Description
This is a spreadsheet describes on financial analysis of Nestle.
OVERVIEW
Nestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food products such prepared dishes & cooking aids, and chocolates & confectionary. Some of the famous brands of Nestle are NESCAF ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh 'n' Natural Dahi and NESTLE Jeera Raita. HISTORY Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestle's first product was "Farine Lactee Nestle the Anglo-Swiss Condensed Milk Company. Nestle's relationship with India started 1912, when it began trading as T Company (Export) Limited, importing and selling finished products in the Indian market. Today, Nestle is the world's largest and most diversified food company. It has around 2,50,000 employees worldwi 100 countries and offers over 8,000 products to millions of consumers universally.
NESTLE INDIA After independence, in response to the then economic policies, which emphasized local production, Nestle formed and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestle to develop the milk econ farmers regarding basic farming and animal husbandry practices such as increasing the milk yield of the cows throu irrigation, scientific crop management practices etc. Nestle set up milk collection centres that ensured prompt colle transformed Moga into a prosperous and vibrant milk district.
PROGRESS Nestle India Limited has grown over the years into the most desired brand in the food and beverage sector in India expectations of the Indian government in bringing a marked change in the milk industry through its suggestion on l cows to improve the milk yield. Nestle India Limited gave directions to the farmers in incorporating the advanced te maintenance and irrigation. The company proposed the set up of centers that not only catered to the storing and s with the farmers. Nestlé has been a partner in India's growth for over nine decades now and has built a very special relationship of tr India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to a suppliers of packaging materials, services and other goods. Nestlé India is a responsible organization and facilitates initiatives that help to improve the quality of life in the com
es a variety of food products such as infant food, milk products, beverages, mous brands of Nestle are NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BARral Dahi and NESTLE Jeera Raita.
product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired d 1912, when it began trading as The Nestle Anglo-Swiss Condensed Milk
und 2,50,000 employees worldwide, operated 500 factories in approximately
d local production, Nestle formed a company in India, namely Nestle India Ltd, ed Nestle to develop the milk economy. In Moga, Nestle educated and advised ng the milk yield of the cows through improved dairy farming methods, centres that ensured prompt collection and paid fair prices. Thus, Nestle
food and beverage sector in India. The company has succeeded in meeting the dustry through its suggestion on latest dairy farming techniques and upkeep of rs in incorporating the advanced technological methods with regard to crop t only catered to the storing and selling of milk, but also maintained contacts
uilt a very special relationship of trust and commitment with the people of yment and provides livelihood to about one million people including farmers,
prove the quality of life in the communities where it operates.
CURRENT RATIO
Year 2004 2005 2006 2007 2008 Current Asset 3,639,992 3,581,752 5,353,738 6,378,541 7,979,532 Current Liabilities 4,923,285 6,182,349 7,688,725 9,577,693 11,839,651
WORKING CAPTIAL RATIO
Year 2004 2005 2006 2007 2008 Cost of Sales 22,275,739 24,769,010 28,160,646 28,160,646 35,043,532 Net working capital -2,600,597 -2,226,330 -2,334,987 -3,199,152 -3,860,119
QUICK RATIO
Year 2004 2005 2006 2007 2008 Quick Asset 3639992 3581752 5353738 6378541 7979532 Current Liabilities 4,923,285 6,182,349 7,688,725 9,577,693 11,839,651
DEBTORS TURNOVER RATIO
Year 2004 2005 2006 2007 2008 Net Credit Annual Sales Average Trade debtors 22,275,739 24,769,010 28,160,646 35,043,532 43,242,450 289,350 283465 431408 546235 495417
AVERAGE COLLECTION PERIOD
Year 2004 2005 2006 2007 2008 Total Trade Debtors 578700 566930 862816 1092470 990834 Sales per Day 0.211 4.177 5.592 5.689 4.182
CREDITORS TURNOVER RATIO
Year 2004 2005 2006 2007 2008 Net Credit Annual Purchases Average Trade crditors 324239 282971 267906 346,677 502,268 2511429 2913469.5 3430796.5 4111164 4786871.5
AVERAGE PAYMENT PERIOD
Year 2004 2005 2006 2007 2008 Total Trade Creditors 5022858 5826939 6861593 8222328 9573743 Average Daily Purchase 888.3260274 775.2630137 733.9890411 949.8 1376.076712
GROSS PROFIT RATIO
Year 2004 2005 2006 2007 2008 Gross profit 38,64,931 46,90,574 48,05,239 62,86,138 77,28,268 Net sales 2,22,75,739 2,47,69,010 2,81,60,646 3,50,43,532 4,32,42,450
NET PROFIT RATIO
Year 2004 2005 2006 2007 2008 Net profit 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Net sales 2,22,75,739 2,47,69,010 2,81,60,646 3,50,43,532 4,32,42,450
RETURN ON EQUITY
Year 2004 2005 2006 2007 2008 Profit after tax 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Average shareholders' equity 32,72,012 33,67,701 37,15,106 40,36,560 44,58,869
EARNINGS PER SHARE
Year 2004 2005 2006 2007 2008 Profit after tax 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Weighted average number of Equity Shares 9,64,15,716 9,64,15,716 9,64,15,716 9,64,15,716 9,64,15,716
PRICE EARNING RATIO
Year 2004 2005 2006 2007 2008 Market price 589 955 1122 1422 1397 Earnings = PAT/No. of shares 26.13 32.11 32.68 42.92 55.39
RETURN OF GROSS CAPITAL EMPLOYED
Year 2004 2005 2006 2007 2008 Adjusted net profit 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Gross capital employed 95,01,672 95,91,981 1,19,31,839 1,40,66,619 1,69,50,135
DEBT EQUITY RATIO
Year 2004 2005 2006 2007 2008 Secured + Unsecured loans Equity 7,49,157 9,88,056 10,51,369 11,61,883 12,27,983 31,94,070 35,41,333 38,88,879 41,84,241 47,33,497
INTEREST COVER
Year 2004 2005 2006 2007 2008 Profit before interest and tax Interest expense 38,64,931 46,90,574 48,05,239 62,86,138 77,28,268 7822 2122 4408 8545 16,430
Current Ratio 0.74 0.58 0.70 0.67 0.67
0.80 0.60 0.40 0.20 0.00 2004 2005
Current Ratio
2006
2007
2008
Working capital turnover ratio
0
Working capital turnover ratio -9 -11 -12 -9 -9
-2 -4 -6 -8 -10 -12 -14
2004
2005
2006
2007
2008
Working capital turnover ratio
Quick Ratio 0.74 0.58 0.70 0.67 0.67
Quick Ratio
0.80 0.60 0.40 0.20 0.00 2004 2005 2006 2007 2008
Debtors Turnover Ratio
100.000
Debtors Turnover Ratio 76.986 87.379 65.276 64.155 87.285
80.000 60.000 40.000 20.000 0.000 2004 2005 2006 2007 2008
Debtors Turnover R
Average Collection Period
3000000
Average Collection Period 2743702.142 135720.6027 154304.9096 192019.3534 236944.9315
2500000 2000000 1500000 1000000 500000 0 2004 2005 2006 2007 2008
Creditors Turnover Ratio
0.1500
Creditors Turnover Ratio 0.1291 0.0971 0.0781 0.0843 0.1049
0.1000 0.0500 0.0000 2004 2005 2006 2007 2008
Creditors Turnover Ra
Average Payment Period
Average Payment Period 5654.295658 7516.080217 9348.358921 8656.904611 6957.274194
10000 8000 6000 4000 2000 0 2004 2005 2006 2007 2008
Average Payment Per
Gross Profit Ratio 0.174 0.189 0.171 0.179 0.179
Net Profit Ratio 0.113 0.125 0.112 0.118 0.124
Return On Equity 0.77 0.919 0.848 1.025 1.198
Earnings Per Share 0.026 0.032 0.033 0.043 0.055
Price Earning Ratio 22.54 29.74 34.33 33.13 25.22
Return Of Gross Capital Employed 0.265 0.323 0.264 0.294 0.315
Debt to Equity Ratio 0.235 0.279 0.27 0.278 0.259
Interest Cover 494 2210 1090 736 470
Current Ratio
r ratio
Working capital turnover ratio
Quick Ratio
Debtors Turnover Ratio
Period
Average Collection Period
Ratio
Creditors Turnover Ratio
Period
Average Payment Period
F)
Inventory Turnover
G)
Inventory period
INTERPRETATION A) DEBT EQUITY RATIO
B)
INTEREST COVERAGE RATIO
INTERPRETATION A) NET PROFIT RATIO
B)
RETURN ON EQUITY
C)
RETURN ON CAPITAL
A)
INTERPRETATION Price Earnings Ratio
B)
Price to Book Ratio
A) Current Ratio Current ratio in a business indicates that the availability of the current asset to meet it’s current liabilities. Higher the ratio, better the coverage. Generally 2:1 ratio is generally accepted. B) Quick Ratio Quick ratio is a better form of the CURRENT RATIO which excludes from current assets things that cannot be converted into cash in short period, like inventories. It’s value for reliance has always been around 1. C) Absolute Ratio This ratio is the acid test ratio, which tells how much current liabilities are covered by the most liquid assets. It’s value is also satisfactory, around 0.70 except in the years 2002-03 D) Debtors Turnover Ratio Debtors turnover ratio represents the speed at which cash is realized from receivables, as it affects the liquidity position of the company. Overall the value of this ratio has been over 16 E) Collection Period This ratio represents the number of days required to realize cash from receivables. It is a better representation of DTR.
INTERPRETATION
F) Inventory Turnover This ratio indicates that how fast inventories is used or sold. A high ratio is good from the view point of liquidity and vice versa. Here, the value of this ratio has been around 6. It has G) Inventory period
It is a representation of the inventories turnover ratio in the number of days. Inventory turnover ratio with debtors turnover represents the total accounting cycle. It has always been above 30 days with minimum in the year 2000-01 and
INTERPRETATION A) DEBT EQUITY RATIO This ratio indicates proportion of owner’s fund to total fund’s investments in the business. Here the high ratio indicates that the business is risky. Whereas a low ratio indicates that the utilization of the leverages is not done properly by the company. In case of Reliance, it’s debt-equity ratio is very high. Specially for the initial years, where it is more than 0.6 B) INTEREST COVERAGE RATIO This indicates the extent to which, earnings may fall without causing any embarrassment to the firm, regarding Payment Charges, this ratio is very low for Reliance, which is because a large part of expenditure is made by interest by Reliance. This
INTERPRETATION A) NET PROFIT RATIO
It indicates the firm’s capacity to face adverse economic conditions such as price competition. The later years have shown higher profitability. It around 13 in the later years. B) RETURN ON EQUITY This ratio is more meaningful to the equity shareholders who are interested to know profile earned by the company and the profiles that can be made available. The higher the ratio, the better it is. Although the return on equity fell during the C) RETURN ON CAPITAL This ratio is the most important for measuring the overall efficiency of a firm. Higher the ratio, the better it is for the company. It should be compared with those of the other
A)
INTERPRETATION Price Earnings Ratio
This indicates the expectation of equity investors about the earnings of the firm. That is, how many times of the actual earnings are they ready to pay for the share. It has generally B) Price to Book Ratio
This ratio indicates the ratio of market price with book value of the share. Higher of this value represents higher expectation of the shareholders. Price to Book ratio has been
doc_173484471.xls
This is a spreadsheet describes on financial analysis of Nestle.
OVERVIEW
Nestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food products such prepared dishes & cooking aids, and chocolates & confectionary. Some of the famous brands of Nestle are NESCAF ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh 'n' Natural Dahi and NESTLE Jeera Raita. HISTORY Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestle's first product was "Farine Lactee Nestle the Anglo-Swiss Condensed Milk Company. Nestle's relationship with India started 1912, when it began trading as T Company (Export) Limited, importing and selling finished products in the Indian market. Today, Nestle is the world's largest and most diversified food company. It has around 2,50,000 employees worldwi 100 countries and offers over 8,000 products to millions of consumers universally.
NESTLE INDIA After independence, in response to the then economic policies, which emphasized local production, Nestle formed and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestle to develop the milk econ farmers regarding basic farming and animal husbandry practices such as increasing the milk yield of the cows throu irrigation, scientific crop management practices etc. Nestle set up milk collection centres that ensured prompt colle transformed Moga into a prosperous and vibrant milk district.
PROGRESS Nestle India Limited has grown over the years into the most desired brand in the food and beverage sector in India expectations of the Indian government in bringing a marked change in the milk industry through its suggestion on l cows to improve the milk yield. Nestle India Limited gave directions to the farmers in incorporating the advanced te maintenance and irrigation. The company proposed the set up of centers that not only catered to the storing and s with the farmers. Nestlé has been a partner in India's growth for over nine decades now and has built a very special relationship of tr India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to a suppliers of packaging materials, services and other goods. Nestlé India is a responsible organization and facilitates initiatives that help to improve the quality of life in the com
es a variety of food products such as infant food, milk products, beverages, mous brands of Nestle are NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BARral Dahi and NESTLE Jeera Raita.
product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired d 1912, when it began trading as The Nestle Anglo-Swiss Condensed Milk
und 2,50,000 employees worldwide, operated 500 factories in approximately
d local production, Nestle formed a company in India, namely Nestle India Ltd, ed Nestle to develop the milk economy. In Moga, Nestle educated and advised ng the milk yield of the cows through improved dairy farming methods, centres that ensured prompt collection and paid fair prices. Thus, Nestle
food and beverage sector in India. The company has succeeded in meeting the dustry through its suggestion on latest dairy farming techniques and upkeep of rs in incorporating the advanced technological methods with regard to crop t only catered to the storing and selling of milk, but also maintained contacts
uilt a very special relationship of trust and commitment with the people of yment and provides livelihood to about one million people including farmers,
prove the quality of life in the communities where it operates.
CURRENT RATIO
Year 2004 2005 2006 2007 2008 Current Asset 3,639,992 3,581,752 5,353,738 6,378,541 7,979,532 Current Liabilities 4,923,285 6,182,349 7,688,725 9,577,693 11,839,651
WORKING CAPTIAL RATIO
Year 2004 2005 2006 2007 2008 Cost of Sales 22,275,739 24,769,010 28,160,646 28,160,646 35,043,532 Net working capital -2,600,597 -2,226,330 -2,334,987 -3,199,152 -3,860,119
QUICK RATIO
Year 2004 2005 2006 2007 2008 Quick Asset 3639992 3581752 5353738 6378541 7979532 Current Liabilities 4,923,285 6,182,349 7,688,725 9,577,693 11,839,651
DEBTORS TURNOVER RATIO
Year 2004 2005 2006 2007 2008 Net Credit Annual Sales Average Trade debtors 22,275,739 24,769,010 28,160,646 35,043,532 43,242,450 289,350 283465 431408 546235 495417
AVERAGE COLLECTION PERIOD
Year 2004 2005 2006 2007 2008 Total Trade Debtors 578700 566930 862816 1092470 990834 Sales per Day 0.211 4.177 5.592 5.689 4.182
CREDITORS TURNOVER RATIO
Year 2004 2005 2006 2007 2008 Net Credit Annual Purchases Average Trade crditors 324239 282971 267906 346,677 502,268 2511429 2913469.5 3430796.5 4111164 4786871.5
AVERAGE PAYMENT PERIOD
Year 2004 2005 2006 2007 2008 Total Trade Creditors 5022858 5826939 6861593 8222328 9573743 Average Daily Purchase 888.3260274 775.2630137 733.9890411 949.8 1376.076712
GROSS PROFIT RATIO
Year 2004 2005 2006 2007 2008 Gross profit 38,64,931 46,90,574 48,05,239 62,86,138 77,28,268 Net sales 2,22,75,739 2,47,69,010 2,81,60,646 3,50,43,532 4,32,42,450
NET PROFIT RATIO
Year 2004 2005 2006 2007 2008 Net profit 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Net sales 2,22,75,739 2,47,69,010 2,81,60,646 3,50,43,532 4,32,42,450
RETURN ON EQUITY
Year 2004 2005 2006 2007 2008 Profit after tax 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Average shareholders' equity 32,72,012 33,67,701 37,15,106 40,36,560 44,58,869
EARNINGS PER SHARE
Year 2004 2005 2006 2007 2008 Profit after tax 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Weighted average number of Equity Shares 9,64,15,716 9,64,15,716 9,64,15,716 9,64,15,716 9,64,15,716
PRICE EARNING RATIO
Year 2004 2005 2006 2007 2008 Market price 589 955 1122 1422 1397 Earnings = PAT/No. of shares 26.13 32.11 32.68 42.92 55.39
RETURN OF GROSS CAPITAL EMPLOYED
Year 2004 2005 2006 2007 2008 Adjusted net profit 25,19,158 30,95,715 31,50,965 41,38,122 53,40,882 Gross capital employed 95,01,672 95,91,981 1,19,31,839 1,40,66,619 1,69,50,135
DEBT EQUITY RATIO
Year 2004 2005 2006 2007 2008 Secured + Unsecured loans Equity 7,49,157 9,88,056 10,51,369 11,61,883 12,27,983 31,94,070 35,41,333 38,88,879 41,84,241 47,33,497
INTEREST COVER
Year 2004 2005 2006 2007 2008 Profit before interest and tax Interest expense 38,64,931 46,90,574 48,05,239 62,86,138 77,28,268 7822 2122 4408 8545 16,430
Current Ratio 0.74 0.58 0.70 0.67 0.67
0.80 0.60 0.40 0.20 0.00 2004 2005
Current Ratio
2006
2007
2008
Working capital turnover ratio
0
Working capital turnover ratio -9 -11 -12 -9 -9
-2 -4 -6 -8 -10 -12 -14
2004
2005
2006
2007
2008
Working capital turnover ratio
Quick Ratio 0.74 0.58 0.70 0.67 0.67
Quick Ratio
0.80 0.60 0.40 0.20 0.00 2004 2005 2006 2007 2008
Debtors Turnover Ratio
100.000
Debtors Turnover Ratio 76.986 87.379 65.276 64.155 87.285
80.000 60.000 40.000 20.000 0.000 2004 2005 2006 2007 2008
Debtors Turnover R
Average Collection Period
3000000
Average Collection Period 2743702.142 135720.6027 154304.9096 192019.3534 236944.9315
2500000 2000000 1500000 1000000 500000 0 2004 2005 2006 2007 2008
Creditors Turnover Ratio
0.1500
Creditors Turnover Ratio 0.1291 0.0971 0.0781 0.0843 0.1049
0.1000 0.0500 0.0000 2004 2005 2006 2007 2008
Creditors Turnover Ra
Average Payment Period
Average Payment Period 5654.295658 7516.080217 9348.358921 8656.904611 6957.274194
10000 8000 6000 4000 2000 0 2004 2005 2006 2007 2008
Average Payment Per
Gross Profit Ratio 0.174 0.189 0.171 0.179 0.179
Net Profit Ratio 0.113 0.125 0.112 0.118 0.124
Return On Equity 0.77 0.919 0.848 1.025 1.198
Earnings Per Share 0.026 0.032 0.033 0.043 0.055
Price Earning Ratio 22.54 29.74 34.33 33.13 25.22
Return Of Gross Capital Employed 0.265 0.323 0.264 0.294 0.315
Debt to Equity Ratio 0.235 0.279 0.27 0.278 0.259
Interest Cover 494 2210 1090 736 470
Current Ratio
r ratio
Working capital turnover ratio
Quick Ratio
Debtors Turnover Ratio
Period
Average Collection Period
Ratio
Creditors Turnover Ratio
Period
Average Payment Period
F)
Inventory Turnover
G)
Inventory period
INTERPRETATION A) DEBT EQUITY RATIO
B)
INTEREST COVERAGE RATIO
INTERPRETATION A) NET PROFIT RATIO
B)
RETURN ON EQUITY
C)
RETURN ON CAPITAL
A)
INTERPRETATION Price Earnings Ratio
B)
Price to Book Ratio
A) Current Ratio Current ratio in a business indicates that the availability of the current asset to meet it’s current liabilities. Higher the ratio, better the coverage. Generally 2:1 ratio is generally accepted. B) Quick Ratio Quick ratio is a better form of the CURRENT RATIO which excludes from current assets things that cannot be converted into cash in short period, like inventories. It’s value for reliance has always been around 1. C) Absolute Ratio This ratio is the acid test ratio, which tells how much current liabilities are covered by the most liquid assets. It’s value is also satisfactory, around 0.70 except in the years 2002-03 D) Debtors Turnover Ratio Debtors turnover ratio represents the speed at which cash is realized from receivables, as it affects the liquidity position of the company. Overall the value of this ratio has been over 16 E) Collection Period This ratio represents the number of days required to realize cash from receivables. It is a better representation of DTR.
INTERPRETATION
F) Inventory Turnover This ratio indicates that how fast inventories is used or sold. A high ratio is good from the view point of liquidity and vice versa. Here, the value of this ratio has been around 6. It has G) Inventory period
It is a representation of the inventories turnover ratio in the number of days. Inventory turnover ratio with debtors turnover represents the total accounting cycle. It has always been above 30 days with minimum in the year 2000-01 and
INTERPRETATION A) DEBT EQUITY RATIO This ratio indicates proportion of owner’s fund to total fund’s investments in the business. Here the high ratio indicates that the business is risky. Whereas a low ratio indicates that the utilization of the leverages is not done properly by the company. In case of Reliance, it’s debt-equity ratio is very high. Specially for the initial years, where it is more than 0.6 B) INTEREST COVERAGE RATIO This indicates the extent to which, earnings may fall without causing any embarrassment to the firm, regarding Payment Charges, this ratio is very low for Reliance, which is because a large part of expenditure is made by interest by Reliance. This
INTERPRETATION A) NET PROFIT RATIO
It indicates the firm’s capacity to face adverse economic conditions such as price competition. The later years have shown higher profitability. It around 13 in the later years. B) RETURN ON EQUITY This ratio is more meaningful to the equity shareholders who are interested to know profile earned by the company and the profiles that can be made available. The higher the ratio, the better it is. Although the return on equity fell during the C) RETURN ON CAPITAL This ratio is the most important for measuring the overall efficiency of a firm. Higher the ratio, the better it is for the company. It should be compared with those of the other
A)
INTERPRETATION Price Earnings Ratio
This indicates the expectation of equity investors about the earnings of the firm. That is, how many times of the actual earnings are they ready to pay for the share. It has generally B) Price to Book Ratio
This ratio indicates the ratio of market price with book value of the share. Higher of this value represents higher expectation of the shareholders. Price to Book ratio has been
doc_173484471.xls