1

Use of the Bloomberg concept in analyzing the financial statement of Nestle company and

Switzerland

Module Code: FE7052

Module Name: International Corporate Finance

Student Id: 22027078

Assessment: Summative

Submission Date: 9th December 2022

Word Count: 2891 (excluding list of references)

 2

Use of the Bloomberg concept in analyzing the financial statement of Nestle company

Abstract

This paper will cover the general understanding of the Bloomberg concept as a model, focusing

more on Nestle's company as an area of great interest. Also, the paper focuses on Nestle's

company as it is essential to understand the company where one is analyzing the financial

statement. As a tool and web, Bloomberg provides a connection between what happens every

day and the theoretical model, thereby acting as an essential tool. This chapter also shows how

most corporations widely use Bloomberg and the financial model worldwide. The model also

tends to connect theoretical frameworks such as Share and bond, capital environment, equity,

and dividend of the real company as the data justifies the company performance. Thus, by

demonstrating the relevance of the Bloomberg concept and web analysis, the paper highlights the

role of the central bank, foreign exchange rates, and regimes of Switzerland and the effect they

play in international markets. Lastly, the report will demonstrate the relevance of the Bloomberg

model and concept and how it influences monetary policies and the company's decision-making.

Bloomberg-based questions will be widely used in this chapter in different categories.

Question 1

Introduction

Evaluation of financial statements plays a significant role in the growth of a country; therefore,

by employing the Bloomberg concept, my analysis will focus on Switzerland in performing

financial analysis. By answering the following Bloomberg-based question

 Discussion on the monetary environment of Switzerland, such as the exchange rate

regime, economic history, the role of the central bank of Switzerland, and how they

affect international trade flows.

 3

Role of the central bank of Switzerland

Switzerland's central bank, known as the Swiss national bank, plays a vital role as it

conducts its mandate regarding monetary policy. As an independent central bank, the central

bank is obliged by both Switzerland's constitution and the statute to work according to the

interests of the people of Switzerland. Swiss National bank ensures price stability as it takes all

due account of the country's economic development. Furthermore, the Swiss National bank

provides there is proper monetary regulation.

Swiss exchange rate crises

Switzerland's monetary environment shows exchange rate crises play a significant role.

Recent publications on the financial web and Bloomberg web show that government monetary

measures create foreign exchange crises. Due to currency stability, the Swiss Franc has to keep

recording greater strength against the Euro. Over an extended period, the price of the Swiss

Franc remains constant, and no day Switzerland ever denounces its nation-recognized currency

as well as its national currency. Therefore, the swiss franc has dominated the international

market, making the country progress positively.

Switzerland's exchange rate regime

In Switzerland, the exchange rate regime operates under the Swiss National bank, which

acts as a central bank. However, the exchange rate regime was later established in the

international market to control inflation due to market forces. Since the country transitioned to

one of the most regimes known as the floating exchange rates regime, the Swiss Franc has been

over a decade determined by market forces for. For instance, it is essential one of the influencing
 4

factors in the history of monetary. The Swiss National bank uses the exchange rate regime to

determine price stability. Thus, the Bloomberg model and concept provide room for financial

analysis of the Swiss Franc with another exchange rate in the international market. When

analyzing the exchange rate regime in Switzerland, it is better to understand that floating

exchange rates play a critical role in ensuring stability, unlike fixed regimes. (Lu, Liu &

Zhou,2022) argue that the two categories explain how capital flow within the country led to the

economy's growth.

An overview of Switzerland's currency (Swiss Franc) on the foreign exchange market

Bloomberg web publication provides an overview of Switzerland's currency and how it is

traded in a global market. To stabilize the country's currency, the Swiss National Bank spent 2.8

Billion Swiss Francs, equivalent to $3.1, as an intervention in their country's third quarter.

Furthermore, Switzerland has achieved rampant growth in derivatives markets.

Furthermore, the Swiss Francs have created a broader gap in the opening rate in the

international market, as recorded by Bloomberg web. For instance, the Swiss franc, abbreviated

as CHF, can be traded against EUR at an open price of 0.9885.

Swiss Franc currency plays a vital role in the country as it is more stable and well-

regulated by the Swiss National bank (SNB). A recent publication by Bloomberg web shows that

the Swiss Franc has a positive trend as the currency is recognized as legal tender. Furthermore,

the country's zero inflation policy, incorporated with good political independence, makes CHF

an extremely stable and robust currency in foreign exchange markets. The illustration below

shows how the Swiss Franc has dominated over another world-strong currency.
 5

The Swiss Franc currency has a more significant role in the foreign exchange market, attracting

investors and larger corporates to gain higher interest rate caps in the international market.

Impact of the Covid-19 pandemic on Switzerland’s economy and its Swiss Franc currency.

One of the recent article demonstrates that there were difficulties with monetary policy

even though Switzerland maintained a 0% inflation rate. The aspects of the monetary policy that

were impacted by the pandemic were the strong Swiss franc, negative interest rate, and low level

of inflation. In addition, the coronavirus epidemic and the restrictions put in place to combat the

virus caused the economy to stagnate and worsen in Switzerland.

The covid-19 pandemic also made the Swiss Franc currency experience new and

unavoidable challenges but also exacerbated the prolonged upward pressure on the Swiss Franc
 6

currency in the foreign exchange market. Bloomberg web also shows Switzerland experienced a

tremendous negative impact on the economy of Switzerland.

The covid-19 epidemic resulted in a decline in income distribution, an increase in the

unemployment rate, and increased inconsistencies in the foreign exchange market, which led to a

decline in Switzerland's gross domestic product as well. Economic growth was stopped as a

result of the decline in the gross domestic product (Barro et al.,2020).

Question 2

 By using Bloomberg Functions to find out the capital structure of the Nestle

company and discuss the cost of capital and its implications on the value of the firm;

I will concentrate on evaluating Nestle Company's financial analysis, soundness, and

performance in this chapter. using the Bloomberg idea and tool to assess the capital structure of

the company. Throughout the world, Nestle is a well-known global firm for being a significant

distributor of food and pharmaceutical items. The business was also founded in Vevey,

Switzerland, in 1866. The company, which sells instant coffee, baby meals, and chocolate goods,

has locations in 187 nations.

Using the Bloomberg function will also assist in calculating the weighted average cost of

capital as the Nestle company is expected to return s its portfolio of all the existing securities in

the market to identify the value to the firm.

The capital structure of Nestle Company is determined by the resources it has access to.

However, resources like liabilities, dividends, equity, and shares play a vital part in the

expansion of Nestle company and are also important to consider when assessing the capital
 7

structure of the company and its impact on the global market. Therefore, the capital structure

generally reflects both the funding and the wealth of the company. The Nestle corporation uses a

combination of debt and equity to fund its operations, with debts coming from loans, financial

obligations, and bonds. However, equity as a source of funding is based on earned retained

profits, common stock, and preferred shares.. By use of the Bloomberg function, the capital

structure can be described as

Nestle company assets = debt + equity

The studies shown by Bloomberg web describe the capital structures of Nestle company and debt

management ratio, which is also referred to as solvency ratio in calculating company capital

structures and company ability to deal with long-term goals and liabilities. The nestle company

capital is analyzed in the form of excel analysis and charts.

The Nestle company capital structures can be described as following 2021 as it shows a positive

increment in weighted average cost. The Nestle company was able to grow domestically as well

as internationally. The cost of capital can be represented in the image below from Bloomberg

web.
 8

By Tracing the change of share/bond price and illustrating the risk and return of the Nestle
company in the market;
 The Nestle company has well-organized management and operates both Shares and
bonds. The Bloomberg function is employed by helping Bloomberg web and theoretical concept
to show how the price of Shares is influenced. To calculate Nestle's shares, we can categorize
shares into two terms: outstanding shares and treasury shares, as recorded in every company
financial year. Therefore, the Share can be calculated as shared unique.
Nestle share outstanding= company issued capital-company treasury shares.

Nestle company share/bond price can be achieved through stock sales in foreign
exchange. The saleable shares are widely affected by the continuous change of share price due to
changes in stock buyers and sellers by traders and investors. The shift in Shares and bonds within
Nestle company can result from a difference in the market price of shares and a high and low-
price cap at any given financial year.
 9

The Nestle company group company has capitalized most of its Shares in the foreign
exchange market as an international market cap against the company’s total outstanding shares in
any given financial year.
Market cap= company's current market price per Share x company number of shares
outstanding
The company share bond can be illustrated as follows.

Identify a piece of related news and (e.g., using economic and financial theory) explain its
impact on the share/bond price; 

The report states that the Earnings per Share calculation is used to determine the value of
the Nestle Company, the Company's Shares, and the Bond. This formula divides the Company's
Net Worth as Attributed by Both Shareholders as the Average Number of Outstanding Shares in
Any Given Financial Year. According to data on the Bloomberg website, Nestle is on the
upswing. The price of the Share is significantly influenced by the news that is released. Select
the share's market price cap, which is also known as earnings per share or EPS.

According to the Bloomberg web news, the price of Nestle Company's bonds and shares

on the international market has increased over time to a higher level. The platform's information
 10

aids the investor in making a thorough preparation before purchasing or disposing of Shares,

which has a greater impact on determining the actual price of Shares and bonds in any given

year.

Analyzing the relationship between the performance of the Nestle company and a market

benchmark index by use of both quantitively and qualitative techniques (e.g., FTSE100

Index) over the sample period

A more great correlation between Nestle's business and performance is revealed

by using both quantitative and qualitative financial analysis. The Nestle Company's management

has made room for improvement in order to suggest this. Additionally, for years straight, the

Nestle corporation has had high opening rates in the foreign exchange markets. As a result of the
 11

average, the current ratio was calculated, revealing that Nestle has greater current liabilities than

its three main competitors. In conversation, the data might be displayed.

In comparison to a 2021 score of 68%, Nestle Company now has a 2022 score of roughly

78%. In addition, the company received a 71% rating on Bloomberg Web's average index score.

Nestle company economic insights and its future

The Nestle Company has made good strides in both the pharmaceutical and food product

industries. Records from Bloomberg's financial platform and site analysis, however, demonstrate

that the improvement has been ascribed to better administration of the company's cash and

ensuring that each individual's data is carefully maintained. As a result, the corporation is well-

known and has a history of financial stability. Last but not least, Nest has made development

since its founding. The capital structure of the organisation, which includes debt and equity,

provides strong support for this.

 12

According to one of the most recent statistics available on the Bloomberg website,

Nestle's financial situation is on the upward and the company will be able to compete with

maturity and positivity. As a result, the Nestle group corporation can be considered the best in

terms of revenue collection and profit margin.

Considering the retained earnings, it shows that the company has a good indicator of

forming better in the future. Even though there was a decline in how the company operated

during covid-19 and the pandemic crisis. the future of Nestle company as a leading distributor of

pharmaceutical have shown a positive trend. In the foreign exchange market. The company has

competed with other giant corporates, such as Siemens, in local and global markets. Thus, the

future of Nestle company is unique as the company has better management.

Question 3

. Provide a self-reflection on the case study of ‘Equity Valuation & Analysis’ (Source:

Bloomberg Market Concept E-learning). The case study explores the reasoning behind and

the disadvantages of the three theoretical equity valuation models. Comment and provide

your perspectives on it.

Three theoretical models are used in equity analysis and evaluation software, as well as

the Bloomberg Market concept: the constant growth model, the multi-stage growth model, and

the dividend discount model (DDM). The tools offer data that explains the practical reasons

behind the drawback of employing three models. Taking as an example the case study on

equities valuation and analysis from Bloomberg Market Concept. Investors are rewarded for

their diligence, equity valuation, and analysis, and as such, they have cash flow that they have

accumulated.
 13

The constant growth model, also known as the Gordon growth model, has been used to discount

the cash flow in the future as long as the company grows regularly. Still, it becomes a

disadvantage as the growth is not constant, as presented by the chart, although it shows how

Nestle's company group growth appears.

However, the Constant growth model has its primary weakness in evaluating since the model

operates of constant growth. Thus, when the company is affected by outliers, the model cannot

be used to show the company's development as the model provides intrinsic values. The constant

growth model also works under the principle that the denominator should always be more

significant, and the result is positive.

 • The multi-stage growth model, which is intended to offer answers, is also used to assess

equity valuation and analysis. The model ought to have included a business with positive

and faster growth. The multi-stage growth model operates under the presumption that the

company should grow across two periods, with the growth being determined by the most

recent income. The chat illustrates how the model suffers when used to analyse stock

valuation because a company's growth can be broken down into distinct time periods.
 14

 The dividend Discounted Model (DDM) as a method of equity valuation has downsides,

including the difficulty of accurate projection as it works under the principle of

assumption. Based on the model, it does not allow the buybacks of dividends because the

model does not enable buybacks. Thus, the model limits equity valuation in such a way

that the model can only provide the assumption of only income from company dividends.

Moreover, the company records numerous income shows while analyzing the case study.

Lastly, the dividend discounted (DDM) model has played a greater significant role in

estimating the intrinsic value of the company stock in a given period, and the model

cannot be employed in analyzing a company with advanced growth.

In equities valuation and analysis, the dividend discount, constant growth, and multi-

growth models are all applied. The three models can evaluate the intrinsic value of a company's

stock; consequently, the model needs to be enhanced to enable the estimation of intrinsic value in

a business with a faster rate of growth, as the case study analyses.

 15

Structure and presentation of the report 

I've concentrated more on the Nestle Company as the area of significant interest in terms

of the overall comprehension of the Bloomberg concept, in conclusion. Additionally, because it

is crucial to comprehend the organisation where one is evaluating the financial statement, the

article was specifically focused on Nestle. As a tool and resource on the internet, Bloomberg

established a direct link between real-world events and the theoretical framework. The financial

model and Bloomberg are used extensively by the majority of firms globally, as this chapter

further demonstrated. The model also includes a theoretical framework that is related to the facts,

such as equities, bonds, the capital environment, and dividends from a real company. Thus, the

article also highlighted the role played by the central bank, foreign currency rates, and regimes of

Switzerland and the effect they play in global markets by proving the applicability of the

Bloomberg idea and online analysis. Last but not least, the study has shown the value of the

Bloomberg model and concept and how it affects monetary policy and business decisions. This

chapter will frequently feature questions from Bloomberg across a variety of areas.
 16

List of references

Barro, R., Ursua, J., & Weng, J. (2020). Coronavirus meets the great influenza

pandemic. VoxEU. Org, 20.

Frydenberg, M., Sultan, J., & VanderClock, W. (2022). Interacting with Bloomberg Terminal

from an Information Technology Perspective (Student Assignment). Information Systems

Education Journal, 20(3), 27-35.

Olayinka, A. A. (2022). Financial statement analysis as a tool for investment decisions and

assessment of companies’ performance. International Journal of Financial, Accounting, and

Management, 4(1), 49-66.

Villegas, N. M., Müller, H. A., Munoz, J. C., Lau, A., Ng, J., & Brealey, C. (2011, November).

A dynamic context management infrastructure for supporting user-driven web integration in the

personal web. In Proceedings of the 2011 Conference of the Center for Advanced Studies on

Collaborative Research (pp. 200-214).