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COMPARATIVE FINANCIAL ANALYSIS
vs.
1.1. Introduction
2.2. Company Profiles
3.3. Ratio Analysis
1
4.4. The cost of Capital
5.5. The working capital Model
CONTENTS
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1.1. Introduction
The Objective of our
project is to analyze the
financial performance in
the last 5 years; of two
competing firms in the
same field of business.
• Analysis of Financial performance of the two firms
• Understanding their competitive advantage over each other
• Future performance forecasting
• Recommendations
Scope of Analysis
vs.
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Dabur India Limited is the fourth largest FMCG Company in India. Dabur operates in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care & Foods.
2.2. Company Profiles
Revenues = US$600 Million (Rs 2834 crore)
Market Capitalization = US$2.2 Billion (Rs 10,000 Crore)
9 Billion-Rs. brands: Dabur Amla, Dabur Chyawanprash, Vatika, Réal, Dabur Red Toothpaste, Dabur Lal Dant Manjan, Babool, Hajmola and Dabur Honey
• Dabur - Ayurvedic healthcare products
• Vatika - Premium hair care• Hajmola - Tasty digestives• Réal - Fruit juices &
beverages • Fem - Fairness bleaches &
skin care products
Master brands
3
2.2. Company Profiles
Revenue= 223.199 ( USD in Millions ) Market Cap = 96494.3027764 ( Rs. in
Millions ) Total Income =Rs. 11331.484 Million
( year ending Mar 2009) Net Profit = Rs. 1615.468 Million ( year
ending Mar 2009)
• Cinthol• Godrej Expert• Renew• Godrej no. 1• Colour soft
Master brands
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Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods companies, with Personal and Home Care Products. Their brands, which include Cinthol, No. 1, Expert and Ezee, among others, are household names across the country.
Ratio Analysis
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3.3. Ratio Analysis
1.12
0.95
1.11
0.93
0.78
2.04
2.5
1.54
1.24
1.13
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
Current Ratio Quick Ratio
0.73
0.6
0.67
0.55
0.38
1.6
1.87
0.89
0.71
0.64
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3.3. Ratio Analysis
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
Cash Ratio Gross profit Ratio
0.22
0.12
0.14
0.12
0.03
0.14
0.93
0.11
0.06
0.06
17.8
17.11
16.91
17.37
45.03
0.14
0.93
0.11
0.06
0.06
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3.3. Ratio Analysis
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
Net Profit Ratio Debt-equity Ratio
15.59
15.2
14.18
13.77
11.67
14.22
16.5
15.95
18.28
15.2
0.19
0.03
0.05
0.05
0.14
0.12
0.89
1.02
0.06
0.12
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3.3. Ratio Analysis
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
Inventory-turnover Ratio Debtors-Turnover Ratio
10.94
12.52
11.11
11.65
9.64
9.25
5.7
6.53
7.54
7.67
22.63
25.94
39.7
35.3
26.95
99.37
81.1
93.26
112.08
61.07
3.3. Ratio Analysis
2008-09
2007-08
2006-07
2005-06
2004-05
DABUR GODGEJ
Fixed Assets turnover Ratio
4.84
4.67
8.51
7.3
7.41
4.18
4.6
9.47
11.82
8.34
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The Cost Of Capital
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4.4. The cost of capital
Cost Of EquityCost Of Equity
Cost Of capitalCost Of capital
Cost Of DebtCost Of Debt
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DABUR GODREJ
10.0% 8.33%
Cost Of DebtCost Of Debt
4.4. Cost of CAPITAL
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Cost Of EquityCost Of Equity
1. CAPM: ks= kRF + (kM -
kRF)b
= kRF + (RPM)b
2. DCF: ks = D1/P0 + g
4.4. Cost of capital
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Cost Of EquityCost Of Equity
DABUR GODREJ
B =0.48
Risk free return=8.0%
Market Return =15.0%
Risk Premium =7.0%
11.4%
B= 0.39
Risk free return =4.91%
Market return = 20%
10.79%
4.4. Cost of capital
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Weighted Average Cost of CapitalWeighted Average Cost of Capital
4.4. Cost of capital
DABUR 11.00%
The Working Capital Model
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5.5. The working capital Model
The short term operating activities of the firm & their impact on cash & working capital
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5.5. The working capital Model
THE OPERATING CYCLE & THE CASH CYCLE
- Short Term Operating Activities :
1 Buying raw-material How much inventory to order
2 Paying cash & purchases To borrow / draw down cash balance
3 Manufacture the product Choice of production technology
4 Selling the product Offer cash / credit term to the customer
5 Collecting cash How to collect cash
12
Inventory
Beg 20114.69
End 26171.64
A/C Receivables
Beg 10046.43
End 11236.01
A/c Payables
Beg 17289.1
End 19384.87
Net Sales 239616.39
Cogs 196953.07
Inventory
Beg 19771.19
End 9355.62
A/C Receivables
Beg 14873.23
End 16099.98
A/c Payables
Beg 18.95
End 47.17
Net Sales 81623.72
Cogs 86745.94
DABUR GODGEJ
5.5. The working capital Model
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Dabur Godrej
Avg Inventory 23143.16 14563.4
Inventory turnover 8.5 times 5.95 times
Inventory pd 42.9 61.3
Avg Receivables 10641.22 15486.6
Receivables turnover 22.51 times 5.27 times
Receivables pd 16.21 69.25
Avg payables 18336.98 33.06
Payables turnover 10.7 times 2623 8 times
Payables pd 34.11 0.139
5.5. The working capital Model
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Inventory Period42.9
Inventory Period42.9
Receivable Period16.21
Receivable Period16.21
Operating Cycle59.11 days
Operating Cycle59.11 days
Operating Cycle59.11
Operating Cycle59.11
A/c Payable period34.11
A/c Payable period34.11
Cash Cycle25 days
Cash Cycle25 days
Inventory Period61.3
Inventory Period61.3
Receivable Period69.25
Receivable Period69.25
Operating Cycle130.55 days
Operating Cycle130.55 days
Operating Cycle130.55
Operating Cycle130.55
A/c Payable period0.139
A/c Payable period0.139
Cash Cycle130 days
Cash Cycle130 days
DABUR
GODREJ
5.5. The working Capital Model
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PRESENTED BY: NEHA LUTHRA & SAHINA PURI