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Financial planning and implementing applications
Financial planning and implementing applications
Principles&processes of financial planning
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Table of Contents Page
1. INTRODUCTION…………………………………………………………………………………………….2
2. THE EVALUATION OF UNILEVER’S CAIPTAL STRUCTURE………………………………3
2.1 Why do Unilever use debt as the main source of finance over equity?...............3
2.2 The disadvantage of using debt that affects Unilever’s financial strategy…….4
2.3 Evaluation on financial instruments…………………………………………………………..4
3. THE EVALUATION OF COMPANY’S DIVIDEND POLICY……………………….……………5
3.1 Unilever’s dividend policy…………………………………………………………………………5
3.2 Signalling effect………………………………………………………………………………………...5
3.3 Unilever’s preferences of dividend payments…………………………………………….6
4. RECOMMENDATIONS……..………………………………………………………………………………7
5. CONCLUSION………………………………………………………………………………………………….8
REFERENCES
INTRODUCTION
The rapid development of media and technology in the world market today has helped companies to sell their products and get in touch with their customers more easily (Rayburn, 2012). However the success of a company depends on many factors, not that only whether it has brilliant advertisement or marketing campaigns. The main aim of a company is to create shareholder’s value which according to Bender and Ward (2008), companies have to manage both well in a trading environment and financial environment in order to do that. Hence, the financial strategy can be seen as one of the most important factors in contributing to the business’s success especially to a large company such as Unilever as it is all about strategic decisions related to raising and manage the funds in the most appropriate manner.
Unilever is the world third largest consumer goods company which produces a wide range of foods, home care and personal care products. Behind the sustained development over 8...
... middle of paper ...
...nilever Addresses the A4S Forum 2012 [online] Available at:
http://www.youtube.com/watch?v=K3aNmF816mU
(Accessed on 23rd Nov 2013)
Unilever (2013) Dividend policy [online] Available at:
http://www.unilever.com/investorrelations/shareholder_info/dividends/
(Accessed on 23rd Nov 2013)
Watson and Head (2010) Corporate Finance Principles and Practices (5th ed) England: Pearson Education.
APPENDICES
1. Table on gearing ratio of Unilever from 2010 to 2012
Gearing ratio 2010 2011 2012
Long term loans
Equity capital + long term loans 12,486 = 45.3%
15,078 + 12,486 17,929 = 54.6%
14,921+ 17,929 14,635 = 48.2%
15716 +14,635
2. Table on debt and equity proportion used by Unilever
2010 2011 2012
Debt 26094/41172= 63.4 % 32591/47512= 68.6% 30450/46166= 66%
Equity 36.6 % 32.4% 34%
3. Share price
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