It is about the anylasis of dupont, ratios, horizontal and vertical analysis

1. TOPIC:
FINANCIAL ANALYSIS OF
NESTLE COMPANY

2. INTRODUCTION
Nestlé Pakistan Ltd is a subsidiary of Nestlé S.A, a
company of Swiss origin headquartered in
Switzerland. It is one of the leading food and beverage
Company in Pakistan. It is a public limited company.
The major activity of the Company is manufacturing,
processing and sale of food products including
imported products (dairy, confectionery, culinary,
coffee, beverages, infant nutrition and drinking water
etc).

3. PATTERN OF SHAREHOLDING
There are 854 numbers of shareholders and
shares held by them are 45,349,584.

4. The auditor states that the financial
statement are prepared under
appropriate accounting polices and
applicable accounting standards and
states the information as required by
the companies ordinance 1984. Hence,
all financial statements give true and
fair view.
AUDIT REPORT

7. RATIO ANALYSIS
ACTIVITY RATIOS:
The comparisons shows that the business is more efficient in 2015, as its
inventory turnovers seems to be more favorable than in 2014. The receivable
turnover in days in both the years is showing almost the same results which is
safe and sound.
LIQUIDITY RATIO:
In term of current ratio and quick ratio, results are showing the negative
signs in both the years as it’s less than 1. The company should take immediate
measures in terms of its liquidity otherwise it would face severe problems
SOLVENCY RATIO:
In terms of debt to asset ratio and long term debt to assets ratio, its high
in 2015 which are large portion of assets that are financed by debt as compared
to 2014 and in term of interest coverage, 2015’s ratio is more efficient.

8. PROFITABILITY RATIO(MARGIN):
In terms of profitability ratios (Margin), 2015’s ratios are
more favorable than in 2014 which means they are more effective and
efficient in 2015 in terms of generating high revenues.
PROFITABILITY RATIO (RETURN):
In terms of profitability ratios (return), the operating
return on assets, return on assets and return on equity is high and
more favorable in 2015, which means the efficiency of business in
generating returns have been increased as compared to the previous
year which is 2014.
SHAREHOLDER/INVESTOR RATIOS:
In terms of shareholder’s ratios, the business has more
capacity to cover its interest cost in 2015. Dividend coverage ratios in
both the year are showing safe position of the business as it’s more
than 1 which seems to be safe and sound.

9. CASH FLOW RATIOS:
In terms of cash flow ratios, the results are
showing that the company in 2015 is efficiently using its assets
to generate cash flow, the ability of the company to make
interest payments on its entire debt loads is increasing, and the
capacity of the company to generate cash from operations is
also increasing which is a very good sign. Thus, in terms of cash
flow ratios, the company is showing more favorable results in
2015.

12. HORIZONTAL COMMON-SIZE ANALYSIS
In terms of horizontal analysis, the comparison is
between
2013 ,2014 and 2015.
Results shows:
 Equity investment is gradually increasing
 Long term finances are increases
 Due to high interest cost, tax expense is decreasing
gradually
 Great increase in percentage of cash and bank balances

15. VERTICAL COMMON-SIZE ANALYSIS
The comparison between 2014 and 2015, and the results show:
 Trade payables have increased in 2015 which means company is
having more credit purchases.
 Percentage of cash and bank balances is increased in 2015 which is
a very good sign.
 Decrease in COGS.
 Operating expenses are increasing with a high percentage in 2015
 Increase in non-current assets.

18. DUPONT FINANCIAL ANALYSIS
The return on equity in 2015 is 82% and 73% in
2014,which means that the company is more efficient in
2015.It is,
 earning good net profit margin
 generating enough revenue to cover its cost and expenses
 efficiently using its debts and assets to generate high
profits
 efficiently managing its resources to generate high
turnovers

19. SUMMARY
We have evaluated the financial performance of
the Nestle Pakistan by using different analysis
methods and came to know that its financial
position and performance is increasing in a
positive manner towards prosperity which is
the reason that currently it is the most leading
food and beverage company in Pakistan, having
higher profits among the top leading
companies.

20. CONCLUSION
We have conclude that :
 Company is highly effective at utilizing its assets
 It has efficient cost management
 Its ratios are almost showing favorable results
 Sales and performance is enhancing every year and it
will earn high revenues in future

21. RECOMMENDATIONS
 Increase loyalty of customer with brand through
attractive packages
 Keep the price low and affordable by the customers
Increase its distribution network
 Create strong brand loyalty among customers
 Training courses/workshops for team
 Hiring of quality sales people

22. THANK YOU!