Financial Statement Analysis of Marico Limited
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Case Code: CLFIN034 Case Length: 6 Pages Period: 2019-21 Pub Date: 2022 Teaching Note: Available |
Price: Rs.250 Organization : Marico Limited Industry :Home Appliances & Consumer Products Countries : India Themes: Financial Analysis |
Abstract
Analysts from an investment advisory firm were interested in finding out the year-on-year change in the operating performance and the financial position of companies based on the stock trends, as the stock trends were believed to reflect the financial performance and financial position of the company. One of the analysts observed that the average stock trading price of Marico Limited had been witnessing a rise since the third quarter of the financial year 2020-21 in comparison with the same quarter of the previous year.
Substantiating the stock trading trend, the management also said that the business performance had been subdued during the first two quarters of the financial year 2020-21 due to the Covid-19 restrictions and the impact of the resultant lockdowns on the supply chains. However, business had started to pick up once the restrictions were eased.
There was some pressure on the operating performance of the company during the first two quarters of the financial year 2020-21 due various macro-economic factors coupled by the impact of Covid-19 on the global markets. The analysts were interested in analyzing and interpreting how the company’s performance and financial position had varied during the year and its impact on the stock performance.
Input costs had increased during the year, and the management also took into account changes in the inventory management practices. The present case study can be helpful in analyzing the financial statements of Marico Limited using the comparative income statement and the comparative balance sheet. It can be used to analyze and interpret the changes in the operating items and in the assets and liability composition of the company during the financial year 2020-21.
Issues
- Understand the purpose and techniques used in financial statement analysis.
- Analyze and interpret the comparative income statement of the company.
- Analyze and interpret the comparative balance sheet of a company.
Introduction
As part of a regular exercise, analysts at an Investment advisory firm were analyzing the stock trading trends of different companies during the financial year 2020-21. One of the analysts who was looking at the stock price trends of India-based multinational consumer goods company Marico Limited (Marico) for the financial years 2019-20 and 2020-21, noticed an interesting trend in the average higher trading price of the company during the year 2020-21. (Refer to Exhibit I for Stock Trading Trends of Marico Limited for the financial year 2019-20 and 2020-21).
Headquartered in Mumbai, Maharashtra, India, Marico was a leading consumer products manufacturing and a distributing company as of 2021. It had a presence in 25 countries in the emerging markets of Asia and Africa. Marico operated 8 manufacturing units across different locations in India. It also exported its products to other markets in the Indian sub-continent like Bangladesh, Sri Lanka, and Nepal.
Keywords
Comparative Income Statement; Comparative Balance sheet; Marico Limited; Financial Statement Analysis; Operating Performance; Financial Position; Base year; Percentage Change; liquidity position
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