This document summarizes a research methodology for Hindustan Unilever Limited. The research aims to analyze why investment volumes in the company's shares have decreased. It identifies the dependent variable as investment volume and independent variables as return on investment and debt-equity ratio. Regression analysis is used to analyze the relationship between these variables using financial data from 2009 to 2011. The results show that debt-equity ratio has a greater impact on investment volume than return on investment, supporting the research hypothesis. The methodology uses primary data collection and regression analysis to test the relationship between the variables.
2. PROBLEM FORMULATION
The problem here is the decrease in the
interest of the investors in the shares of the
company.
The purpose of the research is to find out the
reasons for the decrease in the volumes of
shares.
3. VARIABLES
DEPENDENT INDEPENDENT
Investment Return on investment
– volume of shares = net profit / share capital
Debt-equity ratio
= total liability/
shareholders equity
4. Return on investment
A performance measure used to evaluate the
efficiency of an investment or to compare the
efficiency of a number of different
investments. To calculate ROI, the benefit
(return) of an investment is divided by the
cost of the investment.
5. Debt-equity ratio
A measure of a company's financial leverage
calculated by dividing its total
liabilities by stockholders' equity.
A high debt/equity ratio generally means that
a company has been aggressive in financing
its growth with debt.
6. DEBT-EQUITY RATIO
YEAR 2009 2010 2011
TOTAL DEBT 421.95 0 0
TOTAL 2061.51 2583.52 2633.92
EQUITY
DEBT- 0.2 0 0
EQUITY
RATIO
7. RESEARCH HYPOTHESIS
We assume that volume of shares is more
dependent on debt-equity ratio then return
on investment as high debt-equity ratio
means high liability i.e., higher risk and in
turn higher profitability.
ROI may not be regular, so volume of shares
are less dependent on it.
8. DATA CALCULATION
For this we have considered the balance
sheet of year 2009,10 and 2011 of HUL.
table (5).xlsx
http://www.moneycontrol.com/financials/hindustanunilever/ratios/HU
9. A regression is a statistical analysis assessing
the association between two variables. It is
used to find the relationship between two
variables.
Regression Formula:
Regression Equation(y) = a + bx
Slope(b) = (NΣXY - (ΣX)(ΣY)) / (NΣX2 - (ΣX)2)
Intercept(a) = (ΣY - b(ΣX)) / N
11. VOLUME OF SHARES (X) DEBT-EQUITY RATIO (Y)
3263300 0
3690600 0
5449700 0.2
RESULT
Slope (b) 0
Y-intercept (a) -0.33825
Regression equation -0.34+0x
12. VOLUME OF SHARES (Y) RETURN ON INVESTMENT (X)
3263300 87.57
3690600 85.25
5449700 121.34
RESULT
Slope (b) 48161.95334
Y-intercept (a) -569284.10952
Regression equation -569284.11+48161.95x
13. VOLUME OF SHARES (X) RETURN ON INVESTMENT (Y)
3263300 87.57
3690600 85.25
5449700 121.34
RESULT
Slope (b) .00002
Y-intercept (a) 28.09768
Regression equation 28.1+0x
14.
15. INTERPRETATION OF THE RESEARCH
Volume of shares = f ( return on investment)
The volume of shares is dependent on return
on investment by 28.1%.
Investment = f (debt-equity ratio)
The volume of shares is related to debt-
equity ratio by -0.34%.
16. INTERPRETATION OF THE RESEARCH
Through this research, we find out that the
volume of shares is influenced by both return
on investment and debt-equity ratio but
debt-equity ratio has more impact on it
compared to return on investment. Hence,
our research hypothesis stands true.
17. METHODOLOGY
We have used a primary method of data
collection “EXPERIMENT”.
It is a relative experiment i.e., having more
then one value of independent variable.
Statistical tool used – regression.
18. OTHER FACTORS AFFECTING INVESTMENT
Past market trend
Investors risk appetite
Investment horizon
Investible surplus
Investment need
Expected return