Dabur Case Study.pptx

INTRODUCTION
Dr. S. K. Burman, the founding father of Dabur India Ltd. With revenues of over Rs. 9,500 crore and a
capitalization of over Rs 100,000 crore, Dabur India Limited is India's 4th largest FMCG company. Dabur is India's
most trustworthy name and additionally the world's largest Ayurvedic and Natural Health Care Company, with a
range of over 250 Herbal and Ayurvedic products and a 137-year tradition of quality and talent in the sector.
Dabur's products also are well-known in global markets, with 100+ countries within which they hold the top
market position. Dabur's abroad revenue now could be additional than twenty-five percent of the company's
turnover. Dabur additionally offers a variety of natural projects and has focused more on natural projects
pertaining to the Indian market and heritage.
WHY DABUR?
We have chosen Dabur as it is one of the biggest FMCG companies in India. By analyzing Dabur's financial
statements we will be able to know about the FMCG industry as a whole because Dabur has deep roots in the
FMCG sector, which will also reveal the impact on the economy as a whole. Furthermore, by examining Dabur's
financial records, we will gain insight into how large firms are dealing with the current economic situation. Dabur
is also a corporation that has always upheld its ideals and never forgotten where it came from. All of these
factors persuaded us to choose Dabur.

INDUSTRY OVERVIEW
Fast-moving consumer goods (FMCG) are India's fourth-largest industry, with domestic and personal care
products accounting for 50% of all FMCG sales. Increased awareness, greater access, and changing lifestyles
have been the key development factors in the business. The most important contribution to the overall revenue
obtained by the FMCG sector in India is the urban segment (which accounts for around over 50% of total income
created by the sector in India). India's FMCG sector in the village sector has developed at a faster rate than
urban India's in recent years. Rural and semi-urban areas are rapidly growing, with fast-moving consumer goods
accounting for half of all rural spending.
India's FMCG business is expected to develop at a Growth rate of approximately 15% from USD $110B in 2020 to
USD$ 200+ B in the next 5 years. India's packaged food business is expected to treble to US$ 70 billion by 2025.
The Indian processed food market is predicted to rise to $470B by 2025, up from $263B in 2019-20. Food
processing and single-brand retail have been approved for 100% FDI, while multi-brand retail has been allowed
for 51% FDI by the government. In the 21st century, the sector had healthy FDI inflows of over USD $18 Billion.

SHORT TERM SOLVENCY RATIO
CURRENT RATIO
Current ratio tells about the ability to pay the short term obligations through its current assets. The current
ratio of Dabur decreases by 17.85% ( From 0.138 in 2021 to 0.114 in 2022)
All figures are in crore
INTERPRETATION
There is a drastic decrease in bank balance which led to the decrease in the current ratio.
Current Asset 2021 2022 Change
Inventories 1114.16 1237.96 123.8
Investment 451.14 679.38 228.24
Trade Receivables 281.24 454.55 173.31
Bank Balance 823.37 125.71 (697.66)
Current Liability 2021 2022 Change
Borrowings 151.96 261.88 109.92
Trade Payables 1480.7 1581.47 100.77
Current Tax Liability 26.63 70.59 43.96

QUICK RATIO
Quick Ratio is the ratio of the relationship between quick assets and current liabilities. Here Quick Ratio is Current
Asset less Inventories.
INTERPRETATION
There is an increase in raw material from 336.76cr in 2021 to 404.50cr in 2022 and finished goods from 402cr in 2021
to 436cr in 2022. It indicates that the company has either excessive amount of inventory lying idle with them this
means that the company is unable to sell their inventories or they are expecting higher demand for their product.
ABSOLUTE LIQUID RATIO
The absolute Liquidity Ratio shows a company's ability to cover its short-term obligations using only cash and cash
equivalents and current investments.
INTERPRETATION
This is due to a decrease in bank balances by 697.66 crores which will affect the borrowing power of the company.
2021 2022 % Change
Quick Ratio 0.842 0.604 (28.26%)
2021 2022 % Change
Abs Liquidity Ratio 0.631 0.353 (44.06%)

The firm is not able to meet its short term obligations due to a net decrease in change in current assets when
compared to a change in current liabilities. A high current ratio and a low quick ratio is due to high amounts of
inventories. It indicates Funds locked up and Investment opportunity lost, Other income compromised, High
inventory carrying cost, Less of liquidity, Long operating cycle. But one of the reasons for high inventory could be
anticipation of future sales as the company's sales is quite high.
The firm has increased its inventories by 123.8cr. The company’s Net Sales have increased by 994.77cr. and
inventories have been increasing yearly in anticipation of increased demand.
No, Accounts receivable have increased by 61.62% whereas Net Sales have increased by 13.26% this indicates that
accounts receivables do not move in line with sales. Yes, Accounts Receivables have significantly increased by
173.31 crores.

LONG TERM SOLVENCY RATIO
Debt Equity Ratio:
Debt equity ratio expresses the relationship between the debt and equity.
Debt Equity Ratio = Long term debt/ Net worth
Long term borrowings have increased by 272.66 crores (1298.99.12%) due to borrowings and Shareholder’s Fund
has increased due to increase in Reserves and Surplus by 472.65 crores (8.77%) which results in a slight increase of
debt equity ratio from 0.0039 in 2021 to 0.0501 in 2022.
INTERPRETATION:
Debt equity ratio is low which means that the company can run on its profits and the risk is also low. But in 2022
they borrowed 249.1 crores as long term debt which resulted in increasing of debt equity ratio. Most of the FMCG
companies are debt free or have very low debt.

Leverage Ratio
Measurement of financial leverage.
Leverage Ratio = Total Assets/ Net worth
Total assets have increased by 1087.84 crores (14.49%) and net worth has increased by 472.65 crores (8.77%) which
resulted in an increase of leverage ratio from 1.3919 in 2021 to 1.4652 in the year 2022.
INTERPRETATION
Net worth is more than 50% of total assets, and the leverage ratio is more than 1 which is favorable for the company.
Interest Coverage Ratio
It measures a company’s ability to repay outstanding interest on borrowings.
Interest Coverage Ratio = PBIT/ Interest
PBIT has increased by 213 crores(12.72%) and interest has increased by 9.53 crores (104.27%) due to which the
interest coverage ratio has decreased from 185.1696 in2021 to 102.5699 in 2022.
INTERPRETATION
The decrease in the interest coverage ratio shows that the rise in interest payable and the ability to cover the interest
from the profits has decreased. However, the ratio is high enough to cover the interest.

Summary of Solvency Ratios
S No. Solvency Ratios 2022 2021 Increase/Decrease
1. Debt Equity Ratio 0.0501 0.0039 Increase by 0.0462
2. Leverage Ratio 1.4652 1.3919 Increase by 0.0733
3. Interest Coverage Ratio 102.5699 185.1696 Decrease by 82.5997
4. Fixed Assets to Net worth Ratio 1.0737 0.2098 Increase by 0.8639
5. Total Assets to Net worth Ratio 0.4492 0.5249 Decrease by 0.0757

TURNOVER RATIO
Activity Ratio refers to those ratio that measure the level of activities, performance or the operation of an
enterprises .
They are calculated on the basis of turnover
S.NO Key Turnover / Activity / Efficiency Ratio
1 Trade Receivable Turnover Ratio
2 Trade Payable Turnover Ratio
3 Inventory Turnover Ratio
4 Fixed Asset Turnover Ratio
5 Total Asset Turnover Ratio
6 Current Asset Turnover Ratio
7 Net Worth Turnover Ratio

Trade Receivable Turnover Ratios:-
This ratio indicates the efficiency of the company to collect the amount due from debtors. It determines the
The efficiency with which the trade debtors are managed.
In case of Dabur, Net Sales have increased by 13.84% from previous year whereas Average Trade Receivables
has increased by 11.35% which caused a net increase in Trade receivables Ratio 2.25 of % from previous year.
The Collection Period has decreased from 16.78 days to 16.41 days which is a decrease of 2.25% as compared to
previous year.
INTERPRETATION:
A high trade receivable turnover ratio would mean that the firm is very efficient in converting its trade receivable into
cash. It also means that the debtors are paying their dues on time. The decrease in average collection period
indicates that the company is able to collect receivables at a steady rate.
Trade Payable Ratio:- This ratio shows the speed with which payments are made to the suppliers for purchases
made from them.
In the case of Dabur, Net Purchases have increased by 5.40% from previous year whereas Average Trade
Payables has increased by 21.8% which caused a net decrease in Trade Payable Ratio of 14.68% from previous
year.
AVERAGE PAYMENT PERIOD:- The Payment Period has decreased from days 414 to 474 days which is a
increase of 14.49% as compared to previous year. .
INTERPRETATION:
Trade payable ratio has increased which shows that payment period has decreased compared to the previous
though the decrease is not significant. The high payment period is because the Trade payables consist majorly of
the “Due to others” wherein the bank is paying the supplier instantly and Dabur is liable to the bank

Inventory Turnover Ratio :-
The inventory Turnover Ratio (ITR) helps to find how fast a company is able to move stock and generate sales.
Dabur’s Inventory turnover ratio has decreased by 4.10% , this is mainly due to an increase in inventory by 11.11%
The Inventory Turnover decreased, which indicates that the firm is stocking more goods. Reasons for falls are:-
a) An inventory build up in anticipation of increased sales.
b) Sales volume has declined, leaving excess merchandise on hand.
Current Asset Turnover Ratio:-Current Asset Turnover Ratio indicates the proportion of Average Current Assets
expressed in proportion to Net Sales.
In case of Dabur, the Net Sales have increased by 13.84% which resulted in Net increase of 27% in Current Asset
Turnover Ratio for this year.
Higher Current Asset Turnover ratio implies that the company is utilizing its Current Assets and hence performing
effectively and efficiently.
Net Worth Turnover Ratio
Net Worth Turnover Ratio indicates the proportion of Average Net Worth expressed in proportion to Net Sales.
In case of Dabur, and the Net Sales have increased by 13.84% which resulted in Net increase of 0.80% in Net
Worth Turnover Ratio for this year.
Net Worth Turnover ratio is increasing but the shareholder’s fund is increasing (Reserves and Surplus) over time
which means that the company is able to generate revenue efficiently from the equity.

Inventory Turnover Ratio:-
Inventory Turnover Ratio (ITR) helps to find how fast a company is able to move stock and generate sales.
Dabur’s Inventory turnover ratio have decreased by 4.10% , this mainly due to increase in inventory by 11.11%
The Inventory Turnover decreased , this indicate that the firm is stocking more good. Reasons for fall are:-
a) Inventory build up in anticipation of increased sales .
b) Sales volume has declined, leaving excess merchandise on hand.
Current Asset Turnover Ratio:-Current Asset Turnover Ratio indicates the proportion of Average Current Assets
expressed in proportion to Net Sales.
In case of Dabur, the Net Sales has increased by 13.84% which resulted in Net increase of 27% in Current Asset
A Higher Current Asset Turnover ratio implies that the company is utilizing its Current Assets and henceperforming
effectively and efficiently.
Net Worth Turnover Ratio
Net Worth Turnover Ratio indicates the proportion of Average Net Worth expressed in proportion to Net Sales.
In case of Dabur, the Net Sales have increased by 13.84% which resulted in Net increase of 0.80% in Net Worth
Net Worth Turnover ratio is increasing but the shareholders’ fund is increasing (Reserves and Surplus) over time
which means that the company is able to generate revenue efficiently from the equity.

Fixed Asset Turnover Ratio:
Fixed assets turnover ratio establishes a relationship between net sales and Average Fixed Assets. This ratio
indicates how well the fixed assets are being utilised.
In the case of Dabur, the Average Fixed Assets have increased by 17.52% from previous year whereas the net
sales have increased by 13.84% which caused a net increase of 1.37% in Fixed Asset Turnover Ratio.
INTERPRETATION :
Increase in Fixed Asset Ratio indicates that the company is utilizing its Fixed Assets effectively and efficiently.
Total Asset Turnover Ratio:
Total Assets Turnover ratio establishes a relationship between Net Sales and Average Total Assets. It is a
measure of how efficient the firm is in generating revenue from total assets.
In Case of Dabur, the Average Total Assets have increased by 14.45% from the previous year whereas the
Net Sales have increased by 13.84% which caused a net decrease of 3.80% in Total Asset Turnover Ratio.

Activity Ratio’s Summed up
Activity Ratio’s 2022 2021 % Change
1 Trade Receivable Ratio( Net Sales
/Average Trade Receivable) 22.23 times 21.74 times
Increase by 2.5%
2 Holding Period(1/Trade
Receivable ratio)*365
16.41 days 16.78 days Decrease of 2.5%
3 Trade Payable Ratio( Net
Purchase/Average Trade Payable)
0.769 times 0.88 times Decrease of 14.68%
4 Collection Period(1/ Trade
Payable Ratio)*365
474.64 days 414.77 days Increase of 14.49%
5 Inventory Turnover ratio(
COGS/Average Inventory)
4.21 times 4.39 times Decrease by 4.10%
6 Fixed Asset Turnover Ratio( Net
Sales / avg fixed asset)
6.64 times 6.55 times Increase by 1.37%
7 Total Asset Turnover Ratio( Net
sales/ avg total asset)
1.016 times 1.056 times Decrease of 3.80%
8.Current Asset Turnover Ratio( Net
Sales/ Avg Current Asset ) 2.99 times 2.35 times Increase by 27%
9.Net Worth Turnover Ratio( Net

How efficiently is the sample firm able to manage its balance sheet assets and liabilities?
As we can see that the Trade receivables ratio has improved which means that the firm is able to collect the dues
more rapidly as compared to the previous year.
Although the Trade Payable Ratio has improved slightly, still the payment cycle is too long which is eventually
increasing the liability to the company.
Also the company’s holding period has increased which is a good sign as this indicates the anticipation of demand
for its products which is due to increase in net sales year on year basis.
On the other hand Total Asset Turnover Ratio has decreased which shows that revenue generation in
proportion to Average Total Asset has decreased which may not be a good indicator for the company.
How efficiently does a sample firm generate revenue from its fixed assets?
Fixed Assets of Dabur are steadily increasing over the past years. The fixed assets turnover ratio has also
increased by
1.37%, so has the revenue from operations. The upward trend in revenue indicates that Dabur is able to generate
revenue from its fixed assets efficiently.
Comment on firm’s total assets turnover ratio, current assets turnover ratio, and net worth turnover ratio
also.
Compute the cash conversion cycle of the sample firm.
● Total assets turnover ratio has decreased by 3.80% as compared to previous year.
● Current assets turnover ratio has increased by 27%. It indicates that return generated from investment in
current assets has increased in 2022 as compared to previous year.
● Net worth turnover ratio has also increased by 0.80%, but Shareholders funds increasing (mainly reserves and

What is the average time the sample firm spends to collect the cash from its customers? Whether the
suppliers of your sample firm are waiting for a long time to collect their money? How does this affect the
company's reputation?
As we can see from the table that the Average Collection Period has decreased from 16.78 days to 16.41 days for
the year 2021 and 2022 respectively, this indicates that the company’s ability to collect its dues has increased and
they’re able to convert their debtors into cash more frequently which is a good sign in the eyes of Shareholders of
the company.
The suppliers of Dabur are waiting for a long time to collect their money. The payment period was 280.79 days or
to 324.60days for the year 2022 and 2021 respectively. Even though the payment period has decreased, the
payment period is too high. Though the high payment period indicates the firm is utilizing its credit period, it may
imply that Dabur has pending liabilities and may have a negative impact on investors.

PROFITABILITY RATIOS
Profitability ratios evaluate the firm’s ability to generate profits. It tells us how well a company is able to
make profits from its operations.
Some of the key profitability ratios are mentioned below-
S.no Profitability Ratios Formulas
1 Gross Profit Ratio (Gross profit/Net Sales)*100
2 Operating Profit Ratio (Profit before Interest and Taxes/Net Sales)*100
3 Net Profit Ratio (Profit after Tax/Net Sales)*100
4 Return on Assets (Profit before Interest and Taxes/Average Total Assets)*100
5 Return on Net Worth (Profit After Tax/Average Net Worth)*100

Comment on the profitability of the firm. Where does profitability come from?
Dabur is a profitable company whose profits have been increasing constantly over the years.
Dabur’s Gross Profit has increased from 2960 crores to 3218 crores because there is an increase in net sales. The
increase in net sales is due to a 12.4% increase in Domestic FMCG Volume BUT its Gross Profit ratio had decreased from
41.20% in 2021 to 39.35% in 2022.
This was because the % change in Cost of Goods Sold was greater than the % change in Net Sales. This, in turn, leads to
higher COGS as a percent of Net Sales, which causes an overall decrease in the gross profit ratio.
Also, the sale from the E-commerce route had also increased. It was 3% of the total sales last year but now it had
increased to 6%.
Dabur’s maximum revenue and profit come from packaged juices, Chyawanprash, Honey, Facial Bleach, and Air
Fresheners.

Operating Profit Ratio
This ratio shows the operating profit as a
percent of net sales.
Net Profit Ratio(Return on Sales)
This ratio shows the net profit as a percent of
net Sales.
Operating Profit * 100
Net Sales
Net Profit * 100
Net Sales
The Operating Profit Ratio has decreased from
23.55% in the year 2021 to 23.41% in the year
2022.
The Net Profit Ratio has decreased from 19.23%
in the year 2021 to 17.38% in the year 2022.
The change in Net Sales is more when compared
to the change in Operating Profit which causes an
overall decrease in Operating Profit Ratio for the
year 2022 when compared to 2021.
The change in Net Sales is more when compared
to the change in Net Profit which causes an
overall decrease in Net Profit Ratio for the year
2022 when compared to 2021.

Check the trend (heading downwards or upwards) of the gross profit ratio, operating profit,
and net profit of sample firms. What are the reasons for the same?
In the case of Dabur, we can see that there is a downward trend seen in Gross Profit Ratio as well as Operating Ratio and
Net Profit Ratio.
The GP Ratio has decreased from 41.20% in the year 2022 to 39.35% in the year 2021. Also, the percentage change in the
Cost of Goods Sold is more when compared to the percentage change in Net Sales which causes an overall decrease
in gross profit.
The Operating Profit Ratio has decreased from 23.55% in the year 2022 to 23.41% in the year 2021. The percentage change
in Operating expense is more when compared to the percentage change in Net Sales.
The Net Profit Ratio has decreased from 19.23% in the year 2022 to 17.21% in the year 2021. The percentage change in Net
profit is less than the percentage change in Net Sales.

Return on Net Worth
It measures how much return, the equity shareholders of the firm get on their investments.
Return on Net Worth = Profit after Tax * 100
Average Net worth
This Ratio measures the profitability of equity funds invested in the company. It measures how profitably the owners' funds
have been utilized to generate the company's revenue.
The Return on Net Worth had decreased from 27.73% in 2022 to 25.46% in 2021.
In the case of Dabur, the net profit has increased from 1381 crores in the year 2021 to 1432 crores in the year 2022.
Average Net Worth has increased from 4982 crores in the year 2021 to 5627 crores in the year 2022. This led to an overall
decrease in Return on Net Worth which indicates the low efficiency of the company to generate profit for its shareholders.

Whether the firm is under severe price pressure? Do you see a significant difference in
two profitability measures such as operating profit and net profit ratios? How effective
is your sample firm in utilizing total assets to earn profits
The firm is definitely under price pressure but can’t say whether it is severe or not. This is because inflationary
pressure in the past had caused an increase in the cost of goods sold.
Dabur was not able to pass the increased cost to the consumers.
Inflationary pressure was due to the rise in prices of agricultural commodities and the rise in the price of crude oil.
No, there's no significant difference in the two profitability ratios. Both show a downward trend, operating profit has
decreased by 0.14% and Net Profit by 1.72%.

How effective is Dabur in utilizing total assets to earn profits?
To check the effectiveness of DABUR in utilizing total assets to earn profits, we need to
calculate Return on Total Assets. (RoTA).
RoTA also measures how much the firm has earned on its total assets.
Return on Total Assets = Profit before Interest and taxes * 100
Average Total Assets
It is the combination of two ratios, i.e. Operating Profit Ratio and the Total Asset turnover ratio.
Though both the PBIT and average total assets have been increasing, but the percentage change in average total assets is
more than the percentage change in PBIT. This led to an overall decrease in Return on Total Assets.
RoTA had decreased from 24.81% in 2021 to 23.79% in 2022.
This indicates the company's low efficiency in generating profit from its Assets.

Return on Total Assets
Return on Total
Assets
Operating Profit Ratio
{(PBIT/Net Sales)*100}
Total Assets Turnover Ratio
(Net Sales/Average Total Assets)

Interpretation to Return on Total Assets
Operating Profit Ratio: Decrease in the ratio suggests that the costs and expenses have increased more than net sales.
It tells us that the ability of the firm to generate profits from the operational activities needs to be reviewed.
Total Asset Turnover Ratio: Decrease in the ratio speaks about the decreasing efficiency of the management in utilizing
the total assets to contribute to net sales. Although net sales have increased, the increase rate is lower than the
increase rate in Total Assets.
Return on Total Assets(Overall Interpretation): A decrease in return on total assets means that the efficiency of the
firm to use their total assets to generate profits is not on the positive side.

IN CONCLUSION,
S.no Profitability Ratios 2022 2021 Increase/Dec
rease
1. Gross Profit Ratio 39.35% 41.20% Decrease by 1.85%
2. Operating Profit Ratio 23.41% 23.55% Decrease by 0.14%
3. Net Profit Ratio 17.51% 19.23% Decrease by 1.72%
4. Return on Total Assets 23.79% 24.88% Decrease by 1.09%
5. Return on Net Worth 25.46% 27.73% Decrease by 2.27%

Interpretation to DuPont Analysis
Net Profit Ratio: Decrease in the ratio suggests that the financial health of the company in terms of net
profitability is going downhill. Although Net Sales has increased, PAT has not been able to increase in same
rate, maybe due to inefficient management.
Total Asset Turnover Ratio: A decrease in the ratio speaks about the decreasing efficiency of the management in utilizing the
total assets to contribute to net sales. Although net sales have increased, the increase rate is lower than the increase rate in
Total Assets.
Leverage Ratio: A higher financial leverage ratio compared to previous year indicates that a company is using increased debt
to finance its assets and operations — often a telltale sign of a business that could be a risky bet for potential investors.
Return on Net Worth: A decrease in return in net worth means the company’s decision making and equity management
efficiency is on a negative side.
Overall Interpretation: It can be interpreted that the management needs to be efficient in improving PAT, utilizing total
assets, reducing debt and properly managing the capital structure of the company.

MARKET SPECIFIC RATIO
Earning per share
It shows the earning that is available to each equity share.
INTERPRETATION
Increase in EPS is because of the increase in Net profit and increase of investors value.
P/S Ratio
It measures the relationship between the market price of company’s stock and its net sales per share.
2021 2022 %Change
P/S Ratio 8.68 10.04 5.28
2021 2022 %Change
EPS 7.82 8.11 3.70

P/E Ratio
This ratio is popular in investment community and also the primary determinant of investment value.
INTERPRETATION
This decrease is because of the increase in interest rate from 3.28% per annum in 2021 to 3.83% per annum in 2022.
P/B Ratio
This ratio relates to the market price of company’s stock to its book value per share.
INTERPRETATION
As the ratio is decreased it shows the opportunity growth is lesser in 2022 in comparison to 2021.
P/E ratio of Dabur decreases by 5.28% which means investors are not willing to pay high price.
As the P/B ratio decreases by 10.04%, it shows the opportunity growth is lesser in 2022 in comparison to 2021
2021 2022 %Change
P/E Ratio 69.11 65.46 (5.28%)
2021 2022 %Change
P/B Ratio 12.45 11.20 (10.04%)

CASH FLOW
Cash flow from operating activity decreases by 330.37cr (From 1978.77 in 2021 to 1648.40 in2022).
Cash flow from investing activity increases by 438.6cr (From (1121.40) in 2021 to (682.80) in 2022.
Cash flow from financial activity decreases by 79.75cr ( From (555.04) in 2021 to (634.79) in 2022.
Cash and Cash equivalent decreases by 0.9 crore.
Firm fund for its capital expenditure from current borrowing (114.28)cr. and interest received (320.41)cr.
The dividend paid by the company is 972.32cr which is 380.23cr more than previous year and net profit
increases by 50.11cr.
Difference between net profit and cash flow from the operating activity is 112.98cr.
As the operating activity is decreasing it means that company is not getting any profit from its core business and
increase in investing activity shows that company is investing in purchases and bank deposits and decrease in
financial activity shows that company is paying dividends (972.32 cr.) on a huge amount which is good for
investing purpose.

Sustainable Growth Rate (SGR)
The sustainable growth rate (SGR) is the maximum rate of growth that a company can sustain without having to
finance growth with additional equity or debt. The SGR is used by businesses to plan long-term growth, capital
acquisitions, cash flow projections, and borrowing strategies. Companies looking to grow at a more substantial
rate could cut their dividends, but this is a contentious maneuver

2022 2021
Part 1: Return on Net Worth {(Earnings available
to Equity Shareholders/Average Net Worth)*100}
0.2546 0.2773
Part 2: Retention Ratio (1 - Dividend Payout
Ratio)
1 - 0.64 = 0.36 1 - 0.61 = 0.39
Sub-Part 2: Dividend Payout Ratio
(Dividend per Share/EPS)
(5.2/8.11) = 0.64 (4.75/7.82) = 0.61
Sustainable Growth Rate (Return on Net
Worth*Retention Ratio)
(0.2546*0.36) = 0.09 (0.2773*0.39) = 0.11
Interpretation to Sustainable Growth Rate (SGR)
These are the following things that the company management shall take
care of , to correct the dip sustainable growth rate:
1.Reducing prices at the cost of profitability
2.Competition in the market
3.Saturation of a product in the market
4.Poor long term planning
5.Economic conditions

Common Size Income Statement Analysis
• There is a slight decrease in profit margin if we look into common size income statement, this is due
to an increase in cost of goods sold.
• Revenue from operations has increased, despite the rise in cost of goods sold. Therefore they can
pass this cost rise by increasing price of the product.
• There is not much significant change in operating expenses in relation to the sales of the firm.
Common Size Balance Sheet Analysis
• With respect to Total Assets, non current assets has increased from 62.89 in 2021 to 69.34 in 2022
and Current Assets has decreased from 37.71 in 2021 to 30.66 in 2022.
• Nearly 70% is equity while total liability is only 30%.

Dividend Policy
Dividend Pay-out Ratio = Dividend per share/ Earnings per share
Dividend Yield = Dividend per share/ Market price per share
Year DPS EPS Dividend Payout Ratio
2022 5.2 8.11 0.64
2021 4.75 7.82 0.50
Year DPS MPS Dividend Yield
2022 5.2 536.20 0.010
2021 4.75 540.50 0.009
Interpretation: There is an increase in the Dividend Pay-out Ratio from 2021 to 2022 from
0.50 to 0.64, hence indicating higher dividend to the shareholders. The dividend yield ratio
increased from 2021 to 2022 from 0.009 to 0.010.

Contributions and Limitation of the study
Contributions:
1) This study will help in analyzing the financial strengths and weaknesses with the creditworthiness of Dabur.
2) This ratio analysis study is used in decision making by measuring general efficiency, measure financial
solvency.
3) This study will help in evaluating economic trends, set financial policy and build long term plans for
business
activities.
4) This study will detect unfavorable factors and aid in corrective action.
Limitations:
1) While calculating the ratios, due to the unavailability of data and difficulties in interpretation of data in
Dabur India’s
Annual report, certain assumptions were made for conducting this financial analysis.
2) “Revenue From Operations” has been treated as “Net Sales”.
3) “Purchase of stock-in-trade” has been treated as “Net Purchases”
4) “Employee Benefit Expenses” have been considered as direct expenses.
5) While Calculating Trade Receivable turnover ratio, instead of calculating it on “credit sales” we’ve
calculated it on
“Revenue from Operations considered as Net Sales”
6) While Calculating Trade Payables turnover ratio, instead of calculating it on “credit purchases” we’ve

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