Henkel Integrative Case: Part III
Competitive Benchmarking
Introduction
Understanding a company’s past is essential to forecasting its future. For that reason, a critical
component of valuation is the robust analysis of historical performance. Always start with the
key drivers of value: return on invested capital (ROIC) and revenue growth. Examine trends in
the company’s long-run performance and its performance relative to that of its peers, so you can
base your forecasts of future cash flows on reasonable assumptions about the company’s key
value drivers.
Instructions
Using the financial statements provided for Henkel AG and Reckitt Benckiser plc, please build a
6- to 10-page presentation that compares the financial performances of the two companies. The
presentation should address the four primary drivers of value:
1. Growth: How fast has each company grown (in revenues)? How much of the growth
2. Operating margin: What drives the difference between Henkel’s and Reckitt
Benckiser’s operating margins (i.e., gross margin or selling expenses)? How do the
3. Invested capital: Which company (Henkel or Reckitt Benckiser) does a better job of
managing working capital? How do receivables and inventories (measured in 365
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4. Capital structure and financial health: Use each company’s notes (in their respective
annual reports) to measure debt-to-book equity. What percentage of the capital
Based on your analysis, which company is performing better (from a financial perspective),
Henkel AG or Reckitt Benckiser plc?
Helpful Locations, 2009 Annual Reports
Henkel’s interest expense can be found in note 8, page 92, in the company’s annual
report.
Required Spreadsheets
Financial Data—Henkel
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