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Nestly ratio analysis

The document provides information about Umer Khalid khokhar's final project for his class MCOM (A) submitted on 20.1.2012 to Sir sarwer. It includes an executive summary analyzing Nestle Pakistan's financial position and performance through ratio analysis. The auditor's reports from 2008-2012 for Nestle Pakistan were unqualified, indicating the financial statements were prepared according to accounting standards and accurately reflected the company's financial records. The project examines Nestle Pakistan's liquidity, assets utilization, capital structure, profitability, and market value ratios to evaluate the company's financial health and make recommendations.

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Name: Umer Khalid khokhar Father Name: Khalid mehmood khokhar G1S12MCOM0032 Class MCOM (A) Final project AFS Submit to : Sir sarwer Data: 2o.1 .2012
Dedicated to: “The Teacher of the Universe’’ (Peace be upon Him) With whose existence……. By having the charity of His knowledge the cosmos got illuminated with the light of insight and wisdom and the journey of human enlightenment was made possible. ACKNOWLEDGMENT I WOULD LIKE TO THANKS TO ALLAH WHO GIVE ME STRENGTH TO WORK ON THIS PROJECT AND ALSO THANKS TO MY FAMILY WHO ASSISTED ME WITH THIS PROJECT
S.No. 1 2 3 4 5 6 7 8 9 10 11 11a 11b 11c 12 13 13 14 15 16 17 18 Contents Executive summary Vision and strategies Mission Statement History Nestlé Pakistan Values Product Line Audit reports Summary of audit reports Shareholding pattern Financial Statements Balance Sheet Cash flow Statement Profit and Loss Account Ratio Analysis Liquidity Ratio Assets utilization Ratio Capital Structure Ratio Profitability Ratio Market value Ratios Recommendation conclusion
NESTLE PAKISTAN Executive Summary: Nestle is undoubtedly one of the most proficient food leading companies in not only Pakistan but all over the world. The employees at Nestle have finagled to retain their standards to the most high-pitched level possible in the market. They make sure of the fact that the product of Nestle is definitely the BEST TO USE. Nestle has an assortment of products to offers and they have best to offer their product. I have assign the project by me Sir to identify the company position. For this project our main concern was to study the financial position or performance of the Nestle .I get the information about the Nestle Company from the internet. We study the company financial position and performance through RATIO ANALYSIS of the company. The ratios analysis is also help to the investor whether it is good to invest in the Nestle company or not and also to the financial institution that they finance to the Nestle company or not. Like Debt Management Ratio help to financial institutions, Market value ratio is provide the information to investors or Shareholders. In the end I made some Recommendations based on me my analyses is to make them improve their overall revenue rate or performance.
Vision and strategies: The Nestle global vision is to be the leading health, wellness, and Nutrition Company in the world. Nestle Pakistan subscribes fully to this vision. In particular, they envision to: Lead a dynamic motivated and professional workforce - proud of its heritage and bullish about the future. Meet the nutritional needs of consumers of all age groups - from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. Nestle have profitable and diversified high quality food and beverage product portfolio, delivering60:40+ advantage to consumers, available across all sales channels. Nestle brands are the preferred choice in their categories. Consumer insight drives all aspects of their marketing and communication efforts. Their company is seen as the No. 1 career destination for talented, motivated and ambitious professionals. Their result-oriented organizational structure ensures effective communication and empowered self-management Mission Statement: Since Nestle came into being, health, nutrition and wellness have been central to the Nestle vision. 140years after Henri Nestle, nutrition is, more than ever, the key to the company's future. . Consumers are at the heart of all that Nestle does. Their philosophy is summed up in four words: Good Food, Good life. In their quest to become the world's leading health, nutrition and wellness company, they do everything they can to help people live more fulfilling lives. Good Food, Good Life Henri Nestle chose his own coat of arms to represent the company's philosophy: a bird's nest, with a mother feeding her young. The image represents their core values: care, family values, nutrition, and healthy growth. Safety and comfort. It is a guarantee of quality and a commitment to their responsibilities as a food company and experts in nutrition. Over the years they have reaffirmed their commitment to wellness. Helping their consumers to live longer, healthier and more productive lives, no matter their age, gender or socioeconomic status. Good Ingredients Three vital ingredients lie at the heart of Nestle and come together in their brands: their people, their research and development, and their commitment to quality. The 250,000 dedicated people who make up the Nestle family are the source of strength and energy. Realizing this, Nestle offer them constant professional development. Nestle is one of the largest investors in food technology. R&D is the cornerstone of the Nestle guarantee of quality. They consider quality in three key dimensions: health, sensory pleasure, and social applicability. Thus they try to provide nutritious. Tasty meals that offer value and arc culturally relevant.
INTRODUCTION Nestle is the world's leading nutrition, health and wellness company todayand was founded in 1866 by Henri Nestlé. It has employed around 250,000people and has factories or operations in almost every country in the world.Nestle is the world's leading nutrition, health and wellness company today.Being the world's leading bottled water company is based on a firmeconomic model: strong brands, global presence, innovation capacity,environmental stewardship and passionate people HISTORY Globally 1860-1905 In the 1860s Henri Nestlé, a pharmacist, developed a food for babieswho were unable to breastfeed. His first success was a premature infant whocould not tolerate his mother's milk or any of the usual substitutes. Peoplequickly recognized the value of the new product, after Nestlé's new formulasaved the child's life, and soon, Farine Lactée Henri Nestlé was being sold inmuch of Europe.Henri Nestlé endowed his company with the symbol derived from hisname. His family coat of arms, the nest with a mother bird protecting heryoung, became the Company's logo and a symbol of the Company's care andattitude to life-long nutrition. The Nestlé nest represents the nourishment,security and sense of family that are so essential to life. 1905-1938 In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company.By the early 1900s, the company was operating factories in the UnitedStates, Britain, Germany and Spain. World War I created new demand fordairy products in the form of government contracts. By the end of the war,Nestlé's production had more than doubled. After the war Governmentcontracts dried up and consumers switched back to fresh milk. However,Nestlé's management responded quickly, streamlining operations andreducing debt. The 1920s saw Nestlé's first expansion into new products,with chocolate the Company's second most important activity.
1938-1975 Nestlé felt the effects of World War II immediately. Profits dropped from$20 million in 1938 to $6 million in 1939. Factories were established indeveloping countries, particularly Latin America. Ironically, the war helpedwith the introduction of the Company's newest product, Nescafé, which wasa staple drink of the US military. Nestlé's production and sales rose in thewartime economy. The end of World War II was the beginning of a dynamic phase forNestlé. Growth accelerated and companies were acquired. In 1947 came alot of mergers. Diversification came with a shareholding in L'Oréal in 1974. 1975-1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé'simproved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. 1996-2000 The first half of the 1990s proved to be a favorable time for Nestlé:trade barriers crumbled and world economic markets developed into a seriesof more or less integrated trading areas. The opening of Central and EasternEurope, as well as China, and a general trend towards liberalization of directforeign investment was good news for a company with interests as farflungand diverse as Nestlé. While progress since then has not been asencouraging, the overall trends remain positive.Nestlé opened the 20th century by merging with the Anglo-Swiss CondensedMilk Company to broaden its product range and widen its geographicalscope. 2000-present In July 2000, Nestlé launched a Group-wide initiative called GLOBE(Global Business Excellence), aimed at harmonizing and simplifying businessprocess architecture; enabling Nestlé to realize the advantages of a globalleader while minimizing the drawbacks of size. Nestlé was First to Produce:Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freezedriedcoffee.
Nestlé Pakistan Nestlé Pakistan Ltd is a subsidiary of Nestlé S.A. - a company of Swiss origin headquartered is Vevey, Switzerland. It is a food processing company, registered on the Karachi and Lahore stock exchanges and operating in Pakistan since 1988 under a joint venture with Milk Pak ltd and took over management in 1992. For ten years in a row, the company has won a place among the top 25 companies of the Karachi Stock Exchange. Headquartered in Lahore, the Company operates four production facilities. Two of its factories in Sheikhupura and Kabirwala are multi product factories. One factory in Islamabad and one in Karachi produce bottled water. Through its effective marketing and a vast sales and distribution network throughout the country, it ensures that its products are made available to consumers whenever, wherever and however. Nestlé Pakistan operates in many ways but people, products and brands are the main flag bearers of the Company’s image, and we continue to enhance the quality of life of people. Nestlé Pakistan now operates the biggest milk collection operation in Pakistan, Currently, Nestlé Pakistan collects milk from an estimated 190,000 farmers spread over 145,000 sq Km's in the province of Punjab and Sindh. Nestlé believes in creating shared value and is committed to the communities it works and lives with. In Pakistan, the company is working closely with the communities in areas related to Nutrition, Water and Rural Development, and continues to enhance the quality of life of people throughout its value chain. Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the first infant food, nutrition has been in our DNA. Today more and more consumers mirror our emphasis on nutrition, as they realize that food choices affect their health and quality of life. The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. Nestlé’s existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company’s priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups.
In line with Nestlé’s global philosophy, Nestlé Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and aims to be the leading Nutrition, Health and Wellness Company. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities. Nestle product” Nestle Pakistan Limited (NPL), formerly known as Nestle Milkpak Limited, is a subsidiary of Nestle SA. – a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on the Karachi and Lahore stock exchanges. For 9 years in a row, the company has won a place among the top 25 companies of the KSE. Its principal activities include manufacturing, processing and selling food products and ancillary equipment. The food products include dairy, confectionery, infant nutrition and culinary products, coffee, beverage and drinking water. The major brands include MILKPAK UHT, EVERYDAY, LACTOGEN, NESLAC, CERELAC, NESTLE PURE LIFE, NESCAFE, MAGGI and KITKAT. Nestle has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestle SA, first acquired a share in Milkpak Ltd. Nestle Pakistan is headquartered in Lahore and operates four production facilities. Two of its factories in Sheikhupura and Kabirwala are multi-product factories. To preserve the quality of raw milk in hot weather conditions in Punjab the company has made substantial investment in setting up an extensive cold chain by installing over 2200 chilling units all over the milk shed area. Nestle moto Good food ,,,,,,good life
Nestle products
Water Nestlé Pure Life, Nestlé Aquarel, Perrier, Vittel, Contrex, S.Pellegrino,Acqua Panna, Levissima, Arrowhead, Poland Spring, Deer Park, Ozarka,Hépar, Ice Mountain, Zephyrhills Other beverages Nestea, Nesquik, Nescau, Milo, Carnation, Libby’s, Caro, Nestomalt,Nestlé Shelf stable Nestlé Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moça,Klim, Gloria, Svelty, Molico, Nestlé Omega Plus, Bear Brand, Coffee-Mate Chilled Nestlé Sveltesse, La Laitière, La Lechera, Ski, Yoco, Svelty, Molico, LC1,Chiquitin Ice cream Nestlé Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrême,Maxibon/Tandem, Mega, Mövenpick, Sin Parar/Sem Parar/Non Stop Infant nutrition Nestlé Nan, Lactogen, Beba, Nestogen, Cerelac, Neslac, Nestum,Guigoz, Good Start HealthCare nutrition Nutren, Clinutren, Peptamen, Modulen Bouillons, soups, seasonings, pasta, sauces Maggi, Buitoni, Thomy, Winiary,Torchin Refrigerated products (cold meat products, dough, pasta, pizzas,sauces, snacks) Nestlé, Buitoni, Herta, Toll House Chocolate, confectionery and biscuits Nestlé, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger,Aero, Polo
2008
2009
2011
Nestly SUMMARY OF AUDUTORS’ REPORTS TO MEMBERS: 2008 It was also unqualified report because no ambiguity was find in financial documents.Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects ,and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source and deposited under central zakat fund. 2009 It was unqualified report statements are free of any material misstatement and proper books of account have been kept by the Company as required by the Companies Ordinance, 1984. the books of account and are further in accordance with accounting policies consistently applied except for change referred to in note 2.1 to the financial statements. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2010 It was also unqualified report because Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2011 Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects ,and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2012 Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source.
Financial Statements Balance Sheet EQUITY AND LIABILITIES Share Capital and Reserves Authorized Capital Issued, subscribed and paid up capital Share premium General reserve Accumulated profit Noncurrent liabilities Long term finances Deferred taxation Retirement benefits Liabilities against assets subject to finance lease Current liabilities Current portion of: Current portion of non current liabilities Short term borrowings from associated company – unsecured Short term borrowings – secured Short term running finance under mark–up arrangements – secured Customer security deposits – interest free Trade and other payables Interest and mark–up accrued 2008 2009 2010 2011 2012 RS.(000) 750,000 453,496 249,527 280,000 3,405,824 4,388,847 750,000 453,496 249,527 280,000 3,443,932 4,426,955 750,000 453,496 249,527 280,000 4,598,850 5,581,873 5,139,875 1,319,333 351,968 77,582 6,988,758 4,210,750 1,531,945 215,925 118,275 6,076,895 5,573,750 7,848,050 15,366,964 1,705,508 2,476,871 3,304,091 229,114 44,03,077 6,37,985 55,415 13,690 -7,563,787 10,778,988 19,309,040 54,042 1,322,442 2,105,375 756,362 105,686 3,746,286 46,979 8,083,130 57,786 41,587 41,686 2,143,750 4,950,000 3,900,000 2,780,843 41,75,236 5,937,374 128,857 149,791 184,441 4,633,932 7,343,507 9,743,567 61,404 128,334 196,345 9,806,572 16,788,455 20,003,413 300,000 1,924,287 127,884 2,798,185 102,173 5,306,571 750,000 750,000 453,496 453,496 249,527 249,527 280,000 280,000 6,629,393 10,577,241 7,612,416 11,560,264 CONTINGENCIES AND COMMITMENTS: 16,684,176 18,586,980 22,952,232 35,179,859 50,872,717 Rupe
Balance Sheet Assets: Tangible fixed assets Property, plant and equipment Capital work–in–progress Intangible assets Long term loans and advances Long term deposits and prepayments Goodwill Current assets Stores and spares Trade debts Stock in trade Current portion of long term loans and advances Advances, deposits, prepayments and other receivables Cash and bank balances 2008 2009 2010 2011 2012 Rupees.(000) 9,464,373 10,700,874 11,370,611 16,230,528 21,970,957 1,382,401 914,956 3,076,472 53,70,56111,549,623 10,846,774 11,615,830 14,447,083 21,601,089 33,520,580 49,744 7,106 16,735 11,954 7,173 98,544 113,490 125,674 161,982 236,639 5,036 5,026 9,817 9,817 98,663 104,178 804,647 456,813 2,488,573 26,615 1,488,103 419,327 5,684,078 16,684,176 868,984 241,715 3,895,038 21,012 1,503,009 315,770 6,845,528 18,586,980 1,050,804 126,499 4,602,019 19,149 2,048,936 505,516 8,352,923 22,952,232 1,278,416 276,858 7,064,170 30,914 4,042,634 702,025 13,395,107 35,179,859 1,373,239 491,842 8,025,653 45,735 6,208,184 760,831 16,905,484 50,872,717
Cash Flow Statement Cash flow from operating activities Cash generated from operations (Increase) / decrease in long term security deposits (Increase) in long term loans and advances Retirement benefits paid Finance cost paid Taxes paid Net cash generated from operating activities Cash flow from investing activities Fixed capital expenditure Purchase of intangible asset Sale proceeds of property, plant and equipment Net cash used in investing activities Cash flow from financing activities Repayment of long term finances Short term borrowings from associated company Net movement in short term borrowings – secured Payment of finance lease liabilities Dividend paid Net cash (used in ) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2008 4,224,959 1,052 -23,210 -89,867 -544,413 -41,697 3,526,824 2009 2010 2011 2012 6,397,615 7,618,810 8,384,781 12,722,899 10 -4,791 -88,846 -9,343 -10,321 -48,073 -89,478 -293,122 -137,122 -92,103 -136,227 -497,244 -498,656 -983,425 -2,110,131 -990,053 -1,518,903 -1,776,948 -2,042,636 4,607,863 5,449,017 5,484,232 8,255,581 -1,871,296 -2,271,269 -4,295,328 -8,940,862 -14,070,392 -19,126 -193,060 74,233 32,995 41,654 111,945 123,711 -1,797,063 -2,238,274 -4,272,800 -8,828,917 -14,139,741 2,000,000 7,084,170 1,995,375 -2,252,000 -735,000 -300,000 4,950,000 -1,050,000 -66,383 -54,132 -64,291 -57,924 -41,647 -1,201,764 -2,946,464 -2,946,661 -2,493,275 -1,811,695 -2,003,147 -1,305,221 -3,010,952 2,146,801 4,180,828 -273,386 1,064,368 -1,834,735 -1,197,884 -1,703,332 -1,231,574 -1,504,960 -440,592 -2,275,327 -3,473,211 -1,504,960 -440,592 -2,275,327 -3,473,211 -5,176,543
Profit and Loss Account Sales – net Cost of goods sold Gross profit Distribution and selling expenses Administration expenses Operating profit Finance cost Other operating expenses Other operating income Profit before taxation Taxation Profit after taxation Earnings per share - basic and diluted (Rupees) 2008 2009 2010 2011 34,183,847 -25,231,532 8,952,315 -3,890,352 -956,816 4,105,147 -557,325 -1,382,138 -1,939,463 61,800 2,227,484 -674,590 1,552,894 34.24 41,155,822 -29,256,902 11,898,920 -5,238,488 -1,085,121 5,575,311 -442,050 -1,091,149 -1,533,199 144,145 4,186,257 -1,181,124 3,005,133 66.27 51,487,302 -37,608,733 13,878,569 -5,709,078 -1,311,637 6,857,854 -513,081 -819,084 -1,332,165 170,491 5,696,180 -1,583,331 4,112,849 90.69 64,824,364 -48,099,046 16,725,318 -6,862,113 -1,405,298 8,457,907 -1,050,355 -1,064,233 -2,114,588 159,545 6,502,864 -1,834,507 4,668,357 102.94 2012 Rupees(000) 79,087,696 -57,564,265 21,523,431 -8,787,508 -1,769,803 10,966,120 -1,827,969 -1,320,319 -3,148,288 160,142 7,977,974 -2,113,463 5,864,511 129.32
Ratio analyses: A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.
Liquidity ratios: Current ratio= 2008 1.07:1 Current Assets/ Current Liabilities 2009 0.85:1 2010 0.85:1 2011 0.80:1 2012 0.85:1 Interpretation: In 2009 the current ratio has increasing trend, and the nestle has the ability to pay 0.85 against 1 rupees and in 2010 the company have same current ratio. In 2011 the current ratio decrease due to increase in current liabilities as compare to current assets and the company have the ability to pay 0.80 against 1 rupees liability. But in 2012 the current ratio increase due to increase in the current assets as compare to current liabilities. Quick ratio: Quick ratio = 2008 0.60:1 Current Assets –Inventory / Current Liabilities 2009 0.37:1 2010 0.38:1 2011 0.38:1 2012 0.44:1 Interpretation: The quick ratio is decrease in 2009 because nestle increase in current liabilities as compare to the current assets , and the company have the ability to pay current assets without relying on inventory . In 2010 the current ratio increase due to increase in current assets and in 2011 company have same quick ratio. In 2012 Nestle increase the quick ratio and Nestle have the ability to pay current liability without relying on inventory.
Net working capital: current Asset - current lib. 2008 2009 2010 2011 2012 377,507 -1,237,602 1,453,649 -3,393,348 -3,097,929 Net working capital is also another measure of the liquidity of the company. Net working capital is the difference between the current assets and current liabilities. It is just like the current ratio indicating either the company has enough current assets to pay its current liabilities. If the current assets are more than the current liabilities then company has strong liquidity position indicating it has the ability to discharge it current liabilities. Net working capital is also going increase every year which means APL have enough cash after payment of current liabilities. So the liquidity position is strong. Cash ratio based on current liabilities Cash and cash equivalents Current Liabilities 2008 2009 2010 2011 2012 0.07902033 0.03906531 0.0515487 0.04181594 0.03803506 Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts. The above ratio shows variation due to inflow or outflow of cash in business. In 2010 the ratio is very high but in 2012 ratio is very low as compared to other years which means in 2010 APL has more cash and cash equivalents but in 2012 APL have low cash and cash equivalents to pay current liabilities.
Activity Analysis Inventory Turnover Inventory Turnover Ratio = 2008 13.74 time 2009 10.57 time 2010 11.19 time Sales/Inventory 2011 9.18 time 2012 9.85 time Interpretation: In 2008 the inventory turnover ratio reduce due to increase in inventory and inventory converted in to sale less as compare to 2008.In 2009 inventory turnover ratio increase means inventory is more converted into sale as compare to 2008.But in 2010 inventory turnover is also increase. In 2011 reduce due to decrease in cost of goods sold. But also increase in 2012 as compare to 2011. Days Sales Outstanding (DIO) Days sales outstanding = 2008 4.81 days Receivables/Average Sale per day 2009 2.11 days 2010 0.88 days 2011 1.54 days 2012 2.24 days Interpretation: In 2009 Nestle company Days outstanding ratio is low as compare to 2008 and company can recover the sale receivables more quickly and in 2010 the ratio is more low as compare to 2009.In 2011 the ratio increase which show that the company sales receivable not converted into cash quickly as compare to 2010, and this ratio also increase in 2012 .
Fixed Asset Turnover Fixed Assets Turnover= 2008 3.15 time Sales/Net Fixed Assets 2009 3.54 time 2010 3.56 time 2011 3.00 time 2012 2.36 time Interpretation: In 2009 the fixed assets turnover ratio is high as compare to 2008 means the company use more fixed assets as compare to 2008 and also in to 2010.But in 2011 the ratio is reduce which show that the company use less fixed assets to generate sales and in 2012 the ratio is reduce which is good because company use generate more sale by using less fixed assets. Current asset turnover = _Sale___________ current Asset 2008 2009 6.01 times 6.01 times 2010 6.16 times 2011 2012 4.83 times 4.67 times Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts. The above ratio shows variation due to inflow or outflow of cash in business. In 2010 the ratio is very high but in 2012 ratio is very low as compared to other years which means in 2010 APL has more cash and cash equivalents but in 2012 they have low cash and cash equivalents to pay current liabilities.
Total Asset Turnover Total Assets Turnover= 2008 2.05 time Sales/Total Assets 2009 2.21 time 2010 2.24 time 2011 1.84 time 2012 1.55 time Interpretation: The ratio show how mach total assets use to generate the sale. In 2009 the Total assets turnover ratio is high compare to 2008 which show that the company use more fixed to generate the sale , the ratio of 2010 is increase as compare to 2009. In 2011 the ratio reduce which show that the company generate more sale by using less total assets and in 2012 the ratio reduce more compare to 2011. Solvency Ratios: Total Debt to Total Assets Total Debt to Total Assets= 2008 73.69% (Total Debt/Total Assets)*100 2009 76.18% 2010 75.68% 2011 78.36% 2012 77.28% Interpretation: In 2009 the Total debt to total assets ratio is high as compare to 2008 which show that the 76.18% company assets are generated from the total debt . In 2010 the ratio reduce which show that the generate more assets from less total debt compare to 2009.But high in 2011 and produce 78.68 % total assets from total debt . In 2012 the ratio decrease from 2011 which is good for the nestle company.
Time-Interest-Earned Ratio: Time-Interest-Earned Ratio= EBIT/Interest Charges 2008 5.00 time 2009 10.47time 2010 12.10 time 2011 7.19 time 2012 5.36 time Interpretation: The time earned ratio is high in 2009 as compare to 2008 and which show that the company has ability to pay its interest charges easily compare to the 2008 and also increase in 2010 which that the company is increase and pay interest charges .But the ratio is reduce in 2011 which show that the company interest charges increase and 2012 interest charges are increase that’s way the ratio is reduce as compare to 2011. EBITDA coverage Ratio: EBITDA coverage Ratio= EBITDA +Lease payment/Interest charges +Lease payment+ Principle amount 2008 1.18 time 2009 1.81 time 2010 1.71 time 2011 1.41 time 2012 1.02 time Interpretation: In 2009 the EBITDA coverage ratio is higher than the ratio of 2008 which show that the Nestle company earning is higher to met the loan and its charges but this ratio decrease in 2010 and show that the cash flow available is flow for the payment of fixed and financial charges. The ratio is also decrease in 2011 and 2012.
LTD to fixed assets = Long term debts / fixed Asset 2008 2.04887835 2009 2.214229 2010 2.243237 2011 1.842656 2012 1.554619 Interpretation: Long term liability to fixed asset ratio is one of the measures of the solvency of the company. It measures that how much fixed assets are financed by the long term liabilities. This ratio is in increasing trend throughout the five years. In 2009 2.214229 mfixed assets and in 2013 1.554619 fixed assets are financed by long term liabilities. Profitability Ratios: Profit Margin on Sales 2008 4.54% = ( Net income/Sales)*100 2009 7.30% 2010 7.99% 2011 7.20% 2012 7.42% Interpretation: In 2009 the Profit margin on sales ratio is higher than the ratio of 2008 that show that 7.30% income is generate from 1 rupees sale .That ratio is increase in 2010 and show that the company that the net income is increase per rupees sale. But ratio decrease in 2011 , the net income decrease as compare to 2010.But ratio increase in 2012 and company can get 7.20% net income from 1 rupees.
Return on Total Assets : Return on Total Assets Ratio 2008 9.31% = Net income/Total Assets 2009 16.17% 2010 17.92% 2011 13.27% 2012 11.53% Interpretation: The ratio of 2009 is increase as compare the ratio of 2008 which show that the company net income is increase from the use of total assets .And the ratio of2010 is increase 16.17% to 17.92% and the company get more income by using its total assets .But in 2011 and 2012 the ratio is decreasing which show that the company use more debt on which the pay interest that’s way its net income is decrease and the ratio. Basic Earning Power Ratio : Basic Earning Power Ratio = 2008 16.69% 2009 24.90% (EBIT/Total Assets)*100 2010 27.05% 2011 21.47% 2012 19.28% Interpretation: In 2009 the Basic earnings power ratio is increase from 2008 that show that the company total assets have the availability to generate the 24.90% EBIT and the ratio is also more increase in 2010 which is every good as compare to 2008 and 2009.But the ratio decrease in 2011 that the company EBIT decrease which the company generated from company total assets and also decrease in 2012.
Return on Common Equity : Return on Common Equity 2008 35.38% = (Net Income/Common equity)*100 2009 67.88% 2010 73.68% 2011 61.33% 2012 50.73% Interpretation: In 2009 the company ratio increase from35.38% to 67.88% that show that the company net income increase on the investment of the shareholders and the ratio of 2010 is also high. But the ratios of 2011 and 2012 is decreasing which show that the company net income is reduce on the investment of the shareholders. Market Value Ratios: Price/Earnings per share= 2008 0.29 time 2009 0.15 time Price per share/Earning per share 2010 0.11 time 2011 0.10 time 2012 0.08 time Interpretation: The price/earning per share ratio of the company reduce in 2009 and it indicate that the investors are paying 0.15 for every rupees 1company earning .The ratio of company continuously decreasing from 2009 to 2012, which show that the company earning per share is continuously from year to year.
Price/Cash Flow Ratio : Price/Cash Flow Ratio 2008 -301.33time = Price per share/Cash flow per share 2009 -1029.29 time 2010 -199.31time 2011 -130.60 time 2012 -87.61 time Interpretation: In 2009 cash flow per share is high as compare to 2008 but the is decreasing from 2010 which means that the denominator which cash flow per share is increasing year to year. Cash reinvestment ratio: 2009 2.56% 2010 8.96% 2011 -18.84% 2012 3.06% 2013 12.60% Cash reinvestment ratio measures how much cash is available for the investment in business assets. In 2009 company has low cash to reinvest but in 2013 company has high cash to reinvest in the business assets. Cash flow and solvency ratio: 2009 17.88% 2010 27.52% 2011 -20.63% 2012 23.22% 2013 37.60% This ratio is used to measure the solvency of the company either the company has enough cash to pay its total debts. In 2013 company has 37.60% cash to pay its debts. Cash per share: 2009 2010 2011 2012 2013 34.74 58.32 -38.61 60.96 87.32 Cash flow per share measures the availability of cash against one share of equity. The ratio is in increasing trend except in 2011. In 2011 due to the loss in cash flow from operations company has no cash against one share of equity. In 2012 and 2013 company has 60.96 rupees and 87.32 rupees cash against one share which shows phenomenal performance of APL.
Market/Book Ratio : Market/Book Ratio 2008 66440.64 time = 2009 65868.71 time Market price per share/Book price per share 2010 52240.14time 2011 38305.56 time 2012 25224.15 time Interpretation: In2009 the Market/Book ratio is decrease as compare to 2008 which show that the company accumulated profit of 2009 is increase from 2008.And in the ratio is decrease more quickly in2010,11 and12 which means that the company performance is going good because its accumulated profit increase that’s way its nominator is greater than the denominator which result in decrease of Market/Book ratio of the company continuously .
Recommendations: Employees should be trained according to the changing standards of the organization. Company should conduct survey from time to time, according to which changes can be introduced in the organization to stay updated in the market. They should introduce creativity into the work, so that the employees Cando their work active mindedly. Employee should be given compensation in order to keep them loyal. Employee should be more involved in decision making to become more differentiated. Company should provide incentives to shop keepers As far as the Liquidity ratios are concerned then liquidity position of nestle is not good so the company should improve current ratio and should be able to pay off its current liabilities in this regard the company should increase cash and cash equivalents Conclusion: the company performance not bad, and still nestle is the market leader in pak but the company have more chance to increase its growth and market share because uniliver is the big competitor and he give more challenge in the market. So we can say company performance is satisfactory

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Nestly ratio analysis

  • 1.
    Name: Umer Khalid khokhar FatherName: Khalid mehmood khokhar G1S12MCOM0032 Class MCOM (A) Final project AFS Submit to : Sir sarwer Data: 2o.1 .2012
  • 3.
    Dedicated to: “The Teacherof the Universe’’ (Peace be upon Him) With whose existence……. By having the charity of His knowledge the cosmos got illuminated with the light of insight and wisdom and the journey of human enlightenment was made possible. ACKNOWLEDGMENT I WOULD LIKE TO THANKS TO ALLAH WHO GIVE ME STRENGTH TO WORK ON THIS PROJECT AND ALSO THANKS TO MY FAMILY WHO ASSISTED ME WITH THIS PROJECT
  • 5.
    S.No. 1 2 3 4 5 6 7 8 9 10 11 11a 11b 11c 12 13 13 14 15 16 17 18 Contents Executive summary Vision andstrategies Mission Statement History Nestlé Pakistan Values Product Line Audit reports Summary of audit reports Shareholding pattern Financial Statements Balance Sheet Cash flow Statement Profit and Loss Account Ratio Analysis Liquidity Ratio Assets utilization Ratio Capital Structure Ratio Profitability Ratio Market value Ratios Recommendation conclusion
  • 6.
    NESTLE PAKISTAN Executive Summary: Nestleis undoubtedly one of the most proficient food leading companies in not only Pakistan but all over the world. The employees at Nestle have finagled to retain their standards to the most high-pitched level possible in the market. They make sure of the fact that the product of Nestle is definitely the BEST TO USE. Nestle has an assortment of products to offers and they have best to offer their product. I have assign the project by me Sir to identify the company position. For this project our main concern was to study the financial position or performance of the Nestle .I get the information about the Nestle Company from the internet. We study the company financial position and performance through RATIO ANALYSIS of the company. The ratios analysis is also help to the investor whether it is good to invest in the Nestle company or not and also to the financial institution that they finance to the Nestle company or not. Like Debt Management Ratio help to financial institutions, Market value ratio is provide the information to investors or Shareholders. In the end I made some Recommendations based on me my analyses is to make them improve their overall revenue rate or performance.
  • 7.
    Vision and strategies: TheNestle global vision is to be the leading health, wellness, and Nutrition Company in the world. Nestle Pakistan subscribes fully to this vision. In particular, they envision to: Lead a dynamic motivated and professional workforce - proud of its heritage and bullish about the future. Meet the nutritional needs of consumers of all age groups - from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. Nestle have profitable and diversified high quality food and beverage product portfolio, delivering60:40+ advantage to consumers, available across all sales channels. Nestle brands are the preferred choice in their categories. Consumer insight drives all aspects of their marketing and communication efforts. Their company is seen as the No. 1 career destination for talented, motivated and ambitious professionals. Their result-oriented organizational structure ensures effective communication and empowered self-management Mission Statement: Since Nestle came into being, health, nutrition and wellness have been central to the Nestle vision. 140years after Henri Nestle, nutrition is, more than ever, the key to the company's future. . Consumers are at the heart of all that Nestle does. Their philosophy is summed up in four words: Good Food, Good life. In their quest to become the world's leading health, nutrition and wellness company, they do everything they can to help people live more fulfilling lives. Good Food, Good Life Henri Nestle chose his own coat of arms to represent the company's philosophy: a bird's nest, with a mother feeding her young. The image represents their core values: care, family values, nutrition, and healthy growth. Safety and comfort. It is a guarantee of quality and a commitment to their responsibilities as a food company and experts in nutrition. Over the years they have reaffirmed their commitment to wellness. Helping their consumers to live longer, healthier and more productive lives, no matter their age, gender or socioeconomic status. Good Ingredients Three vital ingredients lie at the heart of Nestle and come together in their brands: their people, their research and development, and their commitment to quality. The 250,000 dedicated people who make up the Nestle family are the source of strength and energy. Realizing this, Nestle offer them constant professional development. Nestle is one of the largest investors in food technology. R&D is the cornerstone of the Nestle guarantee of quality. They consider quality in three key dimensions: health, sensory pleasure, and social applicability. Thus they try to provide nutritious. Tasty meals that offer value and arc culturally relevant.
  • 8.
    INTRODUCTION Nestle is theworld's leading nutrition, health and wellness company todayand was founded in 1866 by Henri Nestlé. It has employed around 250,000people and has factories or operations in almost every country in the world.Nestle is the world's leading nutrition, health and wellness company today.Being the world's leading bottled water company is based on a firmeconomic model: strong brands, global presence, innovation capacity,environmental stewardship and passionate people HISTORY Globally 1860-1905 In the 1860s Henri Nestlé, a pharmacist, developed a food for babieswho were unable to breastfeed. His first success was a premature infant whocould not tolerate his mother's milk or any of the usual substitutes. Peoplequickly recognized the value of the new product, after Nestlé's new formulasaved the child's life, and soon, Farine Lactée Henri Nestlé was being sold inmuch of Europe.Henri Nestlé endowed his company with the symbol derived from hisname. His family coat of arms, the nest with a mother bird protecting heryoung, became the Company's logo and a symbol of the Company's care andattitude to life-long nutrition. The Nestlé nest represents the nourishment,security and sense of family that are so essential to life. 1905-1938 In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company.By the early 1900s, the company was operating factories in the UnitedStates, Britain, Germany and Spain. World War I created new demand fordairy products in the form of government contracts. By the end of the war,Nestlé's production had more than doubled. After the war Governmentcontracts dried up and consumers switched back to fresh milk. However,Nestlé's management responded quickly, streamlining operations andreducing debt. The 1920s saw Nestlé's first expansion into new products,with chocolate the Company's second most important activity.
  • 9.
    1938-1975 Nestlé felt theeffects of World War II immediately. Profits dropped from$20 million in 1938 to $6 million in 1939. Factories were established indeveloping countries, particularly Latin America. Ironically, the war helpedwith the introduction of the Company's newest product, Nescafé, which wasa staple drink of the US military. Nestlé's production and sales rose in thewartime economy. The end of World War II was the beginning of a dynamic phase forNestlé. Growth accelerated and companies were acquired. In 1947 came alot of mergers. Diversification came with a shareholding in L'Oréal in 1974. 1975-1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé'simproved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. 1996-2000 The first half of the 1990s proved to be a favorable time for Nestlé:trade barriers crumbled and world economic markets developed into a seriesof more or less integrated trading areas. The opening of Central and EasternEurope, as well as China, and a general trend towards liberalization of directforeign investment was good news for a company with interests as farflungand diverse as Nestlé. While progress since then has not been asencouraging, the overall trends remain positive.Nestlé opened the 20th century by merging with the Anglo-Swiss CondensedMilk Company to broaden its product range and widen its geographicalscope. 2000-present In July 2000, Nestlé launched a Group-wide initiative called GLOBE(Global Business Excellence), aimed at harmonizing and simplifying businessprocess architecture; enabling Nestlé to realize the advantages of a globalleader while minimizing the drawbacks of size. Nestlé was First to Produce:Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freezedriedcoffee.
  • 10.
    Nestlé Pakistan Nestlé PakistanLtd is a subsidiary of Nestlé S.A. - a company of Swiss origin headquartered is Vevey, Switzerland. It is a food processing company, registered on the Karachi and Lahore stock exchanges and operating in Pakistan since 1988 under a joint venture with Milk Pak ltd and took over management in 1992. For ten years in a row, the company has won a place among the top 25 companies of the Karachi Stock Exchange. Headquartered in Lahore, the Company operates four production facilities. Two of its factories in Sheikhupura and Kabirwala are multi product factories. One factory in Islamabad and one in Karachi produce bottled water. Through its effective marketing and a vast sales and distribution network throughout the country, it ensures that its products are made available to consumers whenever, wherever and however. Nestlé Pakistan operates in many ways but people, products and brands are the main flag bearers of the Company’s image, and we continue to enhance the quality of life of people. Nestlé Pakistan now operates the biggest milk collection operation in Pakistan, Currently, Nestlé Pakistan collects milk from an estimated 190,000 farmers spread over 145,000 sq Km's in the province of Punjab and Sindh. Nestlé believes in creating shared value and is committed to the communities it works and lives with. In Pakistan, the company is working closely with the communities in areas related to Nutrition, Water and Rural Development, and continues to enhance the quality of life of people throughout its value chain. Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the first infant food, nutrition has been in our DNA. Today more and more consumers mirror our emphasis on nutrition, as they realize that food choices affect their health and quality of life. The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. Nestlé’s existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company’s priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups.
  • 11.
    In line withNestlé’s global philosophy, Nestlé Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and aims to be the leading Nutrition, Health and Wellness Company. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities. Nestle product” Nestle Pakistan Limited (NPL), formerly known as Nestle Milkpak Limited, is a subsidiary of Nestle SA. – a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on the Karachi and Lahore stock exchanges. For 9 years in a row, the company has won a place among the top 25 companies of the KSE. Its principal activities include manufacturing, processing and selling food products and ancillary equipment. The food products include dairy, confectionery, infant nutrition and culinary products, coffee, beverage and drinking water. The major brands include MILKPAK UHT, EVERYDAY, LACTOGEN, NESLAC, CERELAC, NESTLE PURE LIFE, NESCAFE, MAGGI and KITKAT. Nestle has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestle SA, first acquired a share in Milkpak Ltd. Nestle Pakistan is headquartered in Lahore and operates four production facilities. Two of its factories in Sheikhupura and Kabirwala are multi-product factories. To preserve the quality of raw milk in hot weather conditions in Punjab the company has made substantial investment in setting up an extensive cold chain by installing over 2200 chilling units all over the milk shed area. Nestle moto Good food ,,,,,,good life
  • 12.
  • 13.
    Water Nestlé Pure Life,Nestlé Aquarel, Perrier, Vittel, Contrex, S.Pellegrino,Acqua Panna, Levissima, Arrowhead, Poland Spring, Deer Park, Ozarka,Hépar, Ice Mountain, Zephyrhills Other beverages Nestea, Nesquik, Nescau, Milo, Carnation, Libby’s, Caro, Nestomalt,Nestlé Shelf stable Nestlé Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moça,Klim, Gloria, Svelty, Molico, Nestlé Omega Plus, Bear Brand, Coffee-Mate Chilled Nestlé Sveltesse, La Laitière, La Lechera, Ski, Yoco, Svelty, Molico, LC1,Chiquitin Ice cream Nestlé Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrême,Maxibon/Tandem, Mega, Mövenpick, Sin Parar/Sem Parar/Non Stop Infant nutrition Nestlé Nan, Lactogen, Beba, Nestogen, Cerelac, Neslac, Nestum,Guigoz, Good Start HealthCare nutrition Nutren, Clinutren, Peptamen, Modulen Bouillons, soups, seasonings, pasta, sauces Maggi, Buitoni, Thomy, Winiary,Torchin Refrigerated products (cold meat products, dough, pasta, pizzas,sauces, snacks) Nestlé, Buitoni, Herta, Toll House Chocolate, confectionery and biscuits Nestlé, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger,Aero, Polo
  • 14.
  • 15.
  • 17.
  • 22.
    Nestly SUMMARY OF AUDUTORS’REPORTS TO MEMBERS: 2008 It was also unqualified report because no ambiguity was find in financial documents.Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects ,and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source and deposited under central zakat fund. 2009 It was unqualified report statements are free of any material misstatement and proper books of account have been kept by the Company as required by the Companies Ordinance, 1984. the books of account and are further in accordance with accounting policies consistently applied except for change referred to in note 2.1 to the financial statements. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2010 It was also unqualified report because Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2011 Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects ,and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source. 2012 Proper books of accounts have been kept by the company. The financial statements together with the notes thereon has been drawn up with conformity with insurance Ordinance, 2000 & companies Ordinance, 1984, and accurately reflects books and records of the company, in all material respects and are in accordance with the accounting policies consistently applied. The apportionment of assets, liabilities, revenue and expenses has been performed in accordance along with Zakat deductible at source.
  • 23.
    Financial Statements Balance Sheet EQUITYAND LIABILITIES Share Capital and Reserves Authorized Capital Issued, subscribed and paid up capital Share premium General reserve Accumulated profit Noncurrent liabilities Long term finances Deferred taxation Retirement benefits Liabilities against assets subject to finance lease Current liabilities Current portion of: Current portion of non current liabilities Short term borrowings from associated company – unsecured Short term borrowings – secured Short term running finance under mark–up arrangements – secured Customer security deposits – interest free Trade and other payables Interest and mark–up accrued 2008 2009 2010 2011 2012 RS.(000) 750,000 453,496 249,527 280,000 3,405,824 4,388,847 750,000 453,496 249,527 280,000 3,443,932 4,426,955 750,000 453,496 249,527 280,000 4,598,850 5,581,873 5,139,875 1,319,333 351,968 77,582 6,988,758 4,210,750 1,531,945 215,925 118,275 6,076,895 5,573,750 7,848,050 15,366,964 1,705,508 2,476,871 3,304,091 229,114 44,03,077 6,37,985 55,415 13,690 -7,563,787 10,778,988 19,309,040 54,042 1,322,442 2,105,375 756,362 105,686 3,746,286 46,979 8,083,130 57,786 41,587 41,686 2,143,750 4,950,000 3,900,000 2,780,843 41,75,236 5,937,374 128,857 149,791 184,441 4,633,932 7,343,507 9,743,567 61,404 128,334 196,345 9,806,572 16,788,455 20,003,413 300,000 1,924,287 127,884 2,798,185 102,173 5,306,571 750,000 750,000 453,496 453,496 249,527 249,527 280,000 280,000 6,629,393 10,577,241 7,612,416 11,560,264 CONTINGENCIES AND COMMITMENTS: 16,684,176 18,586,980 22,952,232 35,179,859 50,872,717 Rupe
  • 24.
    Balance Sheet Assets: Tangible fixedassets Property, plant and equipment Capital work–in–progress Intangible assets Long term loans and advances Long term deposits and prepayments Goodwill Current assets Stores and spares Trade debts Stock in trade Current portion of long term loans and advances Advances, deposits, prepayments and other receivables Cash and bank balances 2008 2009 2010 2011 2012 Rupees.(000) 9,464,373 10,700,874 11,370,611 16,230,528 21,970,957 1,382,401 914,956 3,076,472 53,70,56111,549,623 10,846,774 11,615,830 14,447,083 21,601,089 33,520,580 49,744 7,106 16,735 11,954 7,173 98,544 113,490 125,674 161,982 236,639 5,036 5,026 9,817 9,817 98,663 104,178 804,647 456,813 2,488,573 26,615 1,488,103 419,327 5,684,078 16,684,176 868,984 241,715 3,895,038 21,012 1,503,009 315,770 6,845,528 18,586,980 1,050,804 126,499 4,602,019 19,149 2,048,936 505,516 8,352,923 22,952,232 1,278,416 276,858 7,064,170 30,914 4,042,634 702,025 13,395,107 35,179,859 1,373,239 491,842 8,025,653 45,735 6,208,184 760,831 16,905,484 50,872,717
  • 25.
    Cash Flow Statement Cashflow from operating activities Cash generated from operations (Increase) / decrease in long term security deposits (Increase) in long term loans and advances Retirement benefits paid Finance cost paid Taxes paid Net cash generated from operating activities Cash flow from investing activities Fixed capital expenditure Purchase of intangible asset Sale proceeds of property, plant and equipment Net cash used in investing activities Cash flow from financing activities Repayment of long term finances Short term borrowings from associated company Net movement in short term borrowings – secured Payment of finance lease liabilities Dividend paid Net cash (used in ) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 2008 4,224,959 1,052 -23,210 -89,867 -544,413 -41,697 3,526,824 2009 2010 2011 2012 6,397,615 7,618,810 8,384,781 12,722,899 10 -4,791 -88,846 -9,343 -10,321 -48,073 -89,478 -293,122 -137,122 -92,103 -136,227 -497,244 -498,656 -983,425 -2,110,131 -990,053 -1,518,903 -1,776,948 -2,042,636 4,607,863 5,449,017 5,484,232 8,255,581 -1,871,296 -2,271,269 -4,295,328 -8,940,862 -14,070,392 -19,126 -193,060 74,233 32,995 41,654 111,945 123,711 -1,797,063 -2,238,274 -4,272,800 -8,828,917 -14,139,741 2,000,000 7,084,170 1,995,375 -2,252,000 -735,000 -300,000 4,950,000 -1,050,000 -66,383 -54,132 -64,291 -57,924 -41,647 -1,201,764 -2,946,464 -2,946,661 -2,493,275 -1,811,695 -2,003,147 -1,305,221 -3,010,952 2,146,801 4,180,828 -273,386 1,064,368 -1,834,735 -1,197,884 -1,703,332 -1,231,574 -1,504,960 -440,592 -2,275,327 -3,473,211 -1,504,960 -440,592 -2,275,327 -3,473,211 -5,176,543
  • 26.
    Profit and LossAccount Sales – net Cost of goods sold Gross profit Distribution and selling expenses Administration expenses Operating profit Finance cost Other operating expenses Other operating income Profit before taxation Taxation Profit after taxation Earnings per share - basic and diluted (Rupees) 2008 2009 2010 2011 34,183,847 -25,231,532 8,952,315 -3,890,352 -956,816 4,105,147 -557,325 -1,382,138 -1,939,463 61,800 2,227,484 -674,590 1,552,894 34.24 41,155,822 -29,256,902 11,898,920 -5,238,488 -1,085,121 5,575,311 -442,050 -1,091,149 -1,533,199 144,145 4,186,257 -1,181,124 3,005,133 66.27 51,487,302 -37,608,733 13,878,569 -5,709,078 -1,311,637 6,857,854 -513,081 -819,084 -1,332,165 170,491 5,696,180 -1,583,331 4,112,849 90.69 64,824,364 -48,099,046 16,725,318 -6,862,113 -1,405,298 8,457,907 -1,050,355 -1,064,233 -2,114,588 159,545 6,502,864 -1,834,507 4,668,357 102.94 2012 Rupees(000) 79,087,696 -57,564,265 21,523,431 -8,787,508 -1,769,803 10,966,120 -1,827,969 -1,320,319 -3,148,288 160,142 7,977,974 -2,113,463 5,864,511 129.32
  • 27.
    Ratio analyses: A toolused by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.
  • 28.
    Liquidity ratios: Current ratio= 2008 1.07:1 CurrentAssets/ Current Liabilities 2009 0.85:1 2010 0.85:1 2011 0.80:1 2012 0.85:1 Interpretation: In 2009 the current ratio has increasing trend, and the nestle has the ability to pay 0.85 against 1 rupees and in 2010 the company have same current ratio. In 2011 the current ratio decrease due to increase in current liabilities as compare to current assets and the company have the ability to pay 0.80 against 1 rupees liability. But in 2012 the current ratio increase due to increase in the current assets as compare to current liabilities. Quick ratio: Quick ratio = 2008 0.60:1 Current Assets –Inventory / Current Liabilities 2009 0.37:1 2010 0.38:1 2011 0.38:1 2012 0.44:1 Interpretation: The quick ratio is decrease in 2009 because nestle increase in current liabilities as compare to the current assets , and the company have the ability to pay current assets without relying on inventory . In 2010 the current ratio increase due to increase in current assets and in 2011 company have same quick ratio. In 2012 Nestle increase the quick ratio and Nestle have the ability to pay current liability without relying on inventory.
  • 29.
    Net working capital: currentAsset - current lib. 2008 2009 2010 2011 2012 377,507 -1,237,602 1,453,649 -3,393,348 -3,097,929 Net working capital is also another measure of the liquidity of the company. Net working capital is the difference between the current assets and current liabilities. It is just like the current ratio indicating either the company has enough current assets to pay its current liabilities. If the current assets are more than the current liabilities then company has strong liquidity position indicating it has the ability to discharge it current liabilities. Net working capital is also going increase every year which means APL have enough cash after payment of current liabilities. So the liquidity position is strong. Cash ratio based on current liabilities Cash and cash equivalents Current Liabilities 2008 2009 2010 2011 2012 0.07902033 0.03906531 0.0515487 0.04181594 0.03803506 Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts. The above ratio shows variation due to inflow or outflow of cash in business. In 2010 the ratio is very high but in 2012 ratio is very low as compared to other years which means in 2010 APL has more cash and cash equivalents but in 2012 APL have low cash and cash equivalents to pay current liabilities.
  • 30.
    Activity Analysis Inventory Turnover InventoryTurnover Ratio = 2008 13.74 time 2009 10.57 time 2010 11.19 time Sales/Inventory 2011 9.18 time 2012 9.85 time Interpretation: In 2008 the inventory turnover ratio reduce due to increase in inventory and inventory converted in to sale less as compare to 2008.In 2009 inventory turnover ratio increase means inventory is more converted into sale as compare to 2008.But in 2010 inventory turnover is also increase. In 2011 reduce due to decrease in cost of goods sold. But also increase in 2012 as compare to 2011. Days Sales Outstanding (DIO) Days sales outstanding = 2008 4.81 days Receivables/Average Sale per day 2009 2.11 days 2010 0.88 days 2011 1.54 days 2012 2.24 days Interpretation: In 2009 Nestle company Days outstanding ratio is low as compare to 2008 and company can recover the sale receivables more quickly and in 2010 the ratio is more low as compare to 2009.In 2011 the ratio increase which show that the company sales receivable not converted into cash quickly as compare to 2010, and this ratio also increase in 2012 .
  • 31.
    Fixed Asset Turnover FixedAssets Turnover= 2008 3.15 time Sales/Net Fixed Assets 2009 3.54 time 2010 3.56 time 2011 3.00 time 2012 2.36 time Interpretation: In 2009 the fixed assets turnover ratio is high as compare to 2008 means the company use more fixed assets as compare to 2008 and also in to 2010.But in 2011 the ratio is reduce which show that the company use less fixed assets to generate sales and in 2012 the ratio is reduce which is good because company use generate more sale by using less fixed assets. Current asset turnover = _Sale___________ current Asset 2008 2009 6.01 times 6.01 times 2010 6.16 times 2011 2012 4.83 times 4.67 times Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts. The above ratio shows variation due to inflow or outflow of cash in business. In 2010 the ratio is very high but in 2012 ratio is very low as compared to other years which means in 2010 APL has more cash and cash equivalents but in 2012 they have low cash and cash equivalents to pay current liabilities.
  • 32.
    Total Asset Turnover TotalAssets Turnover= 2008 2.05 time Sales/Total Assets 2009 2.21 time 2010 2.24 time 2011 1.84 time 2012 1.55 time Interpretation: The ratio show how mach total assets use to generate the sale. In 2009 the Total assets turnover ratio is high compare to 2008 which show that the company use more fixed to generate the sale , the ratio of 2010 is increase as compare to 2009. In 2011 the ratio reduce which show that the company generate more sale by using less total assets and in 2012 the ratio reduce more compare to 2011. Solvency Ratios: Total Debt to Total Assets Total Debt to Total Assets= 2008 73.69% (Total Debt/Total Assets)*100 2009 76.18% 2010 75.68% 2011 78.36% 2012 77.28% Interpretation: In 2009 the Total debt to total assets ratio is high as compare to 2008 which show that the 76.18% company assets are generated from the total debt . In 2010 the ratio reduce which show that the generate more assets from less total debt compare to 2009.But high in 2011 and produce 78.68 % total assets from total debt . In 2012 the ratio decrease from 2011 which is good for the nestle company.
  • 33.
    Time-Interest-Earned Ratio: Time-Interest-Earned Ratio=EBIT/Interest Charges 2008 5.00 time 2009 10.47time 2010 12.10 time 2011 7.19 time 2012 5.36 time Interpretation: The time earned ratio is high in 2009 as compare to 2008 and which show that the company has ability to pay its interest charges easily compare to the 2008 and also increase in 2010 which that the company is increase and pay interest charges .But the ratio is reduce in 2011 which show that the company interest charges increase and 2012 interest charges are increase that’s way the ratio is reduce as compare to 2011. EBITDA coverage Ratio: EBITDA coverage Ratio= EBITDA +Lease payment/Interest charges +Lease payment+ Principle amount 2008 1.18 time 2009 1.81 time 2010 1.71 time 2011 1.41 time 2012 1.02 time Interpretation: In 2009 the EBITDA coverage ratio is higher than the ratio of 2008 which show that the Nestle company earning is higher to met the loan and its charges but this ratio decrease in 2010 and show that the cash flow available is flow for the payment of fixed and financial charges. The ratio is also decrease in 2011 and 2012.
  • 34.
    LTD to fixedassets = Long term debts / fixed Asset 2008 2.04887835 2009 2.214229 2010 2.243237 2011 1.842656 2012 1.554619 Interpretation: Long term liability to fixed asset ratio is one of the measures of the solvency of the company. It measures that how much fixed assets are financed by the long term liabilities. This ratio is in increasing trend throughout the five years. In 2009 2.214229 mfixed assets and in 2013 1.554619 fixed assets are financed by long term liabilities. Profitability Ratios: Profit Margin on Sales 2008 4.54% = ( Net income/Sales)*100 2009 7.30% 2010 7.99% 2011 7.20% 2012 7.42% Interpretation: In 2009 the Profit margin on sales ratio is higher than the ratio of 2008 that show that 7.30% income is generate from 1 rupees sale .That ratio is increase in 2010 and show that the company that the net income is increase per rupees sale. But ratio decrease in 2011 , the net income decrease as compare to 2010.But ratio increase in 2012 and company can get 7.20% net income from 1 rupees.
  • 35.
    Return on TotalAssets : Return on Total Assets Ratio 2008 9.31% = Net income/Total Assets 2009 16.17% 2010 17.92% 2011 13.27% 2012 11.53% Interpretation: The ratio of 2009 is increase as compare the ratio of 2008 which show that the company net income is increase from the use of total assets .And the ratio of2010 is increase 16.17% to 17.92% and the company get more income by using its total assets .But in 2011 and 2012 the ratio is decreasing which show that the company use more debt on which the pay interest that’s way its net income is decrease and the ratio. Basic Earning Power Ratio : Basic Earning Power Ratio = 2008 16.69% 2009 24.90% (EBIT/Total Assets)*100 2010 27.05% 2011 21.47% 2012 19.28% Interpretation: In 2009 the Basic earnings power ratio is increase from 2008 that show that the company total assets have the availability to generate the 24.90% EBIT and the ratio is also more increase in 2010 which is every good as compare to 2008 and 2009.But the ratio decrease in 2011 that the company EBIT decrease which the company generated from company total assets and also decrease in 2012.
  • 36.
    Return on CommonEquity : Return on Common Equity 2008 35.38% = (Net Income/Common equity)*100 2009 67.88% 2010 73.68% 2011 61.33% 2012 50.73% Interpretation: In 2009 the company ratio increase from35.38% to 67.88% that show that the company net income increase on the investment of the shareholders and the ratio of 2010 is also high. But the ratios of 2011 and 2012 is decreasing which show that the company net income is reduce on the investment of the shareholders. Market Value Ratios: Price/Earnings per share= 2008 0.29 time 2009 0.15 time Price per share/Earning per share 2010 0.11 time 2011 0.10 time 2012 0.08 time Interpretation: The price/earning per share ratio of the company reduce in 2009 and it indicate that the investors are paying 0.15 for every rupees 1company earning .The ratio of company continuously decreasing from 2009 to 2012, which show that the company earning per share is continuously from year to year.
  • 37.
    Price/Cash Flow Ratio: Price/Cash Flow Ratio 2008 -301.33time = Price per share/Cash flow per share 2009 -1029.29 time 2010 -199.31time 2011 -130.60 time 2012 -87.61 time Interpretation: In 2009 cash flow per share is high as compare to 2008 but the is decreasing from 2010 which means that the denominator which cash flow per share is increasing year to year. Cash reinvestment ratio: 2009 2.56% 2010 8.96% 2011 -18.84% 2012 3.06% 2013 12.60% Cash reinvestment ratio measures how much cash is available for the investment in business assets. In 2009 company has low cash to reinvest but in 2013 company has high cash to reinvest in the business assets. Cash flow and solvency ratio: 2009 17.88% 2010 27.52% 2011 -20.63% 2012 23.22% 2013 37.60% This ratio is used to measure the solvency of the company either the company has enough cash to pay its total debts. In 2013 company has 37.60% cash to pay its debts. Cash per share: 2009 2010 2011 2012 2013 34.74 58.32 -38.61 60.96 87.32 Cash flow per share measures the availability of cash against one share of equity. The ratio is in increasing trend except in 2011. In 2011 due to the loss in cash flow from operations company has no cash against one share of equity. In 2012 and 2013 company has 60.96 rupees and 87.32 rupees cash against one share which shows phenomenal performance of APL.
  • 38.
    Market/Book Ratio : Market/BookRatio 2008 66440.64 time = 2009 65868.71 time Market price per share/Book price per share 2010 52240.14time 2011 38305.56 time 2012 25224.15 time Interpretation: In2009 the Market/Book ratio is decrease as compare to 2008 which show that the company accumulated profit of 2009 is increase from 2008.And in the ratio is decrease more quickly in2010,11 and12 which means that the company performance is going good because its accumulated profit increase that’s way its nominator is greater than the denominator which result in decrease of Market/Book ratio of the company continuously .
  • 39.
    Recommendations: Employees should betrained according to the changing standards of the organization. Company should conduct survey from time to time, according to which changes can be introduced in the organization to stay updated in the market. They should introduce creativity into the work, so that the employees Cando their work active mindedly. Employee should be given compensation in order to keep them loyal. Employee should be more involved in decision making to become more differentiated. Company should provide incentives to shop keepers As far as the Liquidity ratios are concerned then liquidity position of nestle is not good so the company should improve current ratio and should be able to pay off its current liabilities in this regard the company should increase cash and cash equivalents Conclusion: the company performance not bad, and still nestle is the market leader in pak but the company have more chance to increase its growth and market share because uniliver is the big competitor and he give more challenge in the market. So we can say company performance is satisfactory