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Basic Financial Statement Analysis For Nestl Philippines, Inc
Basic Financial Statement Analysis For Nestl Philippines, Inc
Basic Financial Statement Analysis For Nestl Philippines, Inc
Group Members
Miedes, Diane L.
12 – St. Timothy
Liquidity Ratios
=−2, 027
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
2. Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
41,003
=
43,030
=0.95
=0. 36
= 0.10
Profitability Ratios
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
1. Return on Equity = × 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 ′ 𝑠 𝐸𝑞𝑢𝑖𝑡𝑦
10,468
= × 100
60316
=17.36%
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
2. Return on Assets = × 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
10,468
= × 100
135,122.5
=7. 75%
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
3. Gross Profit Margin = × 100
𝑆𝑎𝑙𝑒𝑠
45,680
= × 100
91,439
=0.4996 × 100
=49.96%
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
4. Operating Profit Margin = × 100
𝑆𝑎𝑙𝑒𝑠
13,752
= × 100
91,439
= 0.1504 × 100
= 15.04%
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
5. Net Profit Margin = × 100
𝑆𝑎𝑙𝑒𝑠
10,468
= × 100
91,439
= 0.1145 × 100
= 11.45%
Leverage Ratios
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
1. Debt Ratio = × 100
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
78,612
= × 100
137,015
= 0.5737 × 100
= 57.37%
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2. Debt-to-Equity Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
78,612
=
58,403
= 1.35
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
3. Equity Ratio = × 100
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
58,403
= × 100
137,015
= 0.4263 × 100
= 42.63%
12991
=
1,008
= 12.89 x
IV. VERTICAL ANALYSIS
2018
ASSETS
Total Assets 137015
Cash and Cash Equivalents 4500 3.28%
Short-term investments 5801 4.23%
Inventories 9125 6.66%
Trade and other receivables 11167 8.15%
Prepayments and accrued income 530 0.39%
Derivative Assets 183 0.13%
Current income tax assets 869 0.63%
Assets held for sale 8828 6.44%
Total Current Assets: 41003
EQUITY
100.00 %
STATEMENT OF COMREHENSIVE INCOME
As of the year 2018, Nestle Company has a working capital of -2,027. The
company’s working capital resulted as negative because they cannot cover
up their short term liabilities. The company has more liabilities than its assets.
Therefore, there will be a chance that the company will have liquidity
problems in the future. The company’s current ratio is 0.95 that means that
the company is not efficient in using its current assets. The company’s quick
ratio on the other hand is 0.36 means that the company doesn’t have enough
current assets to cover its current liabilities. The company relies too much on
inventory or other assets to pay its short term liabilities. And the company has
1.10 cash ratio. That means that the company will be able to pay off its
current liabilities with cash and cash equivalents, and have funds left over.
On the other type of ratio (Leverage Ratio), the debt ratio which has
57.37%, is considered as poor ratio. This means that there are risks that the
company cannot generate enough cash flow to its debt. The Debt Equity on the
other hand has a high average which is 134.60% that means that the company is
taking advantage with the profit. According to the company’s equity ratio, it has
42.63% which is higher than the standard good ratio of the equity. This means
that the Nestlé Company is worth investing since there are investors that can
finance the company. And times interest earned which has an average of
1,288.78% that means that there are lesser risks because the company has large
earnings.
In evaluating the Statement of Financial Position, the largest component of
asset is the Goodwill which has an average of 14.23% and the current income
tax assets is the smallest which has an average of 0.4%. On the other hand, 85%
of assets are financed by liabilities and other hand is financed by equity. In the
Statement of Comprehensive Income, the cost of goods sold is 50.38% of sales.
The company has a gross profit rate of 49.62%. The operating expenses are
34.91% of sales. Thus, the Nestle Company earns income of 11.45 for every
peso of sales. Gross profit generated for every peso of sale is 0.50.