NESTLE PAKISTAN

Um e Laila
19p00024
Introduction
 Nestle’ is operating in Pakistan since 1988 under a joint venture with Milk
Pak limited and took over management in 1992, it is subsidiary of Swiss
multinational Nestle company
 Nestlé Pakistan is headquartered in Lahore, with four production facilities
across the country. Factories in Sheikhupura and Kabirwala are multi-
product, whereas the ones in Islamabad and Karachi are water factories.
 Nestlé is the world’s largest food and beverage company. It is present in 191
countries around the world, and its 328,000 employees are committed to
Nestlé
 Its current CEO is Bruno Olierhoek
Common size analysis Income statement
Common size analysis Balance sheet
Trend Analysis Income statement
Trend analysis of Balance sheet
Liquidity analysis:
Capital structure and Solvency
RNOA 2015-2016 2016-2017 2017-2018
 
8525.5/83494.5 7178.98 / 85163 10111.5
RNOA= =0.102109484 =0.084296963 /87202
NOPAT/AVG NOA     =0.115955446
 

0.095* 1.07 0.08 * 1.051 0.1105*1.0485

NOPAT/SALES*SALES /AVG =0.102109484 = 0.08429 =0.11595
NOA  

0.095*0.73*1.46 0.0801 * 0.7071 *1.487671 0.1105*0.698*1.500

=0.1021 = 0.08429 =0.11595
NOPAT/SALES*SALES/AVG
OA* (1+AVG OL/AVG NOA)

     
ROCE

8883/68932.5 7511/64105 10468/60316

(NI-PREF DIV)/AVG =0.128865194 =0.11716 =0.1735
COMMON EQUITY  

0.099 *0.662 * 1.96 0.0838 * 0.6758*2.06 0.114 *0.6767*2.24

NI-PREF DIV/SALES* = 0.128865 =0.11716 =0.1735
SALES/AVG TA
* AVG TA/AVG COMMON
EQUITY

RNOA+ (LEV* SPREAD) 0.102 + 0.0181 0.0842 + 0.0168 0.115 +0.039

=0.120 = 0.101 =0.15502
 Operating Performance

ASSET UTILIZATION
 MARKET MEASURE ANALYSIS
 As an investor:
 As market measure of the company reveals that , EPS of the company is
increasing and Share price of the company is increasing
 Hence we can invest in the company to earn capital gain.. And DPS of the
company has improved from 2016-2018 so can get good dividend on share..
Investors should invest in the company
 As an creditor
 Liquidity analysis: With each passing year company current liabilities has
increased than its Current assets.. So company may not be in good position to pay
off its Trade creditors
 Solvency analysis: Reveal that company LT-DEBT /Equity ratio is increasing..
Company owe more to its already non-trade creditors than what its shareholders
owns. Not a good sign.
Overall suggestion to the firm
 Improve its Solvency and Liquidity.
 With each passing year company debt is increasing in comparison to its
equity of the owners.
 Lenders and investors usually prefer low debt-to-equity ratios because
their interests are better protected in the event of a business decline.
 Rest: Nestle performance is good well, the downfall that was seen in its net
profit margin from 2014 to 2017 has diverted back with increase in Net
profit margin in 2018 by 39% compare to 2017…
Thank You