Unilever Horizontal Analysis
Liquidity | | | 2014 | 2013 |
Current Ratio | | | 0,63 | 0,70 |
Acid test retio | | | 34,52 | 44,14 |
Accounts receivable turnover | | 99,62 | 198,72 |
Accounts receivable turnover days | | 4 | 2 |
Inventory turnover | | | 6,81 | 7,38 |
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Profitability | | | 2014 | 2013 |
Profit margin | | | 0,08 | 0,07 |
Asset turnover | | | 1,10 | 1,05 |
Return on assets | | | 0,09 | 0,08 |
Return ordinary shareholders equity | | -31,07 | -25,60 |
Earnings per share (EPS) | | | -181,63 | -178,35 |
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Their accounts receivable turnover decreased dramatically while the accounts receivable turnover days doubled. The current ratio and acid test ratio decreased what is not good for the liquidity. However the acid test ratio is still remarkably high.
Examining the profitability we find that the profit margin and return on assets are a bit low but increasing compared to 2013. Furthermore are all profitability ratios slowly increasing except for the payout ratio. That could indicate more money is invested in the company to increase growth. The solvency of Unilever is not in a good state. The debt to total assets is relatively low but rapidly increasing. And the times interest earned is very low but also rapidly increasing. This could mean the company is investing more which caused the debt to total assets to increase and using those investments they increase their income which increases the times interest earned ratio.
Examining the horizontal analysis we see that the total assets increased by 2.514 million, the total liabilities by 3.066 million and the total shareholders’ equity decreased by 81 million. The long-term debt increased with 228 which partially explain the increase in debt to total assets ratio. The retained earnings decrease strongly by 2.726 which is invested in goodwill and property, plant and equipment. This also explains the decrease in the payout ratio because the company used the retained earnings for investment instead for more dividends.