FINANCIAL

ANALYSIS
REPORT
SUBMITTED TO: SIR
ASAD ULLAH
 GETTING TO KNOW NESTLE
NESTLE PAKISTAN LTD IS A SUBSIDIARY OF NESTLE S.A.
- A COMPANY OF SWISS ORIGIN HEADQUARTERED IN VEVEY,
SWITZERLAND
- IT IS A FOOD PROCESSING COMPANY, REGISTERED ON THE
KARACHI AND LAHORE STOCK EXCHANGES AND OPERATING IN
PAKISTAN SINCE 1988 UNDER A JOINT VENTURE WITH MILK PAK
LTD AND TOOK OVER MANAGEMENT IN 1992
- FOR TEN YEARS IN A ROW, THE COMPANY HAS WON A PLACE
AMONG THE TOP 25 COMPANIES OF THE KARACHI STOCK
EXCHANGE
- HEADQUARTERED IN LAHORE, THE COMPANY OPERATES FOUR
PRODUCTION FACILITIES, IN SHEIKHUPURA, KABIRWALA,
ISLAMABAD AND KARACHI
 ROA &ROE
Chart Title
3.5
3
2.5
2
1.5
1
0.5
0
2018 Return
2017on Assest Return On Equity
2016 2015

2018 2017 2016 2015

Return on Assest 0.17 0.25 0.23 0.18
Return On Equity 2.95 3.16 1.34 0.69
 EFFICIENCY RATIOS
Chart Title

10

0
2018 2017 2016 2015
Total Assest TurnOver Account Receiveable Turn Over

2018 2017 2016 2015

Total Assest TurnOver 1.87 2.09 2.21 2.09
Account Receiveable Turn Over 5.09 9.6 3.18 4.06
LIQUIDITY RATIOS
Chart Title
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2017 2016 2015
Current Ratio Quick Ratio

2018 2017 2016 2015

Current Ratio 0.66 0.62 0.59 0.72

Quick Ratio 0.06 0.065 0.03 0.04

Declining liquidity ratios:this indicates that Nestle may have problems paying its bills on time and the company
will be vulnerable to its short-term creditor demands.
 LEVERAGE RATIO

Leverage Ratio 2018 2017 2016 2015

Debt Ratio
1.92 2.14 2.14 2.03
Interest Ratio
(5.82) (5.78) (5.45) (5.78)

Nestle Debt Ratio shows a downward trend over the periods of 4 years, which
is a satisfying situation,and it shows the percentage of assets which are
financed by the debts are decreasing.
 TREND ANALYSIS
Chart Title
150

100

50

0
2015 2016 2017 2018
Sales-net Net Income

Nestle’s growth was impressive over the period of 5 years, but it

was out paced by even higher growth in the company’s net income.
 COMMON SIZE/ VERTICAL ANALYSIS

• INCOME STATEMENT
• OVER ALL, THE COMPANY’S FINANCIAL STATUS HAS IMPROVED, WHILE MOST OF THE EXPENSES
HAVE DECREASED, WHICH INDICATES A FAVOURABLE PROSPECTIVE FROM AN INVESTMENT
PRESPECTIVE.

• BALANCE SHEET
• LONG TERM LIABILITIES, LONG TERM FINANCING HAS GONE DOWN WHICH IS A GOOD SIGN, AS
IT INDICATES THAT COMPANY TOOLS LESS LOANS IN 2018, IMPLYING LESS DEGREE OF RISK IN
FIRMS CAPITAL STRUCTURE IN TERMS OF LONG TERM DEBT.
• TOTAL LIABILITIES ARE ALMOST 93% OF ASSTES, OF WHICH MORE THSN 13% IS LONG TERM DEBT.
• CURRENT LIABILITIES ARE 74% WHICH IS LARGER THAN ITS CURRENT ASSETS, NOT A GOOD SIGN
FOR NESTLES LIQUIDITY.
 CONCLUSION
• NESTLE HAS BEEN EARNING WELL FOR ITSELF AND OFFERING
• AMPLE RETURNS TO THE SOCIETY FOR OVER TWO DECADES NOW.
• STILL GROWING IT’S BUSINESS AND PRODUCT PORTFOLIO AS NO
• COMPETITOR HAS GIVEN MATCHING COMPETITION YET.
• POSITIONED AS THE PROVIDER OF HEALTHIEST AND NUTRIEST
• FOOD IN THE MARKET.
• HAS MAJOR PRODUCTS IN GOOD MARKET STRENGTH.
• NESTLE SHOULD FOCUS ON DEVELOPING MORE NEW PRODUCTS AND EXPLORING
MORE NEW MARKETS TO RETAIN IT’S LEADING
• POSITION IN THE FOOD INDUSTRY OF PAKISTAN.
THE END