Financial Management

Ratio Analysis of Nestle India Ltd.

PRESENTED BY :SUBASH TRIPURA

ID NO. 19IUT0160022
MBA(GENERAL)1ST SEMESTER
INTRODUCTION

In this study of ratio analysis I’ll try to find the ratio analysis of Nestle India Ltd’.
Current ratio: Compares current assets to current liabilities, to see if a business has
enough cash to pay its immediate liabilities.
 Company Profile

“
Nestle India ltd.

Nestle India Limited is an India-based company

”
engaged in food business. The Company operates
in the Food segment. The Company's food
business incorporates product groups, which
include milk products and nutrition, beverages,
prepared dishes and cooking aids, and chocolate
and confectionery. Its milk products and
nutrition include NESTLE BABY & me, and
NESTLE NESLAC.
Objectives

Objectives and Benefits of Ratio Analysis:

Ratio Analysis hence becomes a vital tool for financial analysis and financial
management.
Let us take some objectives that ratio analysis.
 
 Simplify accounting information.
 Assess the operating efficiency of the business.
 Analyze the profitability of the business.
Research Methodology

SOURCE OF DATA :-
 Secondary data:- Secondary data is collected from the internet.
SAMPLING METHOD: 
 STATISTICAL TOOLS: The tables, line charts are used for analyzing the data.

 RESEARCH TYPE AND GENERAL GOAL :-

 The proposed research is applied, descriptive, experimental and longitudinal.
 The proposed research is developed from quantitative point of view.
 Data Analysis

Quick Ratio
0.45

0.4 0.4 0.4

Quick Ratio is equal in 2018 and 2017 but
0.35 in 2016 it was low, it cannot reach to ideal
0.3 Quick ratio .The quick ratio is showing less
0.25
0.26 which is not good sign for the organization.
It’s not performing well in the market.
0.2

0.15

0.1

0.05
Quick Ratio = Quick Asset /Current Liabilities
0
2018 2017 2016
 Current Ratio
0.8
0.7 0.68 The company’s current asset is less than
0.66 current liabilities That means here incoming
0.6
0.56 cash is less than the outgoing cash.
0.5
0.4
0.3
0.2
0.1
0 Current Ratio= Current Asset / Current
2018 2017 2016 Liabilities
 Inventory Turnover Ratio

Inventory Turnover Ratio

12

11.5
11.7
There is increase in inventory turn over ratio.
11.1
This means company effectively managed the
11
inventory.
10.5

10
9.78
9.5

9
Inventory Turnover Ratio = Cost Of Goods Sold /
8.5 Average Inventory
2018 2017 2016
DEBT EQUITY
RATIO
Debt Equity Ratio
12 From the diagram it is shown that in 2016 to 2018
10.69
the debt equity ratio is increase continuously
10 which means the company has to pay more debt
9.4
than past. It is a bad sign for the company’s future.
8

6 5.93

2 Debt Equity Ratio = Long Term Debt /

Shareholder’s Equity
0
2018 2017 2016
GROSS PROFIT
RATIO
Gross Profit Ratio
30
28.57
The Gross profit of the organization is gradually
25
25.67 decrease. It is clearly seen in the diagram that in
2016 the profit is more that is 28.57% and afterward
21.26
20 it start falling to 25.67% in 2017 and 21.26% in 2018

15

10

Gross Profit Ratio = Gross Profit / Net Sales X 100

0
2018 2017 2016
Findings

 After analyzing the quick ratio It is seen that the organization cannot be attain the
ideal ratio i.e. 1:1.
 Analyzing the current ratio is increased but it is clearly shown that current
liabilities are more than current asset.
 Inventory turnover Ratio is good position in the organization.
 Inventory holding period capacity is very less for this organization. Inventories
becoming obsolescence day by day.
 Net profit is popular profitability ratio that shows relationship between EBIT and
Net sales . This means the organization is incurring losses. .
Conclusion

 Nestle India limited is one of the Indian’s largest private sector companies. But
after analysis the performance of last 3years of the company. Based on the data
analysis and findings the study on concluded that company performance is going
down and run for the bad position. The company need to work on their weak point
and must need to improve their financial condition.
Conceptual Relevance

  Ratio analysis is the process of examining and comparing financial information by

calculating meaningful financial statement figure percentages instead of comparing line
items from each financial statement.
 The working capital ratio is a measure of liquidity, revealing whether a business can pay
its obligations.
 The quick ratio is an indicator of a company’s short-term liquidity position and
measures a company’s ability to meet its short-term obligations with its most liquid
assets.
 The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year.
 The inventory turnover ratio is an efficiency ratio that shows how effectively inventory
is managed by comparing cost of goods sold with average inventory for a period.
Reference

Websites :
 www.google.com
 www.capitalmaket.com
 www.investopedia.com
 www.inc.com
 www.accountingtools.com

Books :
Financial Management By Khan and Jain
Thanks