We were told at the beginning of the session that we were going to be given a capstone project. This means that we will be analyzing the financial statement of two companies listed on a major stock exchange market. During the course of the semester, my group was asked to analyze Unilever as it compares to Nestle over a 10 year period. We carried out extensive research on the financials, and carried out liquidity ratio, profitability ratio, and leverage ratio. We also carried out a SWOT analysis and proffered recommendations.
The deadline for the submission of the presentation was on the 6th of April, 2022 while we were expected to present on the 8th of April, 2022. The professor told us that he could call on anyone to present for the group and would grade everyone in the group based on the presentation of whoever he picked. The summary of our presentation was a comparative analysis of Unilever and Nestle 10 year financial statements. Unilever is an entity in the business of manufacturing, and marketing foods and personal care products. It was established in 1925 and quoted on the Nigeria stock exchange in the year 1973. Nestle on the other hand was founded in 1961 and conducted trading under the name of Nestle Products Nigeria Limited. It was listed on the Nigerian Stock Exchange in 1979. It is a food and beverage specialty company. We went ahead to use the statement of profit and loss as well as the statement of financial position to analyze the key performance index which shows that Unilever incurred a negative net income in 2019 and 2022 which we attributed to COVID 19.
As for the financial ratio, we used the current ratio to access the liquidity position of the company. The graph we shared showed that due to changes in the market, the liquidity position improved between 2016 and 2017. This means that the company will be able to meet its short-term financial obligations. A ratio of 1 means that a company can exactly pay off all its current liabilities with its current assets. A ratio of less than 1 would imply that a company is not able to satisfy its current liabilities. Our analysis showed that from 2017 Unilever was able to could pay off all its current liabilities with its current assets. We also used quick ratio to access the liquidity position of the company. It is a more stringent liquidity test that indicates if the company has enough short-term assets without selling its inventory to cover its liabilities.
We used the net profit margin to access the profitability ratio of Unilever. The net profit wants to know how much money Unilever is making per every naira of sales. Unilever was not doing well in this aspect. We also carried out Leverage ratio and efficiency ratio.
To be continued.