart no:4.1
Return On Assets of Hindustan Unilever Limited
Return on Assets (%)
40 34.37 33.78
30.53 30.43
30
20 11.67
10
0
2021 2020 2019 2018 2017
Interpretation:
The above graph no. 4.1 shows how Hindustan Unilever Limited's ROA varies from year to year.
In 2017, it is 30.43 % due to the company's net income and thus ROA in the first year. In 2018, it
was 30.53 %, indicating that the company had started to make a profit, and the ROA had
increased. It will be cut in 2021 because this year's net income was less 11.67%and shareholders'
funds were increasedin comparison to the previous year in 2020, the ROA is 34.37%, and the
shareholders' fund is up from the previous year. Because of the drop in net income in 2021, the
ROA will be 11.67 %.

Return on Equity
ROE is the basic test to analyse the effectiveness of use of investors’ money.Return on equity (ROE)
measures the financial performance and profitability of a business and is calculated by dividing net
income by shareholders' equity. ROE is considered a measure to know how effectively the
management is using a company’s assets to create profits.The return on equity (ROE) measures if
management is increasing the company's value at a reasonable rate. The rate of return on
stockholder’s equity that the company obtains. The amount of Net income returned as a percentage of
shareholders’ equity. ROE measures a corporation’s profitability by revealing how much profit a
company generates with the money shareholders have invested. ROE is used to evaluate the company
equity. A low ROE may indicate that management is doing a poor job at using its investors’ funds to
generat
ROE= (Net Income / Shareholder’s Equity) * 100 e a

return.
Table 4.2
Table no: 4.2 Return on equity(ROE) of Hindustan Unilever Limited Company.
YEAR Return on Networth / Equity (%)

2021 16.76
2020 83.89
2019 78.8
2018 74.020
2017 69.18
Analysis:
From 2017 to 2021, Hindustan Unilever Limited's ROE is shown in the table above. The previous
five-year ratio has been calculated, and it is approximately 69.76% in 2017, 74.02 % in 2018,

Chart no. 4.2

Return on equity of Hindustan Unilever Limited Company
Interpretation:
The above graph no. 4.1 shows how Hindustan Unilever Limited's Return on Equity varies from
year to year. In 2017, it is 69.18 % due to the company's net income and thus ROE in the first
year. In 2018, it was 74.02 %, indicating that the company had started to make a profit, and the
ROE had increased. It will be cut in 2021 because this year's net income was less than 16.76 %and
shareholders' funds were increasedin comparison to the previous year In 2020, the ROE is 83.89
percent, and the shareholders' fund is up from the previous year. Because of the drop in net
income in 2021, the ROE will be 16.76%.
Return on Investment (ROI) or Return on Capital Employed
Return on capital employed (ROCE) is a financial ratio that can be used in evaluating a company's
profitability and capital efficiency. The ratio can help to understand how well a company is generating
profits from its capital. ROI it is also known as ROCE shows the relationship of profit (profit before
interest and tax) with capital employed. The result of operations a business is either profit or loss.
The funds or sources used in the business is to earn profit or loss. Capital Employed computed by
Liabilities Approach or Assets Approach. So, whichever approach is followed the amount of
capital employed will be the same.
ROI = (Net Profit before Interest, Tax and Dividend/Capital Employed) x 100

Liabilities Approach
Capital Employed = Shareholder’ Fund + Non-current Liabilities.(In case, Surplus balance is

there in Statement of Profit and Loss, we will deduct the amount of surplus to calculate the
Shareholder’ Fund)
Assets Approach
Capital Employed = Non-current Assets + Working Capital. (Non-current Assets = Fixed

assets + Non-current Trade Investments + Long-term Loans and Advances).
Working Capital = Current Assets – Current Liabilities
Table no:4.3
ROCE / ROI of Hindustan Unilever Limited
ReturnonCapitalEmployed
YEAR (%)
2021 18.9
2020 89.49
2019 92.27
2018 86.53
2017 81.82
Analysis:
The return on capital employed ratio of Hindustan Unilever Limited is shown in the table below.
The previous five-year ratio has been calculated, and it is approximately 81.82 % in 2017, 86.53%
in 2018, 92.27% in 2019, 89.49% in 2020, and 18.9% in 2021. The data presented above is
simplified further in the bar chart below.

Chart no:4.3
ROCE / ROI of Hindustan Unilever Limited
Return on capital employed (investment)

4000
3436.8282 3378.4284
3500
3052.0112 3041.6526
3000
2500
2000
1500 1167.4208
1000
500
0
2021 2020 2019 2018 2017
Interpretation:
From the preceding chart no.4.3, it can be seen that Hindustan Unilever Limited's Return on
Capital has been fluctuating from 2017 to 2021. In 2017, it was 81.82%, followed by 86.53 %in
2018, 89.49 %in 2019, and 18.9% in 2020. We can observe that 2020 has the highest value when
compared to past years because net income has increased. The lowest rate of return on capital
employed is 18.9 % in 2021.
Profitability ratio Analysis
Profitability ratio are a type of accounting ratio that helps in determining the financial
performance of business at the end of an accounting period. Profitability ratios show how well a
company is able to make profits from its operations. Profitability ratios are financial metrics used
by investors to measure and evaluate the ability of a company to generate income (profit) related
to revenue, balance sheet assets, operating costs, and shareholders’ equity during a specific period
of time. They show how well a company utilizes its assets to produce profit and value to
shareholders. It is an indicator of a company’s pricing strategies and how well the company
controls costs. Profit margin is calculated by finding the net profit as a percentage of the total
revenue. If the profit margin of a company increases, every sale will bring more money to a
company’s bottom line, resulting in a higher overall return on equity. A higher ratio or value is

commonly sought-after by most companies, as this usually means the business is performing well
by generating revenues, profits, and cash flow. The ratios are most useful when they are analysed
in comparison to similar companies or compared to previous periods.
Profitability = Profit after Tax(PAT)/ Net Sales ∗ 100
Profitability analysis and assessment of the fundamental drivers of profitability is a critical

component of evaluating financial performance. Performance measures like the operating profit
margin, asset turnover ratio, return on assets, and return on equity—and more importantly how
they are impacted by marketing, operations, investment, and financing decisions—are extremely
valuable to a farm manager. The operating profit margin shows the amount each dollar of sales
yields to net income. The asset turnover rate measures the revenues generated per dollar of assets
and indicates how efficiently the business uses its assets. The return on assets is a measure that
managers can use to determine if capital is generating an acceptable rate of return. Return on
equity helps managers assess whether or not the debt of the farm business is working for or
against them. Together, these measures help to show how well the farm business is performing
financially. These four measures are core to the manager’s analysis of business financial
performance, and are succinctly summarized in the DuPont profitability analysis model.
These are the Profitability ratios are used by HUL Company
 Profit After Tax (PAT)

 Profit Before Interest After Tax (PBIT)
 Profit before tax (PBT)
Profit after Tax (PAT)
PAT is the net profit earned by the company after deducting all expense like interest, depreciation
and tax. The profit after-tax figure is considered the best measure of the ability of an entity to
generate a return, since it incorporates both operating income and income from other sources,
such as interest income. The profit after-tax margin is closely watched by investors to see if the
income-generating ability of a firm is changing over time
Profit After Tax (PAT) = Profit Before Tax (PBT) – Tax Rate Profit before tax
Profit before Interest after Tax (PBIT)

A Financial measure that is an indicator of a company’s operating performance. EBIT/PBIT,

measure a company’s profitability without taking into account structure.The PBIT margin is a
financial ratio that calculates a company's profitability without including the impact of interest
and taxes. It is calculated by dividing PBIT (Profit before interest and taxes) by sales or net
income. PBIT margin is also known as operating margin. It is characterized by reflecting the
benefit generated by the economic activity of a company alone. It ignores the way in which it is
financed and the intervention of the state or national policy.
PBIT Margin = PBIT Net/ Sales ∗ 100
Profit before tax (PBT)
Profit before tax (PBT) is a measure of a company's profitability that considers earnings before
taxes are deducted. It compares all of the company's expenses, such as operations and interest
expenses, to its revenues, but does not include income tax payments.
Profit Before Tax = Revenue – Expenses (Exclusive of the Tax Expense)
Table no:4.4
Profitability Ratio (Income) of Hindustan Unilever Limited
PROFITABILITY RATIO ( INCOME)
2021 2020 2019 2018 2017

PBDIT Margin (%) 25.73 26.64 24.33 22.72 20.61
PBIT Margin (%) 23.53 24.22 22.96 21.33 19.36
PBT Margin (%) 22.8 23.44 22.29 21.1 20.05
Net Profit Margin (%) 17.29 17.37 15.79 15.16 14.07
PBDIT Margin - Profit Before Depreciation, Interest, and Taxes

PBIT Margin-Profit Before Interest and Taxes
PBT Margin- Profit Before Taxes
Analysis:
The profitability ratio of Hindustan Unilever Limited is shown in the table below. The previous
five-year ratio has been calculated, and its PBDIT approximately 20.61% in 2017, 22.72% in
2018, 24.33% in 2019, 26.64% in 2020, and 25.73% in 2021. PBIT is also shown in this table that
is for the year 2017 it was 19.36%, 2018 it was 21.33%, 2019 it was 22.96%, 2020 it was 24.44%,

2021 it was 23.53%. PBT is also shown in this table for the year 2017 it was 20.05%, 2018 it was
21.1%, 2019 it was 22.29%, 2020 it was 23.44%, 2021 it was 22.8%. Net profit margin is also
shown in this table for the five years 2017 it was 14.07%, 2018 it was 15.16%, 2019 it was
15.79%, 2020 it was 17.37%, 2021 it was 17.29%. The data presented above is simplified further
in the bar chart below.
Chart no:4.4
Profitability Ratio (Income) of Hindustan Unilever Limited
PROFITABILITY RATIO (INCOME)

30
26.64
25.73
24.22 24.33
25 23.53 23.44 22.9262.29
22.8 22.72
21.3321.1 20.61 20.05
19.36
20
17.29 17.37
15.79 15.16
15 14.07
10
0
2021 2020 2019 2018 2017
PBDIT Margin (%) PBIT Margin (%) PBT Margin (%) Net Profit Margin (%)
Interpretation:
The above chart no. 4.4 shows how Hindustan Unilever Limited's profitability ratio varies from
year to year. In 2017, by observing the graph there is lot of fluctuation in the profitability. In this
chart we can understand that comparing to other profitability ratio net profit margin is less. But in
net profit margin there is an increase in every year. Other profitability ratio (income) there is a

fluctuation in every year in 2017, the PBDIT margin was 20.61 %; in 2018, it was 22.72 %, and in
2019, it was 24.33 %. In the year 2020, it was 26.64 %, and in the year 2021, it was 25.73 %. In
2017, the PBIT margin was 19.36%; it began to rise in 2018, when it reached 21.33 %; in 2019, it
reached 22.96 %; in 2020, it reached 24.22 %; and in 2021, it fell to 23.53 %.In the year 2017, the
PBT margin was 20.05 %; it began to climb in the year 2018, when it was 21.1 %; in 2019, it was
22.29 %; in 2020, it was 23.44 %; and in 2021, it was 22.8 %. The net profit margin in 2017 was
14.07%, indicating that the net profit margin has been steadily increasing. It was 5.16 % in 2018,
15.16 % in 2019, 15.79 % in 2020, and it has climbed in 2021 when compared to the previous
four years.
OBJECTIVE 2-To Analyse the Effectiveness of Du-Pont Analysis of Hindustan Unilever

Limited.
DUPONT ANALYSIS
The DuPont analysis (also known as the DuPont identity or DuPont model) is a framework for
analysing fundamental performance popularized by the DuPont Corporation. DuPont analysis is a
useful technique used to decompose the different drivers of return on equity (ROE). The
decomposition of ROE allows investors to focus on the key metrics of financial performance
individually to identify strengths and weaknesses.
The DuPont analysis is a framework for analysing fundamental performance originally

popularized by the DuPont Corporation. Du-Pont analysis is a useful technique used to
decompose the different drivers of return on equity (ROE). An investor can use analysis like this
to compare the operational efficiency of two similar firms. Managers can use DuPont analysis to
identify strengths or weaknesses that should be addressed.
DuPont Analysis=Net Profit Margin ×AT×EM
Net Profit Margin=Revenue/Net IncomeAT=Asset turnover
Asset Turnover= Sales/ Average Total Assets
Equity Multiplier=Average Shareholders’ Equity/Average Total Assets
Or Equity Multiplier=total assets/Shareholders capital

DUPONT MODEL
The DuPont model is a common and useful tool for assessing and understanding the drivers of
profitability (Barry et al., 2000, p. 121). The DuPont model is a ratio-based analysis allowing
managers to observe the interactions among the important variables in the cost volume-profit
chain (Van Voorhis, 1981).
As characterized by Blumenthal (1998), the DuPont model is a useful framework for visualizing
financial information and is a good tool for assisting managers in understanding how operating,
financing, and investment decisions impact financial performance. Firer (1999) explains the
DuPont model as a financial analysis and planning tool intended to develop an understanding of
the factors that affect the return on equity (ROE) of the firm using straightforward accounting
relationships. He argues that the DuPont model allows for the assessment of the components of
ROE and assists management in examining the possible influence of strategic initiatives on
financial performance.Ross, Westerfield, and Jordan (1999) further identify three factors that
impact ROE as it is represented in the DuPont model:
(a) operating efficiency (measured by operating profit margin and calculated as operating margin
divided by gross revenue)
(b) asset use efficiency (measured by asset turnover and calculated as gross revenue divided by
assets)
(c) financial leverage (measured by the equity multiplier and calculated as assets divided by
equity).
In agreement with this description, Eisemann (1997) states that the ratios establishing ROE reflect
three major performance characteristics: one income statement management feature (profit
generated per sales dollar) and two balance sheet management features (sales generated per dollar
of assets and the amount of solvency risk).

DuPont Financial Analysis Model
Financial Statements
For the DuPont Analysis we utilize annual balance sheets and income statements. The balance
sheet presents the business’ assets, liabilities, and equity at a point of time. A balance sheet
changes continuously as these account balances change. We utilize year-end balance sheets. The
income statement is a report of revenues and costs generated from operations across the time
period captured in the balance sheets.
Financial equations and relationships defined for DuPont Analysis
Measure Calculation Performance

Equity =Total Assets– Total Value
Liabilities
Total Assets =Current Assets + Fixed Efficiency
Assets

Total Liabilities =Current Liabilities + Long- Leverage

Term Liabilities
Gross Margin =Total Revenue- Cost of Profitability
Goods Sold
Profit Margin (Net Income) =Total Revenue – Total Cost Profitability
Total Cost =Cost of Goods Sold + Profitability
Operating Expenses +
Depreciation + Amortization8
Operating Profit =Total Revenue – Total Cost + Profitability
Depreciation + Amortization4
Net Profit Margin

The net profit margin is the ratio of bottom line profits compared to total revenue or total sales.
This is one of the most basic measures of profitability. The profit margin can be improved if costs
for the owner were reduced or if prices were raised, which can have a large impact on ROE. This
is one of the reasons that a company's stock will experience high levels of volatility when
management makes a change to its guidance for future margins, costs, and prices.
Net Profit Margin= Net Profit / Net Sales) * 100
Table no:4.5
Profit Margin of Hindustan Unilever Limited
PROFIT MARGIN
YEAR PROFIT MARGIN

2021 17.29
2020 17.37
2019 15.79
2018 15.16
2017 14.07

Analysis:
From 2017 to 2021, Hindustan Unilever Limited's Profit Margin is shown in the table above. The
previous five-year ratio has been calculated, and it is approximately 14.07% in 2017, 15.16% in
2018, 15.79% in 2019, 17.37% in 2020, and 17.29% in 2021. The data presented above is
simplified further in the bar graph below
Chart no: 4.5

Profit margin of Hindustan Unilever Limited
PROFIT MARGIN PROFIT MARGIN
20 17.29 17.37
15.79 15.16 14.07
15
10
0
2021 2020 2019 2018 2017
Interpretation:
The Profit Margin Ratio of Hindustan Unilever Limited is fluctuating from 2017 to 2021, as
shown in figure no. 4.6. In 2017, the Profit Margin Ratio was 14.07 %. In 2018, the profit margin
improved by 15.16%. In the year 2019, it climbed by 15.79%. In the year 2020, it will have
climbed by 17.37%. The profit margin has decreased by 17.29%.
Asset Turnover Ratio

The asset turnover ratio assesses how effectively a corporation generates revenue from its assets.
A typical asset turnover ratio will differ from one industry to the next. A utility corporation, on the
other hand, owns enormously valuable assets.A utility company, on the other hand, holds
relatively expensive fixed assets in relation to its revenue, resulting in a far lower asset turnover
ratio than a retail company.The ratio can be helpful when comparing two companies that are very
similar. Because average assets include components like inventory, changes in this ratio can signal
that sales are slowing down or speeding up earlier than it would show up in other financial
measures. If a company's asset turnover rises, its ROE will improve.

Asset Turnover=Sales/ Average Total Assets
Table no:4.6
Asset turnover ratio of Hindustan Unilever Limited
Analysis:
From 2017 to 2021, Hindustan Unilever Limited's asset tis shown in the table above. The previous
five-year ratio has been calculated, and it is approximately 216.18% in 2017, 201.32% in 2018,
further in the bar graph below
Chart no:4.6
Asset turnover ratio of Hindustan Unilever Limited
Interpretation:
The Asset Turnover Ratio of Hindustan Unilever Limited is fluctuating from 2017 to 2021, as
shown in chart no. 4.7. In 2017, the Asset Turnover Ratio was 216.18. In 2018, the asset turnover
ratio has been decreased by 201.32. In the year 2019, it climbed by 213.96. In the year 2020, it has
been decreased by 197.86. The asset turnover ratio has decreased by 67.52

Financial Leverage or Equity Multiplier

The equity multiplier, also known as financial leverage, is an indirect measure of a company's use
of debt to fund its assets. To fund operations and expansion, most businesses need combine debt
and equity. Using no leverage may put the company at a disadvantage in comparison to its
competitors.However, using too much debt in order to increase the financial leverage ratio and
therefore increase ROE can create disproportionate risks.
Equity Multiplier=Average Shareholders’ /EquityAverage Total Assets
or Equity Multiplier=Total Asset/Shareholders capital
Table no:4.7
Equity Multiplier Ratio of Hindustan Unilever Limited
EQUITY MULTIPLIER
YEAR EQUITY MULTIPLYER

2021 289.86
2020 90.75
2019 82.71
2018 79.39
2017 68.29
Analysis:
five-year ratio has been calculated, and it is approximately 68.29 in 2017, 79.39 in 2018, 82.71 in
2019, 90.75 in 2020, and 289.86 in 2021. The data presented above is simplified further in the bar
graph below.

Table no:4.7
Equity Multiplier of Hindustan Unilever Limited
Interpretation:
The Equity Multiplier Ratio of Hindustan Unilever Limited is fluctuating from 2017 to 2021, as
shown in figure no. 4.8. In 2017,The Equity Multiplier Ratio in 2017 was 68.29%. The asset
turnover ratio climbed by 79.39% last year. It increased by 82.71% in the year 2019. It has been
increased by 90.75 % by the year 2020. The asset turnover ratio has risen 289.86%.
Table no:4.8
DU-PONT Analysis of Hindustan Unilever Limited
DU-PONT ANALYSIS
YEAR PM(%) (A) AT(times)( B) EM (C) DU-PONT Analaysis(A*B*C)

2021 17.29 67.52 289.86 338383.13
2020 17.37 197.86 90.75 311892.16
2019 15.79 213.96 82.71 279424.18
2018 15.16 201.32 79.39 242309.91
2017 14.07 216.18 68.29 207719.53
PM- Profit Margin

AT- Asset Turnover
EM- Equity Multiplier

Analysis:
five-year ratio has been calculated, and it is approximately 207719.53 in 2017, 242309.91 in 2018,
279424.18 in 2019, 311892.91 in 2020, and 3383.13 in 2021. The data presented above is
simplified further in the bar graph below.
Chart no:4.8
DU-PONT Analysis of Hindustan Unilever Limited
Interpretation:
The profit margin, asset turnover ratio, and return on capital employed are summarised in Table
No.4.9. Table summarises HUL's profit margin, asset turnover ratio, and equity multiplier used
from 2017 to 2021. From 2017 to 2019, it was on the decline, but then began to raised.In 2017,
HUL had a profit margin of 14.07 %, which increased to 15.16 % in 2018, 15.79 % in 2019, 17.37
% in 2020, and 17.29% in 2021. Profit margins have been gradually increasing. employed
between 2017 and 2021 for HUL during the time period under consideration. In 2017, the profit
margin was 14.07 %, and in 2021, it will be 17.29 %. In 2021, the assets turnover ratio fell from
2017 to 2020,In 2021, the assets turnover ratio fell. The profit margin increased by 17.29 %, while

the assets turnover ratio declined by 67.52 %, according to the growth rate. From 2017 to 2021,
the equity multipliers ratio of HUL has been steadily growing. When profit margin was multiplied
by asset turnover as well as equity multiplier, this table shows that DU-PONT Analysis for the
year 2021 is 338383.13. This situation indicates that the company's assets are underutilised;
nevertheless, internal management may improve the situation and better utilise fixed assets to
increase return on investment.
OBJECTIVE-3 TO EVALUATE THE OVERALL EFFECT OF DU-PONT ANALYSIS ON

PROFITABILITY, LIQUIDITY AND GROWTH OF HINDUSTAN UNILEVER LIMITED.
Liquidity Ratios:
Liquidity refers to the ability of a concern to meet its current obligations as and when these
become due (Gupta & Sharma, 2014). The liquidity ratios analyse the ability of a company to pay
off both its current liabilities as they become due as well as their long term liabilities as they
become current. The liquidity ratios show the cash levels of a company and the ability to turn
other assets into cash to pay off liabilities and other current obligations. The liquidity of a
company not only shows that how much cash a business has, in fact, it shows how easy it will be
for a company to raise enough cash or convert assets into cash. The liquidity has two dimensions
i.e. quantitative and qualitative aspects. The quantitative aspect includes quantum, structure and
utilization of liquid assets whereas in qualitative aspect, the ability to meet its Types of Ratios
Liquidity Ratios Solvency Ratios Activity Ratios Profitability Ratios 52 all present and potential
demands on cash from any source in a way that the cost gets minimizes and the value of the firm
gets maximized. The excess liquidity reflects lower profitability, deterioration in managerial
efficiency, increased speculation and unjustified expansion, extension of too liberal credit and
dividend policies whereas too little liquidity leads to frustration of business objections, reduced
rate of return, business opportunity missed, and weakening of morale. The important ratios to
measure the liquidity position of the firm are:
Classification of Liquidity Ratios
 Current Ratio
 Quick Ratio

 Net Working Capital Ratio
Current Ratio or Working Capital Ratio
The current ratio is a measure of a company’s ability to pay off the obligations within the next
twelve months. This ratio is used by creditors to evaluate whether a company can be offered short
term debts. It also provides information about the company’s operating cycle. It is also popularly
known as Working capital ratio. It is obtained by dividing the current assets with current
liabilities.
Current ratio is calculated as follows: Current ratio = Current Assets / Current Liabilities
Table no:4.9
Current Ratio of Hindustan Unilever Limited
YEAR CURRENT RATIO

2021 1.26
2020 1.31
2019 1.36
2018 1.29
2017 1.3
Analysis:
The current ratio of Hindustan Unilever Limited is shown in the table above. The previous five
years' ratio has been calculated, and it is approximately 1.3 % in 2017, 1.29 % in 2018, 1.36 % in
2019, 1.31 % in 2020, and 1.26 % in 2021. The data presented above is simplified further in the
bar chart below

Chart no: 4.9
Current Ratio of Hindustan Unilever Limited
Interpretation:
The current ratio of Hindustan Unilever Limited is depicted in the graph above. From 2017
through 2020, it has been fluctuating. The current ratio in 2017 was 1.3 %. In 2018, the current
ratio was 1.29 %, which is lower than the previous year of 2017. The current ratio increased to
1.36 % in 2019, however it decreased in 2020 and 2021 compared to 2019.The above table
demonstrates that in the year 2021, there will be significant decreases.
Quick Ratio or Acid Test Ratio
Quick ratio is also known as Acid test ratio is used to determine whether a company or a business
has enough liquid assets which are able to be instantly converted into cash to meet short term
dues. It is calculated by dividing the liquid current assets by the current liabilities It is represented
as
Quick Ratio = (Cash + Marketable securities + Accounts receivable) / Current liabilities

Table no: 4.10
Quick ratio of Hindustan Unilever Limited
YEAR QUICK RATIO

2021 0.95
2020 1.02
2019 1.07
2018 1.02
2017 0.9
Analysis:
The current ratio of Hindustan Unilever Limited is shown in the table above. The previous five
years' ratio has been calculated, and it is approximately 0.9 % in 2017, 1.02 % in 2018, 1.07 % in
2019, 1.02 % in 2020, and 0.95 % in 2021. The data presented above is simplified further in the
bar chart below.
Chart no:4.10
Quick ratio of Hindustan Unilever Limited
QUICK RATIO
1.1 1.07
1.05 1.02 1.02
1
0.95
0.95
0.9
0.9
0.85
0.8
2021 2020 2019 2018 2017

Interpretation:
The quick ratio of Hindustan Unilever Limited can be seen in the above chat. From 2017 through
2021, the ratios have been shifting. The quick ratio for the year 2017 is 0.9 %. In the year 2018, it
was raised to 1.02 %. In comparison to 2017 and 2018, it has increased in the year 2019. In
comparison to 2019, it has reduced to 1.02 % in 2020. In the year 2021,In the year 2021, the
percentage will drop to 0.95 %. In terms of current assets, the results have had no substantial
impact on the distribution of the Quick ratio across a 5-year interval. HUL, on the other hand, has
consistently demonstrated a high return on quick ratio.
Net Working Capital Ratio
The net working capital ratio is used to determine whether a company has sufficient cash or funds
to continue its operations. It is calculated by subtracting the current liabilities from the current
assets.
Net Working Capital Ratio = Current Assets – Current Liabilities
Table no:4.11
Net working capital of Hindustan Unilever Limited
Analysis:
five-year ratio has been calculated, and it is approximately 2163 in 2017, 2503 in 2018, 3021 in
2019,2804 in 2020, and 2799 in 2021. The data presented above is simplified further in the bar
graph below.

Table no:4.11
Net working capital of Hindustan Unilever Limited
NET WORKING CAPITAL
3500
3021
2799 2804
3000
2503
2500 2163
2000
1500
1000
500
0
2021 2020 2019 2018 2017
Interpretation:
Table No.4.11 summaries the profit margin, asset turnover ratio, and return on capital utilize.
From 2017 through 2021, the table summariesHUL's current asset and current liability. Since
2017, the current asset has grown by 9365, then 11139 in 2018, 11374 in 2019, 11908 in 2020,
and 13640 in 2021. The value of current assets has been steadily increasing. Beginning in
2017,Current liability has been steadily increasing since 2017, reaching 7202 in 2017, 8636 in
2018, 8353 in 2019, 9104 in 2020, and 10841 in 2021. There is a variation in net working capital
due to an increase in current asset as well as current liability. In 2017, net working capital was
2163 dollars; in 2018, it was 2503, and in 2019, it was 3021; however, in 2020 and 2021, it was
2804 and 2779, respectively.

Table No.4 .12

Statement of Profit Margin in HUL
Statement of Profit Margin in HUL
Year PBIT(Rs) Sales(Rs) Profit Margin

2017 5651 33895 16.67
2018 6792 34619 19.62
2019 8113 37660 21.54
2020 8662 38273 22.63
2021 10312 45311 22.76
Mean 7906 37951.6 20.64
Growth 78% 30% 34%
Analysis:
Table no.12 shows the profit margin of HUL. The previous five-year profit margin has been
calculated, in 2017 it was 16.67, 2018 it was 19.62, 2019 it was 21.54, 2020 it was 22.63, 2021 it
was 22.76, mean and growth is also calculated in this table. The data presented above is simplified
Chart no:412
Statement of profit margin in HUL
Interpretation:
Chart no.12 shows the profit margin of HUL in 2017 was 16.67 %, in 2018 it was 19.62%, in
2019 it was 21.54%, in 2020 it was 22.63% and in 2021 it was 22.76%. This shows that profit

margin of HUL is increasing trend from 2017 to 2021. While analysing the growth rate of HUL,
the growth of profit before interest and tax (PBIT) is 78%, of sales is 30% and of profit margin
was 34% which indicates a very high growth rate and indicates that with passage of time HUL is
earning more and more brand value. The following table No.13 presents the summary of
Investment (Assets) Turnover ratio of HUL for the period 2017 to 2021.
Table No4.13
Statement of Investment Turnover (Assets Turnover) of HUL
Statement of Investment Turnover (Assets Turnover) of HUL

Investment (Capital Employed)
Year Sales(Rs) (RS) Ratio (Times)
2017 33895 3041.65 11.14
2018 34619 3052.01 11.34
2019 37660 3378.43 11.15
2020 38273 3436.82 11.14
2021 45311 1167.42 38.81
Mean 37951.6 2815.27 16.72
Growth 30% -53% 248%
Analysis:
From the above Table No.13 reveal that the investment or Assets turnover ratio of HUL. In the
year 2017 it was 11.14, 2018 it was 11.34, 2019 it was 11.15, 2020 it was 11.14, 2021 it was
38.81, mean and growth is also calculated in this table.The data presented above is simplified

Chart no:4.13
Investment Turnover (Asset Turnover) of HUL
Interpretation:
From the above Table No.13 reveal that the investment or Assets turnover ratio of HUL in 2017
was 11.14 times, 11.34 times was in 2018, 11.15 times was in 2019, 11.14 was in 2020 and 38.81
times was in 2021. The average Investment turnover ratio was 16.72 times. The growth rate of
sales was 30% as compared to the growth rate of investment, it is declined which is -53% and the
growth rate of investment turnover ratio was increased by 248% which indicates that the assets are
effectively utilised by HUL during the period under study. Above table also highlights that the
investment turnover ratio is 2017 was satisfactory. Return on Investment (ROI) is one of the most
important profitability metrics of DuPont analysis. It becomes a yard sticks to measure the
efficiency of business. Table No.14 shows the summary of DuPont Analysis for the period 2017to
2021.

Table No.4.14
Summary of DuPont Analysis
Summary of DuPont Analysis

Return on Capital
Year Profit Margin (%) Assets turnover (Times) Employed (Investment)
2017 16.67 11.14 185.79
2018 19.62 11.34 222.54
2019 21.54 11.15 240.14
2020 22.63 11.33 256.39
2021 22.76 38.81 883.32
Mean 20.64 16.76 357.64
Growth 34% 248% 280%
Standard Deviation 2.283 11.029
Variance 5.21 121.64
Analysis:
Table no.14 indicates summary of profit margin, assets turnover ratio and return on capital
employed of HUL from 2017 to 2021. In this table mean, growth, standard deviation as been
calculated for previous five years The data presented above is simplified further in the bar graph
below.

Chart no: 4.14
Summary of DU-PONT Analysis of HUL
Interpretation:
chart no.14 indicates summary of profit margin, assets turnover ratio and return on capital
employed of HUL from 2017 to 2021. From 2017 to 2021 it showed a increase trend. In 2017 the
return on Investment of HUL was 185.79%, in 2018 it was 222.54%, in 2019 it was 240.14%, in
2020 it was 256.39% and in 2021 it was 883.32%. The profit margin showed in increasing trend
during the period under study from 2017 to 2021. In 2017 the profit margin was 16.67% and in
2018 it was 19.62%. The assets turnover ratio showed in increased trend from 2017 to 2021.
While analysing the growth rate, the growth of profit margin was 34% and growth of assets
turnover ratio was 248%. This table indicate that profit margin when multiplied by investment
turnover the resultant is Return on capital employed or investment was 280%. This situation
highlights that assets are properly utilised by the company by internal management and the fixed
assets are more effectively utilized to increases the return on Investment.

CHAPTER – 5
Summary of Findings, Suggestion
and Conclusion
“A STUDY ON EFFECTIVENESS OF DU-PONT ANALYSIS ON PROFITABILITY AT HINDUSTAN
UNILEVER LIMITED COMPANY”
SUMMARY OF FINDINGS, CONCLUTION AND SUGGESTION
SUMMARY OF FINDINGS:
 Return on asset of HUL has been increased by year to year there was a decrease in the
year 2021. In 2020, the ROA is 34.37%, and the shareholders' fund is up from the
previous year. Because of the drop in net income in 2021, the ROA will be 11.67 %.
 Return on equity of HUL has been increased by year to year there was a decrease in
the year 2021. In 2020, the ROE is 83.89%, and the shareholders' fund is up from the
previous year. Because of the drop in net income in 2021, the ROE will be 16.76%.
 Return on Capital has been fluctuating from year to year. In 2017, it was 81.82%,
followed by 86.53 %in 2018, 89.49 %in 2019, and 18.9% in 2020. We can observe
that 2020 has the highest value when compared to past years because net income has
increased. The lowest rate of return on capital employed is 18.9 % in 2021.
 Profitability ratio varies from year to year. In 2017, by observing the graph there is lot
of fluctuation in the profitability. In this chart we can understand that comparing to
other profitability ratio net profit margin is less. But in net profit margin there is a
increase in every year. Other profitability ratio (income) there is a fluctuation in every
year.
 The Profit Margin Ratio of Hindustan Unilever Limited is fluctuating from 2017 to
2021. In 2017, the Profit Margin Ratio was 14.07 %. In 2018, the profit margin
improved by 15.16%. In the year 2019, it climbed by 15.79%. In the year 2020, it will
have climbed by 17.37%. The profit margin has decreased by 17.29%.
 The Asset Turnover Ratio of Hindustan Unilever Limited is fluctuating from 2017 to
2021. In 2017, the Asset Turnover Ratio was 216.18. In 2018, the asset turnover ratio
has been decreased by 201.32. In the year 2019, it climbed by 213.96. In the year
2020, it has been decreased by 197.86. The asset turnover ratio has decreased by
67.52.

 The Equity Multiplier Ratio of Hindustan Unilever Limited is fluctuating from year to
year. In 2017,The Equity Multiplier Ratio in 2017 was 68.29%. The asset turnover
ratio climbed by 79.39% last year. It increased by 82.71% in the year 2019. It has
been increased by 90.75 % by the year 2020. The asset turnover ratio has risen
289.86%. there is a continuous increase in every year.
 Table summarises HUL's profit margin, asset turnover ratio, and equity multiplier
used from 2017 to 2021. From 2017 to 2021, the equity multipliers ratio of HUL has
been steadily growing. When profit margin was multiplied by asset turnover as well
as equity multiplier, this table shows that DU-PONT Analysis for the year 2021 is
338383.13. This situation indicates that the company's assets are underutilised;
nevertheless, internal management may improve the situation and better utilise fixed
assets to increase return on investment.
 . The current ratio of Hindustan Unilever Limited is depicted in the graph above.
From 2017 to 2020, it has been fluctuating. The current ratio in 2017 was 1.3 %. In
2018, the current ratio was 1.29 %, which is lower than the previous year of 2017.
The current ratio increased to 1.36 % in 2019, however it decreased in 2020 and 2021
compared to 2019. The above table demonstrates that in the year 2021, there will be
significant decreases.
 The quick ratio of Hindustan Unilever Limited can be seen in the above chat. From
2017 through 2021, the ratios have been shifting. In terms of current assets, the results
have had no substantial impact on the distribution of the Quick ratio across a 5-year
interval. HUL, on the other hand, has consistently demonstrated a high return on
quick ratio.
 Net working capital summaries the profit margin, asset turnover ratio, and return on
capital utilize. From 2017 through 2021, the table summaries HUL's current asset and
current liability. There is a variation in net working capital due to an increase in
current asset as well as current liability. In 2017, net working capital was 2163
dollars; in 2018, it was 2503, and in 2019, it was 3021; however, in 2020 and 2021, it
was 2804 and 2779, respectively.
 Profit margin of HUL is increasing trend from 2017 to 2021. While
analysing the growth rate of HUL, the growth of profit before interest and
tax (PBIT) is 78%, of sales is 30% and of profit margin was 34% which

indicates a very high growth rate and indicates that with passage of t ime
HUL is earning more and more brand value. The following table No.1 3
presents the summary of Investment (Assets) Turnover ratio of HUL for
the period 2017 to 2021.
 From the table reveal that the investment or Assets turnover ratio of HUL in 2017 to
2021. The growth rate of sales was 30% as compared to the growth rate of
investment, it is declined which is -53% and the growth rate of investment turnover
ratio was increased by 248% which indicates that the assets are effectively utilised by
HUL during the period under study. Above table also highlights that the investment
turnover ratio is 2017 was satisfactory. Return on Investment (ROI) is one of the most
important profitability metrics of DuPont analysis. It becomes a yard sticks to
measure the efficiency of business.
 Summary of profit margin, assets turnover ratio and return on capital employed of
HUL from 2017 to 2021. The assets turnover ratio showed in increased trend from
2017 to 2021. While analysing the growth rate, the growth of profit margin was 34%
and growth of assets turnover ratio was 248%. This table indicate that profit margin
when multiplied by investment turnover the resultant is Return on capital employed or
investment was 280%. This situation highlights that assets are properly utilised by the
company by internal management and the fixed assets are more effectively utilized to
increases the return on Investment.
SUGGESTION
 The study suggest that the assets of the company must be efficiently and effectively
utilised.
 It is suggested that certain action should be taken for increasing sales and decreasing
the operating cost so that profit margin could be increased.
 The liquidity ratios of the company shown to be fluctuating, liquidity ratios are also
not equal to the standard norms of the ratios. Therefore, HUL should focus on
improvement of liquidity ratios i.e. current ratio, liquid ratio and networking capital
ratio.

 HUL improved its current ratio by increasing current asset or by decreasing

currentliabilities. The company can also reduce its reserve and surplus instead of
increasing its current liabilities.
 In case of return on equity, there is a fluctuation during the study period. In order to
maintain stability in return on equity, HUL should increase its net profit or decrease
its shareholder’s fund. If return on equity lies between 15- 20 percent than it shows a
good sign for the company. Hence, HUL return on equity was lower than 15% than
company has to maintain its return on equity.
 In total asset turnover ratio, there is a fluctuation during the study period. To improve,
may either increase its sales or reduce its assets. This ratio shows that how efficiently
company using its assets in generating revenue.

CONCLUSION:
The present paper tried to focus on measurement of financial performance using DuPont
analysis using profitability ratios like ROE, ROA and ROI/ROCE. In DuPont analysis, ROE
has been decomposing into its three components of NPM TAT and EM. From the study it
was identified that there is strong relationship among three variables such as NPM, ROA,
ROE and ROCE which states that high level of management effectiveness and efficiency of
investor’s money can predict high level of profit margin and also analysed that there is
negative correlation exists between EM and ROA, ROE and ROCE. It was found that
companies using DuPont analysis shows that the higher return on equity for these companies
is mostly due to higher asset turnover ratios, indicating higher operating efficiency with low
debt. Multiple regression model was carried on to find out the association between return on
equity and net profit margin, Asset turnover ratio and equity multiplier and analysed that
there is significance difference exists in the financial performance of selected companies with
reference to Return on equity and Return on Assets.
DuPont analysis of HUL, it is concluded that profit margin is satisfactory but return on
investment of HUL is satisfactory because assets are effectively used by the HUL. On the
basis of the study it was revealed that HUL has an increasing trend of PBIT, sales and profit
margin but the profit margin ratio showed decreasing trend. There is a decline in the growth
rate of investment So, Management of HUL should take certain steps to check that the assets
of the company are efficiently and effectively utilised and also certain action should be taken
for increasing sales and decreasing the operating cost so that profit before interest and tax
could be increased.

BIBLOGRAPHY
BIBLIOGRAPHY
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using DuPont Analysis. Inspira –Journal
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 Undavia, M. B. (2016). Economic Value Added as Technique of Performance

Evaluation. Original Research Paper, pp, 77-77.
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Websites:
 http://www.diss.fuberlin.de/docs/servlets/MCRFileNodeServlet/FUDOCS_derivate_0
00000004923/discpaper2015_16.pdf
 http://www.hul.co.in/
 http://www.wikipedia.org/
 https://stock-financials.valuestocks.in/en/hul-ratio-analysis
 https://www.moneycontrol.com/financials/hindustanunilever/ratiosVI/H


ANNEXURE
KEY FINANCIAL RATIOS MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

OF HINDUSTAN
UNILEVER (in Rs. Cr.)
PER SHARE RATIOS
Basic EPS (Rs.) 33.85 31.13 27.89 24.20 20.75
Diluted EPS (Rs.) 33.85 31.12 27.88 24.19 20.74
Cash EPS (Rs.) 38.15 35.54 30.37 26.46 22.62
Book Value 201.85 37.18 35.46 32.75 30.05
[ExclRevalReserve]/Share
(Rs.)
Book Value 201.85 37.18 35.46 32.75 30.05
[InclRevalReserve]/
Share (Rs.)
Dividend / Share(Rs.) 31.00 34.50 22.00 20.00 17.00
Revenue from 195.73 179.56 176.96 159.84 147.64
Operations/Share (Rs.)
PBDIT/Share (Rs.) 50.37 47.84 43.06 36.32 30.43
PBIT/Share (Rs.) 46.06 43.50 40.63 34.11 28.60
PBT/Share (Rs.) 44.64 42.09 39.45 33.73 29.61
Net Profit/Share (Rs.) 33.85 31.19 27.94 24.25 20.79
PROFITABILITY RATIOS
PBDIT Margin (%) 25.73 26.64 24.33 22.72 20.61
PBIT Margin (%) 23.53 24.22 22.96 21.33 19.36
PBT Margin (%) 22.80 23.44 22.29 21.10 20.05
Net Profit Margin (%) 17.29 17.37 15.79 15.16 14.07
Return on Networth / Equity 16.76 83.89 78.80 74.02 69.18
(%)
Return on Capital Employed 18.90 89.49 92.27 86.53 81.82
(%)
Return on Assets (%) 11.67 34.37 33.78 30.53 30.43
Total Debt/Equity (X) 0.00 0.00 0.00 0.00 0.00
Asset Turnover Ratio(%) 67.52 197.86 213.96 201.32 216.18

LIQUIDITY RATIOS
Current Ratio (X) 1.26 1.31 1.36 1.29 1.30
Quick Ratio (X) 0.95 1.02 1.07 1.02 0.97
Inventory Turnover Ratio 13.60 14.71 15.78 14.64 13.50
(X)
Dividend Payout Ratio (NP) 110.77 77.11 75.31 74.39 79.53
(%)
Dividend Payout Ratio (CP) 98.27 67.69 69.29 68.17 73.08
(%)
Earnings Retention Ratio -10.77 22.89 24.69 25.61 20.47
(%)
Cash Earnings Retention 1.73 32.31 30.71 31.83 26.92
Ratio (%)
VALUATION RATIOS
Enterprise Value (Cr.) 566,917.00 491,383.40 365,196.80 285,181.40 194,835.00
EV/Net Operating Revenue 12.33 12.67 9.55 8.26 6.11
(X)
EV/EBITDA (X) 47.89 47.55 39.26 36.35 29.64
MarketCap/Net Operating 12.42 12.80 9.65 8.36 6.16
Revenue (X)
Retention Ratios (%) -10.77 22.88 24.68 25.60 20.46
Price/BV (X) 12.04 61.81 48.16 40.79 30.28
Price/Net Operating 12.42 12.80 9.65 8.36 6.16
Revenue
Earnings Yield 0.01 0.01 0.02 0.02 0.02

BALANCE SHEET OF HINDUSTAN UNILEVER LIMITED
BALANCE SHEET OF MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

HINDUSTAN UNILEVER (in
Rs. Cr.)
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 235.00 216.00 216.00 216.00 216.00
TOTAL SHARE CAPITAL 235.00 216.00 216.00 216.00 216.00
Reserves and Surplus 47,199.00 7,815.00 7,443.00 6,859.00 6,274.00
TOTAL RESERVES AND 47,199.00 7,815.00 7,443.00 6,859.00 6,274.00

SURPLUS
TOTAL SHAREHOLDERS 47,434.00 8,031.00 7,659.00 7,075.00 6,490.00

FUNDS
NON-CURRENT
LIABILITIES
Long Term Borrowings 0.00 0.00 0.00 0.00 0.00
Deferred Tax Liabilities [Net] 5,986.00 0.00 0.00 0.00 0.00
Other Long Term Liabilities 2,304.00 1,269.00 804.00 666.00 574.00
Long Term Provisions 1,551.00 1,198.00 1,049.00 772.00 485.00
TOTAL NON-CURRENT 9,841.00 2,467.00 1,853.00 1,438.00 1,059.00

LIABILITIES
CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 0.00 0.00
Trade Payables 8,627.00 7,399.00 7,070.00 7,013.00 6,006.00
Other Current Liabilities 1,723.00 1,287.00 782.00 972.00 809.00
Short Term Provisions 491.00 418.00 501.00 651.00 387.00
TOTAL CURRENT 10,841.00 9,104.00 8,353.00 8,636.00 7,202.00

LIABILITIES
TOTAL CAPITAL AND 68,116.00 19,602.00 17,865.00 17,149.00 14,751.00

LIABILITIES
ASSETS
NON-CURRENT ASSETS
Tangible Assets 5,786.00 4,625.00 3,907.00 3,776.00 3,654.00

Intangible Assets 45,241.00 431.00 436.00 366.00 370.00
Capital Work-In-Progress 623.00 513.00 373.00 430.00 203.00
Other Assets 0.00 0.00 0.00 0.00 0.00
FIXED ASSETS 51,650.00 5,569.00 4,716.00 4,572.00 4,227.00
Non-Current Investments 312.00 252.00 256.00 256.00 260.00
Deferred Tax Assets [Net] 0.00 261.00 339.00 255.00 160.00
Long Term Loans And 520.00 453.00 396.00 404.00 352.00

Advances
Other Non-Current Assets 1,994.00 1,159.00 784.00 523.00 387.00
TOTAL NON-CURRENT 54,476.00 7,694.00 6,491.00 6,010.00 5,386.00

ASSETS
CURRENT ASSETS
Current Investments 2,683.00 1,248.00 2,693.00 2,855.00 3,519.00
Inventories 3,383.00 2,636.00 2,422.00 2,359.00 2,362.00
Trade Receivables 1,648.00 1,046.00 1,673.00 1,147.00 928.00
Cash And Cash Equivalents 4,321.00 5,017.00 3,688.00 3,373.00 1,671.00
Short Term Loans And 0.00 0.00 0.00 0.00 0.00

Advances
OtherCurrentAssets 1,605.00 1,961.00 898.00 1,405.00 885.00
TOTAL CURRENT ASSETS 13,640.00 11,908.00 11,374.00 11,139.00 9,365.00
TOTAL ASSETS 68,116.00 19,602.00 17,865.00 17,149.00 14,751.00
OTHER ADDITIONAL
INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 2,692.00 2,809.00 2,009.00 1,699.00 1,241.00
CIF VALUE OF IMPORTS
Raw Materials 0.00 0.00 0.00 0.00 0.00
Stores, Spares And Loose 0.00 0.00 0.00 0.00 0.00

Tools
Trade/Other Goods 0.00 0.00 0.00 0.00 0.00
Capital Goods 0.00 0.00 0.00 0.00 0.00
EXPENDITURE IN
FOREIGN EXCHANGE
Expenditure In Foreign 2,635.00 1,565.00 1,382.00 1,285.00 1,214.00

Currency
REMITTANCES IN
FOREIGN CURRENCIES
FOR DIVIDENDS
Dividend Remittance In -- -- -- -- --
Foreign Currency
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods -- -- -- -- --
Other Earnings 247.00 283.00 324.00 387.00 541.00
BONUS DETAILS
Bonus Equity Share Capital 131.69 131.69 131.69 131.69 131.69
NON-CURRENT
INVESTMENTS
Non-Current Investments -- -- -- -- --
Quoted Market Value
Non-Current Investments 2.00 2.00 2.00 2.00 6.00

Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Quoted 2,683.00 1,248.00 2,693.00 2,855.00 3,519.00

Market Value
Current Investments -- -- 2.00 2.00 6.00

Unquoted Book Value

PROFIT AND LOSS OF HINDUSTAN UNILEVER LIMITED
PROFIT & LOSS ACCOUNT MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

OF HINDUSTAN
INCOME
REVENUE FROM 45,311.00 38,273.00 37,660.00 34,619.00 33,895.00

OPERATIONS [GROSS]
Less: Excise/Sevice 0.00 0.00 0.00 693.00 2,597.00
Tax/Other Levies
REVENUE FROM 45,311.00 38,273.00 37,660.00 33,926.00 31,298.00
OPERATIONS [NET]
TOTAL OPERATING 45,996.00 38,785.00 38,224.00 34,525.00 31,890.00

REVENUES
Other Income 513.00 733.00 664.00 569.00 526.00
TOTAL REVENUE 46,509.00 39,518.00 38,888.00 35,094.00 32,416.00
EXPENSES
Cost Of Materials Consumed 14,951.00 11,572.00 13,240.00 12,491.00 11,363.00
Operating And Direct 0.00 0.00 0.00 0.00 0.00

Expenses
Changes In Inventories Of -391.00 -121.00 12.00 -71.00 156.00

FG,WIP And Stock-In Trade
Employee Benefit Expenses 2,229.00 1,691.00 1,747.00 1,745.00 1,620.00
Finance Costs 108.00 106.00 28.00 20.00 22.00
Depreciation And 1,012.00 938.00 524.00 478.00 396.00

Amortisation Expenses
Other Expenses 10,766.00 9,701.00 9,880.00 9,272.00 8,538.00
TOTAL EXPENSES 35,792.00 30,229.00 30,139.00 27,747.00 26,261.00
PROFIT/LOSS BEFORE 10,717.00 9,289.00 8,749.00 7,347.00 6,155.00

EXCEPTIONAL,
EXTRAORDINARY ITEMS
AND TAX
Exceptional Items -227.00 -197.00 -227.00 -62.00 241.00
PROFIT/LOSS BEFORE 10,490.00 9,092.00 8,522.00 7,285.00 6,396.00

TAX

TAX EXPENSES-
CONTINUED OPERATIONS
Current Tax 2,458.00 2,202.00 2,565.00 2,148.00 1,865.00
Less: MAT Credit 0.00 0.00 0.00 0.00 0.00

Entitlement
Deferred Tax 78.00 152.00 -79.00 -100.00 41.00
Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00
TOTAL TAX EXPENSES 2,536.00 2,354.00 2,486.00 2,048.00 1,906.00
PROFIT/LOSS AFTER TAX 7,954.00 6,738.00 6,036.00 5,237.00 4,490.00

AND BEFORE
EXTRAORDINARY ITEMS
PROFIT/LOSS FROM 7,954.00 6,738.00 6,036.00 5,237.00 4,490.00

CONTINUING
OPERATIONS
PROFIT/LOSS FOR THE 7,954.00 6,738.00 6,036.00 5,237.00 4,490.00

PERIOD
OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 33.85 31.13 27.89 24.20 20.75
Diluted EPS (Rs.) 33.85 31.12 27.88 24.19 20.74
VALUE OF IMPORTED
AND INDIGENIOUS RAW
MATERIALS STORES,
SPARES AND LOOSE
TOOLS
Imported Raw Materials 0.00 0.00 0.00 0.00 0.00
Indigenous Raw Materials 0.00 0.00 0.00 0.00 0.00
STORES, SPARES AND

LOOSE TOOLS
Imported Stores And Spares 0.00 0.00 0.00 0.00 0.00
Indigenous Stores And 0.00 0.00 0.00 0.00 0.00

Spares
DIVIDEND AND DIVIDEND

PERCENTAGE
Equity Share Dividend 8,811.00 5,196.00 4,546.00 3,896.00 3,571.00
Tax On Dividend 0.00 1,048.00 913.00 755.00 693.00
Equity Dividend Rate (%) 3,100.00 3,450.00 2,200.00 2,000.00 1,700.00

CASH FLOW OF HINDUSTAN UNILEVER LIMITED
CASH FLOW OF HINDUSTAN MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

10,490.00 9,092.00 8,522.00 7,347.00 6,155.00

NET PROFIT/LOSS BEFORE
EXTRAORDINARY ITEMS AND
TAX
Net CashFlow From Operating 8,957.00 7,305.00 5,728.00 5,916.00 4,953.00

Activities
Net Cash Used In Investing -1,367.00 1,926.00 -264.00 - -752.00

Activities 1,264.00
Net Cash Used From Financing -9,280.00 - - - -4,264.00

Activities 6,676.00 5,462.00 4,651.00
Foreign Exchange Gains / 0.00 0.00 0.00 0.00 0.00

Losses
Adjustments On Amalgamation 0.00 0.00 0.00 0.00 0.00

Merger Demerger Others
NET INC/DEC IN CASH AND -1,690.00 2,555.00 2.00 1.00 -63.00

CASH EQUIVALENTS
Cash And Cash Equivalents 3,430.00 575.00 573.00 572.00 635.00

Begin of Year
Cash And Cash Equivalents End 1,740.00 3,130.00 575.00 573.00 572.00
Of Year

Ramagonadanahalli,YelahankaBangalore-64
(CollegeCode:3417)
Dissertation Work Diary
Name of the Student: ANJU M
Register. No: CM198002
SignatureOfThe SignatureOfThe
Date TopicDiscussed Student Guide
Introduction:
Meaning,Definitionand
Conceptofthetopic
ReviewOfLiteratureandResearchDesign:Iti
ncludestitleofthestudy,
statement of the
problem,objectiveofthestud
y,scopeof the study,
researchmethodology,resear
chinstrument,limitationsand
planofthestudy
Companyprofile:
TheCompanyprofilegivest
hedetailedinformation
abouttheCompany,
backgroundofthefirm,
visionandmission
Statements.
DataanalysisandI
nterpretation:
Analysisandinterpretationof
tablesand diagram
Findings,ConclusionandSuggestions
Signature of Guide Signature of HOD

Ramagonadanahalli,YelahankaBangalore-64
(CollegeCode:3417)
Project Review Report

Name of the Student : ANJU M
Register Number : CM198002
Name of the Guide :
Title of the Project :
Date of Commencement of project

:
Date of Completion of Project :
Commentsbythe Signatureof Signatureofthe

Chapter Date Progress
Guide theStudent Guide
1
DraftofDissertation
FinalReport
Signature of the Guide Signature of the Principal

Anju M Final Project

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Project Report On

“A STUDY ON EFFECTIVENESS OF DU-PONT ANALYSIS ON PROFITABILITY

Submitted to Bangalore City University

Under the Guidance of

NAGARJUNA DEGREE COLLEGE

I hereby declare that the dissertation entitled “A STUDY ON

award of M. Com Degree of Bangalore City University.

Thisistocertifythattheprojecttitled“A STUDY ON EFFECTIVENESS OF DU-

HOD, Department of Commerce (M.Com)

Nagarjuna Degree Collage

I am very much grateful to Bangalore City University for giving this

opportunity. I am very much grateful to DR. HARISH BABU. S the

principal of Nagarjuna Degree College, Bangalore for his continuous

I would like to thank DR. DHAKSHAYINI .K N HOD of M.Com

I am grateful to the manager of HINDUSTAN UNILEVER LIMITED

1.10 ADVANTAGES AND DISADVANTAGES OF DU-PONT

1.11 PRINCIPLES OF DUPONT ANALYSIS

1.12 FORMULA FOR DUPONT MODEL

SL.NO TITLE PAGE NO.

4.1 RETURN ON ASSET(ROA) OF HINDUSTAN UNILEVER LIMITED

4.2 RETURN ON EQUITY (ROE) OF HINDUSTAN UNILEVER LIMITE

4.3 RETURN ON INVESTMENT OF HINDUSTAN UNILEVER LIMITE

4.4 PRIOFITABILITY RATIO (INCOME) OF HINDUSTAN UNILEVER

4.5 PROFIT MARGIN OF HINDUSTAN UNILEVER LIMITED

4.6 ASSET TURNOVER RATIO OF HINDUSTAN UNILEVER LIMITED

4.7 EQUITY MULTIPLIER RATIO OF HINDUSTAN UNILEVER LIMIT

4.8 DU PONT ANALYSIS OF HINDUSTAN UNILEVER LIMITED

4.9 CURRENT RATIO OF HINDUSTAN UNILEVER LIMITED

4.10 QUICK RATIO OF HINDUSTAN UNILEVER LIMITED

4.11 NETWORKING CAPITAL RATIO OF HINDUSTAN UNILEVER

4.12 STATEMENT OF PROFIT MARGIN OF HINDUSTAN UNILEVER

4.13 STATEMENT OF INVESTMENT TURNOVER (ASSET

4.14 SUMMARY OF DU PONT ANAYSIS

SL.NO TITLE PAGE NO.

5.1 RETURN ON ASSET(ROA) OF HINDUSTAN UNILEVER LIMITED

5.2 RETURN ON EQUITY (ROE) OF HINDUSTAN UNILEVER LIMITE

5.3 RETURN ON INVESTMENT OF HINDUSTAN UNILEVER LIMITE

5.4 PRIOFITABILITY RATIO (INCOME) OF HINDUSTAN UNILEVER

5.5 PROFIT MARGIN OF HINDUSTAN UNILEVER LIMITED

5.6 ASSET TURNOVER RATIO OF HINDUSTAN UNILEVER LIMITED

5.7 EQUITY MULTIPLIER RATIO OF HINDUSTAN UNILEVER LIMIT

5.8 DU PONT ANALYSIS OF HINDUSTAN UNILEVER LIMITED

5.9 CURRENT RATIO OF HINDUSTAN UNILEVER LIMITED

5.10 QUICK RATIO OF HINDUSTAN UNILEVER LIMITED

5.11 NETWORKING CAPITAL RATIO OF HINDUSTAN UNILEVER LI

5.12 STATEMENT OF PROFIT MARGIN OF HINDUSTAN UNILEVER

5.13 STATEMENT OF INVESTMENT TURNOVER (ASSET

5.14 SUMMARY OF DU PONT ANAYSIS

A graphical representation is provided in order to compare financial ratios such as

NAGARJUNA DEGREE COLLEGE

MEANING OF DU-PONT ANALYSIS:

NAGARJUNA DEGREE COLLEGE Page 1

According to “CFO Magazine” a finance executive at E.I. DuPont de Nemours and co of

NAGARJUNA DEGREE COLLEGE Page 2

Return on Equity= Net Profit Margin × Assets Turnover × Financial Leverage

FORMULA AND CALCULATION OF DUPONT ANALYSIS

DuPont Analysis=Net Profit Margin ×AT ×EM

Net Profit Margin=Net Income/Revenue

Asset Turnover=Sales/ Average Total Assets

Equity Multiplier =Average Total Assets/ Average Shareholder’s Equity

Or Equity Multiplier= Total Assets/ Shareholders capital

1.5OBJECTIVES OF DU-PONT ANALYSIS

NAGARJUNA DEGREE COLLEGE Page 3

ROE (123) .32 .32