Nestle Pakistan is a subsidiary of Nestle S.A. that has been operating in Pakistan since 1988. It operates four factories producing foods such as milk, cereals and bottled water. The document analyzes Nestle Pakistan's financial ratios for 2013 and 2014, including current ratio, acid test ratio, gearing ratio, interest coverage ratio, inventory turnover, receivables collection period, and various profitability and investment ratios to evaluate the company's liquidity, leverage, efficiency and returns.
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Nestle financial report analysis 2013 & 2014
1.
2. RATIO ANALYSIS OFNESTLE PAKISTAM
UVAS BUSINESS SCHOOL
PRESENTED TO
SIR SHAHID MEHMOOD
PRESENTED BY
ALI RAZA
FAIZA GULAM RASOOL
IQRA IHSAN
RAMEELA SHAFIQUE
NAILA JAMEEL
SHAHRYAR AKRAM
ATTIYA SHOUKAT
3.
4. Introduction
• Nestlé Pakistan Ltd is a subsidiary of
Nestlé S.A. –
– a company of Swiss origin
headquartered in Vevey, Switzerland.
• Operating in Pakistan since 1988
• Food processing company
• Headquarter is in Lahore
• Operates the biggest milk collection
operation in Pakistan.
5. NESTLÉ’S FOUNDER, GERMAN-BORN PHARMACIST
HENRI NESTLÉ, LAUNCHES HIS ‘FARINE LACTÉE’
(‘FLOUR WITH MILK’) IN VEVEY, SWITZERLAND. IT
COMBINES COW’S MILK, WHEAT FLOUR AND
SUGAR, AND NESTLÉ DEVELOPS IT FOR
CONSUMPTION BY INFANTS WHO CANNOT BE
BREASTFED, TO TACKLE HIGH MORTALITY RATES.
AROUND THIS TIME HE STARTS USING THE NOW
ICONIC ‘NEST’ LOGO.
HISTORY
In
1867
6. History
• 1979
– MILKPAK Ltd. was founded by Syed Babar Ali
• 1988
– Nestlé SA acquired 40 percent shares in
MILKPAK Ltd.
• 1992
– Nestlé took over the running of the company
• 1996
– MILKPAK Ltd. was renamed Nestlé MILKPAK Ltd.
• 2005
– Nestlé MILKPAK Ltd was renamed Nestlé
Pakistan Ltd.
7. • It operates four production
factories.
• In Sheikhupura and
Kabirwala
– multi product factories
• And in Islamabad and
Karachi
– produce water.
9. Ratios analysis is important for :
• Analyzing Financial Statements
• Judging Efficiency
• Locating Weakness
• Formulating Plans
• Comparing Performance
10. Current Ratio
(working capital Ratio )
Current
assets
Current
liabilities
Current
Ratios
•primary measure liquidity
•Relates current assets to current
liabilities
•2:1 or higher is satisfactory
14. Long-term Solvency Ratios
• Solvency ratios tells……..
• Some major solvency ratios are:-
• 1) Gearing Ratio
• 2) Interest Coverage Ratio
• 3)Debt Ratio
15. 1)Gearing Ratio:-
The gearing ratio is a general term describing
a financial ratio that compares some form of
owner's equity (or capital) to borrowed
funds.
17. Gearing Ratio:-
• As described below in comparison ………
2013 2014
(17464812/29323969)*100
=59.558%
6951459/19579084*100
=35.50%
18. 2) Interest coverage ratio:-
• This ratio tells us about the ability of
company to meet its interest
payments……
• If it is increasing then it is good for
business ,
• If it is decreasing then it is not good
for business
20. Interest coverage ratio:-
• Comparison over 2 years:-
2013: 2014:
11471270/2113096 =
5.4286 TIMES
14113463/2155637 =
6.547 TIMES
21. 3) DEBT Ratio:-
• Debt ratio measures a firm’s total
liabilities as a percentage of its total
assets.
• The higher percentage indicates more
leverage and more risk.
24. EFFICIENCY
The comparison of what is actually PRODUCED or
performed with what can be achieved with the
same CONSUMPTION of RESOURCES (MONEY,
time, LABOUR etc.). IT is an important FACTOR in
determination of PRODUCTIVITY.
“Measures the Efficiency of the Business”
TRADE RECEIVABLE COLLECTION PERIOD.
TRADE PAYABLE PAYMENT PERIOD.
INVENTORY PERIOD.
25. TRADE RECEIVABLE COLLECTION PERIOD
TRADE
RECEIVABLES
2013
=
𝟑𝟐𝟖𝟏𝟏𝟎
𝟖𝟔𝟐𝟐𝟔𝟖𝟔𝟗
∗ 𝟑𝟔𝟓
=1.38 days
2014
=
𝟐𝟕𝟐𝟑𝟐𝟏
𝟗𝟔𝟒𝟓𝟕𝟕𝟒𝟑
∗ 𝟑𝟔𝟓
= 1.03 days
365 (DAYS)
SALES
(CREDIT)
26. TRADE PAYABLES PAYMENT PERIOD
The trade payables payment period
ratio represents the time lag between a credit
purchase and making payment to the supplier.
As trade payables relate to credit purchases so
credit purchases figure should be used in
calculating this ratio. However as the amount
of credit purchase is usually not separately
available in the income statement so in that
case total purchases could be used.
=
𝑻𝑹𝑨𝑫𝑬 𝑷𝑨𝒀𝑨𝑩𝑳𝑬
𝑪𝑶𝑺𝑻 𝑶𝑭 𝑺𝑨𝑳𝑬𝑺
∗ 𝟑𝟔𝟓 𝑫𝑨𝒀𝑺
27. TRADE PAYABLE PAYMENT PERIOD
2013 2014
=
𝟗𝟑𝟔𝟔𝟖𝟎𝟓
𝟔𝟐𝟎𝟔𝟔𝟎𝟕𝟐
∗ 𝟑𝟔𝟓
= 55 days
2014
=
𝟏𝟒𝟑𝟔𝟏𝟗𝟏𝟑
𝟔𝟗𝟏𝟑𝟑𝟕𝟓𝟑
∗ 𝟑𝟔𝟓
= 75 days
28. INVENTORY PERIOD
In accounting, inventory period is a
measure of the average number of
days inventory is held, calculated by
dividing the inventory by the average
daily cost of goods sold. It is also called
days in inventory.
=
𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑹𝒀
𝑪𝑶𝑺𝑻 𝑶𝑭 𝑺𝑨𝑳𝑬𝑺
∗ 𝟑𝟔𝟓 𝑫𝑨𝒀𝑺
30. INVESTMENT RATIOS
• DIVIDEND YIELD (%)
• DIVIDEND PAYOUT(%)
• EARNING PER SHARE
• PRICE / EARNING RATIO
• TOTAL SHARE HOLDER RETURN
31. DIVIDEND YIELD (%)
ANNUAL
DIVIDEND
PAID PER
SHARE
MARKET
PRICE PER
SHARE
DIVIDEND
YIELD
The dividend yield is a financial ratio that
measures the amount of cash dividends
distributed to common shareholders relative to
the market value per share.
DIVIDEND PAYMENT F
TOTAL NUMBER OF
SHARE OUTSTANDING
33. DIVIDEND PAYOUT (%)
TOTAL
DIVIDEND
PAID
PROFIT
AFTER TAX &
PRFERENCE
DIVEDEND
DIVIDEND
PAYOUT
The dividend payout ratio measures the
percentage of net income that is distributed to
shareholders in the form of dividends during the
year.
39. TOTAL SHARE HOLDER RETURN
• The internal rate of return of all cash flows to
an investor during the holding period of an
investment.
•
𝑪𝑨𝑷𝑰𝑻𝑨𝑳 𝑮𝑨𝑰𝑵 𝑶𝑹 𝑳𝑶𝑺𝑺 𝑰𝑵 𝑷𝑬𝑹𝑰𝑶𝑫+𝑫𝑰𝑽𝑰𝑫𝑬𝑵𝑫
𝑺𝑯𝑨𝑹𝑬 𝑷𝑹𝑰𝑪𝑬 𝑨𝑻 𝑩𝑬𝑮𝑰𝑵𝑰𝑵𝑮 𝑶𝑭 𝑷𝑬𝑹𝑰𝑶𝑫
40. TOTAL SHAREHOLDER RETURN
• Comparison over 2 years:-
2013: 2014:
=5439789+249527/10
= 5464741
=7032581+249527/10
=7057533.7
41. Return on total capital employed (ROCE) %
A ratio that indicates the efficiency and
profitability of a company's capital
investments.
=
𝑷𝑹𝑶𝑭𝑰𝑻 𝑩𝑬𝑭𝑶𝑹𝑬 𝑭𝑰𝑵𝑨𝑵𝑪𝑬 & 𝑇𝐴𝑋
𝑻𝑶𝑻𝑨𝑳 𝑪𝑨𝑷𝑰𝑻𝑨𝑳 𝑬𝑴𝑷𝑳𝑶𝒀𝑬𝑫
∗ 𝟏𝟎𝟎
55. Operating Profit Ratio
“Calculated by
dividing the
Operating Net Profit
by Sales”
Formula:
(Operating Profit/Net
sales)*100
Determined
the Ability Of
the
Management
in Running
the Business
57. CONCLUSION
The company performance not bad
and still nestle is the market leader in
Pakistan . But the company have
more chance to increase its growth
and market share.
So we can say company performance
is satisfactory.
