Unilever financial ratio
Here is the financial ratio analysis of Unilever Pakistan Limited for the year 2010. The
ratios would be compared with that of the previous years to explain the changes the
company’s performance. The ratios would also be compared with the industry average in
order to evaluate the company’s performance with that of the industry.
Liquidity Ratios:
Current Ratio
Current assets
=
7,426,964,000
=
0.8
Current Liabilities
8,973,709,000
For this year current ratio is 0.8 which shows that the company would have still left with
current liability to pay, if it sells all its current assets to cover its current liabilities.
Company is in risky position. It is short of liquidity to pay for current liabilities. As
compare to last year, the current ratio is same as of this year i.e. 0.8. The reason that the
ratio is same for both years is that there has been increase in current asset and current
liabilities have increased in same proportion.
Quick Ratio
Current assets – Inventories
=
7,426,964,000

3,881,007,000
=
0.4
Current Liabilities
8,973,709,000
0.4 ratio shows that the company current liability is two times its current asset (excluding
the inventory). The situation for company is under risk. Comparing this ratio with its last
year ratio i.e. 0.3. There we have seen little progress in it but it doesn’t mean that we have
reduced our liabilities. This is due to change in inventory. As inventory has decreased in
a year and the current asset (excluding inventory) has increase so this show little progress
in the quick ratio in one year time.
Financial Leverage Ratios
Debt to Equity Ratio
Total Debt
=
9,928,472,000
=
2.7
Shareholder’s Equity
3,560,318,000
This ratio is very much high for the company. It shows that for every 1 rupee of equity
there is 2.7 rupee of debt financing. This means that the ¾ of company assets are
financed by the debt financing. This is very unfavorable situation for the company. If we
see it with last year debt to equity ratio i.e. 2.4 the situation for company is much riskier
then last year. The ratio has increased because the company borrows more from the
creditors as compare to the shareholders investment.