A NOTE ON FINANCIAL RATIO ANALYSIS
Ravi Madapati
Faculty Member
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INCOME STATEMENT OF HINDUSTAN LEVER LIMITED
|
Hindustan Lever Ltd.
Rs. Crore
|
Dec-96
12mths |
Dec-97
12mths |
Dec-98
12mths |
Dec-99
12mths |
Dec-00
12mths |
Dec-01
12mths |
|
|
|
|
|
|
|
|
|
Income |
7137.8 |
8363.3 |
10261.57 |
10978.3 |
11458.3 |
11861.77 |
|
Other income |
106.7 |
165.2 |
183.93 |
269.3 |
305.9 |
283.14 |
|
Change in stocks |
15.2 |
46.4 |
-7.9 |
128.52 |
-83.85 |
-4.63 |
|
Non-recurring income |
137.8 |
50.4 |
47.15 |
14.4 |
47.8 |
310.93 |
|
Expenditure |
|
|
|
|
|
|
|
Raw materials, stores, etc.
|
4533.4 |
5201.9 |
6158.31 |
6548.4 |
6388.8 |
6381.54 |
|
Wages & salaries |
385 |
448.7 |
527.23 |
584.1 |
614.3 |
591.7 |
|
Energy (power & fuel) |
105.8 |
110.8 |
118.43 |
123.1 |
139.9 |
152.77 |
|
Indirect taxes (excise, etc.)
|
577.1 |
626.5 |
835.44 |
861.8 |
870.1 |
920.66 |
|
Advertising & marketing expenses
|
283 |
490.6 |
676.86 |
746.5 |
709.2 |
835.75 |
|
Distribution expenses |
279.2 |
289.1 |
345.77 |
366.2 |
446 |
465.86 |
|
Others |
386.6 |
474.9 |
544.02 |
596.9 |
712.4 |
761.8 |
|
Non-recurring expenses |
139.9 |
54 |
49.43 |
20.4 |
20.7 |
146.01 |
|
Profits/losses |
|
|
|
|
|
|
|
PBDIT |
707.5 |
928.8 |
1229.4 |
1543.1 |
1826.8 |
2195.13 |
|
Financial charges (incl. Lease rent)
|
57 |
33.8 |
29.28 |
22.3 |
13.1 |
7.74 |
|
PBDT |
650.5 |
895 |
1200.2 |
1520.8 |
1813.7 |
2187.39 |
|
Depreciation |
55.2 |
57.9 |
101.05 |
128.7 |
130.9 |
144.66 |
|
PBT |
595.3 |
837.1 |
1099.2 |
1392.1 |
1682.8 |
2042.73 |
|
Tax provision |
192.55 |
270 |
293 |
318 |
355 |
402.42 |
|
PAT |
402.8 |
567.1 |
806.2 |
1074.1 |
1327..8 |
1640.31 |
|
Appropriation of profits |
|
|
|
|
|
|
|
Dividends |
261.9 |
372.44 |
531.35 |
711.09 |
942.3 |
1158.31 |
|
Equity dividend |
249 |
338.5 |
463.46 |
638.1 |
770.2 |
1100.62 |
|
Dividend tax |
12.9 |
33.9 |
67.9 |
72.9 |
172.1 |
57.69 |
|
Retained earnings |
140.9 |
194.7 |
274.9 |
363.1 |
385.5 |
482 |
| |
Current Ratio
Calculation of current ratio for HLL
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
|
|
|
|
|
|
|
Current assets
|
2240.99
|
2753.33
|
3295.08
|
3321.35
|
3712.06
|
|
Current liabilities
|
2093.01
|
2503.92
|
2966.85
|
3252.71
|
3559.52
|
|
Current ratio
|
1.071
|
1.1
|
1.111
|
1.021
|
1.043
|
The norm for the
current ratio in FMCG industry is 2:1. The current ratio of HLL is almost
equal to 1:1, which is less than the norm. On an average, for every rupee of
current liability, HLL has Rs. 1.069 of current assets. The current ratio can
be better judged if it is studied along with ratios such as inventory turnover
and receivables turnover.
The higher the receivables and inventory turnover, greater the firm's ability
to pay its current liabilities. Generally, a low current ratio indicates the
firm's inability to meet its current obligations. But a high current ratio may
represent unnecessary blocking of liquid assets such as cash and cash
equivalents.
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