and see if we can calculate these ratios

let's start with Mcdonalds

since mcdonalds I have

10K is the annual report in US and since it is listed in US

the financial statements are prepared as per the US gaap

What would be US GAAP?

gap would be generally accepted accounting practices

every country will have its own set of rules to prepare financial statements

These financial statements that we see here are prepared as per the rules in US

in US

here this is data for 2013 this is a data 2012

this is a data for 2011

is this visible to everyone?

sales by company

operator restaurants revenue from franchisee restaurants we will look at the total revenue

year 2011 it was 27006

27567

28106

can we say there's an increase in revenue ?

but fractional, not very significant

the data is given in dollars in millions

27,000 million here now

these are there operating costs and expenses

company operated restaurant, franchisee, SGA

to be just saw that and total operating cost

so can we say that sales minus

operating cost will give us EBIT that means EBIT of MCdonalds

is how much?

8764 , so using this can you calculate operating profit margin?

so please find out what is the operating profit margin of McDonald's?

for 2013

8764

divided by 28106, these two numbers

8764, 28106

how much would that be

it

31-point so roughly about

let's say 31 percent so whatever is the sales

operating cost are about 69 percent of the sales

and therefore operating profit margin is 31 percent let's look at the same values

for 2018

so same 8605

divided by 27567

30 it's almost the same number

and for year before that 8530

divided by 27006 31.5

so again I will sale maybe 31 or 32% which means

the operating performance of McDonald's over the period of 3 years 2011-12 and 13

has been more or less

similar so we do not have the bifurcation of what is COGS and

what are the other expenses

We don't have that but on a totality basis it looks to be on the

similar lines then we have interest expese here

we have non operating expenses profit before Taxes

then Taxes and this is where we have the net income

do see this net income numbers

55 86 5465 5503

can you calculate net profit margin for McDonald's

this would be calculated as 5586

divided by 28106

19.87

5465 divided by 27567

82

and 5503

divided by 272006

20.37

so there is a really small fractionally degrees in your net profit margin

and maybe that's happening because we can see some small amount of increase in

interest cost

is it visible 493

then 517 and then 522

but it is not significant which means this appears to be more of a mature and

stable company

operating profit margin net profit margin and more predictable

over the period of time

let's look at a few more companies know so

one question is that 19.87

a good number or bad number yes

is that 19.87 good or bad

so the answer is depends it depends on

what are the profit margin of similar businesses in US

if you take Burger King

and if their KFC and if their profit margins at 35-40 percent

then we will say maybe McDonald's doesn't have the operating structure right

because similar industries who should generally produce

similar type a profit margins so now we will build comparative analysis on

few similar companies let's take a

Dabur India Limited let me find out the financial statements so this annual

report for 2012-13

financial statements fish 102 what would be difference between financial

statements standalone and consolidated consolidated means

inclusive of all the subsidiaries

to consolidated financial statement is available on

page 102 this is income statement all amount

in Rupees lacs except the share data

this is year 2012 this is year 2013

we started with revenues group is in lacks

so 2013 the revenue 627

062 these are cost of material consumed

Employee Benefit so now this is an Indian accounting standard balance sheet

so therefore format is slightly different

but roughly these four items

up to 2916

are component of your cogs which is a manufacturing cost

so what I want to do is take a total of these items

take negative item as negative and find out what is total cogs

which means 242 211

is it visible at the back 242 211

plus 59922% W

plus 59922 W

minus 3028 minus

87

plus 2916

301934

your total cogs is 301934

now using this we can calculate the gross profit for

Dabur company here so

Ideally we should be taking only this number but just

senses are first analysis let's take 627062

627062

minus 301934

325128 now using this gross profit

can you find out gross profit margin so find out

325128

divided by 627062

51 percent so next time you buy a

Dabur product and if you buying it for 100 rupees

you know that it has been manufactured roughly at about 49 rupees

and because 51 percent is the gross profit margin

now after this

if you would observe these expenses this is a part of your SGA

which is given as: Employee Benefit expense

and even these other expenses are part of SGA

so when we will reduce 47123

and 165575

then we will get a beta from that you will reduce depreciation

then you would get a bit from that you will reduce

interest and you'd see interest is really really less

and for such a large size of company its very small amount of interest

that means it even this company appears to be more on the conservative side

so when you reduce interest you will get earning

before Taxes and then you will make adjustments for taxes and some other

items

which is here and finally we get net profits so directly calculate net profit

now

76342

76342 as ratios to 627062

12.17 percent this is someone you knows just write down this number

since we'll be building comparative analysis gross profit margin Dabur

gross profit margin

Dabur 51 percent and net profit margin

12.17 percent

are we fine here

let us go on to

Godrej now or maybe Hindustan Unilever is a better comparison

so let's pick up Hindustan Unilever

let's search for consolidated financial statements page number 115

so these are your financial statements your total revenue

is 27536

and your cogs

would be made of these three components

this is data is given in rupees and crore which was actually is

substantially larger in size company so

let's take an addition of these numbers 10987

plus 3125

-26 total of these 3 will gives us cogs

14086

this is 14086 is the cogs

now sales minus cogs will give us a gross profit

27536

-14086

13450 and let us calculate gross profit margin

which is 13450 divided by 27536

forty-eight percent

48.8 so about forty-nine percent

so which means

from a manufacturing perspective Dabur was

fractionally better that than the Hindustan Unilever but the 2% isn't really here

significant difference all we fine with this

so it appears now it's very nave conclusion

but based on two companies that we analyse on an average in the FMCG

sector

manufacturing cost is about fifty percent sales in India

so next time you buy some FMCG product

let it be a detergent or bathing bar or shampoo

you'd know that if you're buying it at fifty rupees it must have been

manufactured at price of

25 now moving further

let us take the net profit margin

so you're total revenue is

27536 and your net profit

is 3828 how much is that

13.9% is the net profit margin

and how much was a net profit margin of Dabur

so

compared to Dabur HUL had slightly lesser gross profit margin

but it is got slightly higher net profit margin

and may be one reason that you can see is your finance cost just

25 that's almost negligible twenty-fifth crores

on such a big balance sheet should which means actually appears to be more