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FINANCIAL TREND AND RATIO ANALYSIS
Procter and Gamble or simply P&G has its world headquarters in Cincinnati, Ohio. P&G community is large and comprises approximately 127000 employees scattered worldwide in 80 countries. The company sells its products to over 180 countries mainly through mass merchandisers, club stores, drug stores and neighborhood stores. These products serve people mainly in developing markets (Brechner, 2012).
The company has a portfolio of trusted brands such as Always, Ariel, Duracell, Gillette, Ace, and Oral-B among others. These products influence directly on the lives of consumers. The products of P&G continue to make presence in pharmacies, e-commerce, department stores and salons. P&G is a public company whose stocks are listed in New York and Paris Exchanges. Innovation is a crucial driver in the growth of the company (Dyer, Dalzell & Olegario, 2004).
This company invests a whopping $ 2 billion each fiscal year dedicated in research and development. This trend analysis looks back at the financial record for the past three years since 2010 to 2013. The values provide in this analysis will be inform of USD. The sales or revenue in 2010 was 78.94 billion while, in 2011, it was 82.56 billion. This represented 4.59% increment. In 2012, the company sold goods valued 83.68 billion while, in 2013, it collected revenue worth 84.17 billion.
This represented 1.36% increment in comparison to 2011 and 0.58% increment in comparison to 2012. The gross income for the company in 2010 was 41.09 billion, and in 2011, it was 41.77 billion, this represented 1.64% increment. In 2012, the income dropped to 41.64 billion, and this represented a drop by 0.31%. In 2013, there was a 1.10% increase, and thus the gross income was 42.1 billion. Net income for the company in the five-year span represents inconsistency. In 2010, the net income was 10.95 billion while, in 2011, it was 11.8 billion. This represented 7.77% increment. In 2012, however, the net income dropped by 22.28% with the net income being 9.17 billion. In 2013, there was 23.37% increment translating to 11.31 billion.
Unilever is known for a portfolio of 400 brands, which are focused on health and well being. The company brands ranges from balanced food, bathing soaps, shampoos and household products. The world leading products from the company include Dove, Axe, and Omo alongside trusted brands such as Suave and Blue Band (Wolf, 2011). Sustainability is the contributor to the success of the company. The company places emphasis on products that improve the health and well-being of the consumer. It also dedicates itself to environmental protection. The company headquarters is in London and Rotterdam (Wolf, 2011). The revenue for the year 2009 was 39.82 billion, and for the year 2010, it was 44.26 billion.
This represented 11.15%, and in 2011, it was 46.47 billion. This represented 4.98% incremented in growth while, in 2012, it was 51.32 billion. This was a 10.45% increment from the 2011. The gross income for 2009 was 19.0 billion while, for 2010, it was 21.03 billion. This represented 10.27%. The gross income for 2011 dropped to 18.35 billion.
This represented -12.78% decrease in overall performance. In 2012, there was increment by 12.40% with the gross income being 20.62 billion. The net income for the company in 2009 was 3.37 billion, while in 2010 it was 4.24 billion. This represented 25.93% increase. In 2011, net income increased by 0.19% translating to 4.25 billion while in 2012, it represented 4.48 billion a 5.36% increase.
Procter and Gamble positioned in the market with an articulated flow of income. This financial analysis looks at three aspects namely revenue, gross income and the net income. P&G revenues rotate around the same value with little variations. The lowest is 78.94 billion and the highest being 84.17 billion. This represents a 5.23 difference in revenue between the 2013 and 2010. The ratio in growth was at its best in 2011 having 4.59%. Between the years 2012 and 2013, the revenue seems to be behaving like a plateau i.e. stabilizing in sales. Gross income for the company is not variable with 2010 having 41.09, 2011 being 41.77 and 2013 having 42.1 billion. The ratios also tell of a stabilizing gross income.
The net income for the company has the largest fluctuations with 2012 being the most affected. For 2010, 2011 and 2013, the trend is stabilizing with minimal variations in the net earnings. A close look at Unilever reveals a similar trend. In the revenue collected between 2010 and 2012, there is minimal variation with a difference of 7.06 billion dollars. This represents the difference in the revenue collections. The company maintains a constancy in total sales made.
The gross income for the company shows a similar trend with minimal variations. For instance in 2010, the gross income was 19.01 billion while in 2012, it was 20.62 billion. This represents a 1.61 difference in value. The trend can help in prediction of the future performance of the company within the same margin. The net income is 4.24, 4.25, and 4.48 billion for the years 2010, 2011, and 2013 respectively. This represents a constant trend in performance in terms of overall net income collected.
Constancy in the performance of the two companies shows that they are leaders in the industry. An infant company is characterized by fluctuations in the performance. Once established, companies tend to maintain a certain trend in in their businesses. This indicates both companies are leaders in their areas. From the financial statements of the two companies, it is clear that the future for the industry remains unexploited and more investment is required. The future of the industry is not bleak but filled with opportunities for growth and exploitation.
The stock exchange or rather equity can be used to raise finances. Bonds and stocks are closely followed for general economic conditions. Stocks offer ownership to the company. Stocks are offered during an IPO or via equity sales (Brechner, 2012). Using equity, the stocks are at a great risk. Stocks fluctuate depending on the market value of the company. Bonds are loans that a company offers at fixed interests. A company may choose to borrow money from the bank, individuals or institutional investors (Brechner, 2012).
In comparison to stocks, bonds have low volatility and do not require a centralised place for trading. Furthermore, when the company is bankrupt, stockholders bear the huge losses. Basing on such differences, bonds are the best form of raising capital in a company. Moreover, stock prices are dependent on the market value, which is not constant. Financial reporting has some ethical implications such as disclosure of meaningful information. A sense of responsibility is needed to ensure information of high ethical standards. Truthful information will enable investors have a true value for their money.
Brechner, R. A. (2012). Contemporary mathematics for business and consumers. Australia: South-Westen/Cengage Learning.
Dyer, D., Dalzell, F., & Olegario, R. (2004). Rising tide: Lessons from 165 years of brand building at Procter & Gamble. Boston, Mass: Harvard Business School Press.
Wolf, S. M. (2011). Unilever Case Study. München:
Company Analysis is among one of the famous form of assignments that are provided to management students. The task is a test of a candidate's potential to size up a particular company in terms of its growth, establishment and probable future. There are certain essentials which are mandatory for a company analysis project. They are:
Introduce the company
When you are conducting a company analysis, it is obvious that you will be first required to introduce the company. In the introductory paragraph itself the readers should know about the company, a brief of its contribution to its respective industry and a recent affair in relation to the company. This will arouse interest among the readers and they will look forward to go ahead with your report. Contrarily, a dull introduction about a company can kill the desire of the readers to move ahead with your analysis.
Overall Status of the company
Once the company has been introduced, it is time to move ahead with the company details. The immediate paragraph following the introduction should be able to highlight about the history of the company along with its cherished achievements. History should include the date of establishment of the company, major changes faced by the company and the impact of the company in its respect niche. To conclude the overall status, recent status of the company should be placed that indicates a continuous growth rate (if applicable).
SWOT analysis is an impeccable approach for find out the current status of a company. SWOT stands for:
Analyzing these factors for a company will allow the researcher to gain valuable information about the company whereby internal and external are discovered and disclosed.
Management and Financial Analysis
Internal and external factors to a company are often expressed in terms of financial benefits or losses. Management Analysis and Financial Analysis play a key role in determining the exact position o a company in a particular industry. Statement such as Cash Flow and Fund Flow gives an absolute idea of the monetary flows whereas, on the other hand, key ratios such as return on investment (ROI), Stock turnover ratio, etc., provides a valuable source of comparison.
To end a company analysis, you will have to predict the future of the company based on the growth of the company and growth of its respective industry. The derived cash flow statements and key ratios will also play a major role in contributing to the given conclusion.
Inclusion of these 5 points is a must for every researcher who wishes to conduct a company research as it serves as the base pillars.