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# Nestle

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### Nestle

2. 2. 2004= 19.57
3. 3. 2005= 21.02
4. 4. 2006= 19.44
5. 5. 2007= 20.05
6. 6. 2008= 17.02
7. 7. Comment: As we see from the above figures that gross profit is fluctuating, the company has to take certain measures to increase its gross profit in order to increase its profitability position.
8. 8. Net profit ratio = net profit/ net sales * 100
9. 9. 2004= 11.24
10. 10. 2005= 12.39
11. 11. 2006= 11.09
12. 12. 2007= 11.73
13. 13. 2008= 12.24
14. 14. Comment: The net profit is ranging from 11-12, which is satisfactory, but if it wants to improvise further it has to decrease expenses & increase sales or both.
15. 15. Operating profit =operating profit/net sales*100
16. 16. 2004= 19.2
17. 17. 2005= 20.02
18. 18. 2006= 18.86
19. 19. 2007= 19.50
20. 20. 2008= 17.20
21. 21. Comment: The company’s operating ratio is decreasing in 2008, so the company has to decrease its operating expenses, for increasing the profitability.
22. 22. (b) Return Ratios:
23. 23. Return on investment = PBIT/Investment *100
24. 24. (or) = PBIT/ Capital employed * 100
25. 25. 2004= 119.2
26. 26. 2005= 127.18
27. 27. 2006= 120.01
28. 28. 2007= 150.33
29. 29. 2008= 163.97
30. 30. Comment: The Company is improvising its return on investment and also has quite higher rate of return.
31. 31. Return on net worth = PAT-pref. dividend/net worth *100
32. 32. (Or)= PAT-pref. dividend/eq. shareholder fund
33. 33. 2004= 78.87
34. 34. 2005= 87.42
35. 35. 2006= 81.03
36. 36. 2007= 98.90
37. 37. 2008= 112.83
38. 38. Comment: Company’s profitability position has increased as the return on net worth has also increased.</li></ul>(c) Valuation Ratio:<br /><ul><li> Earnings per share or EPS
39. 39. =PAT-pref. dividend/no. of equity shares
40. 40. 2004= 26.13
41. 41. 2005= 32.11
42. 42. 2006= 32.68
43. 43. 2007= 42.92
44. 44. 2008= 55.39
45. 45. Comment: The Company’s earnings have been considerably increased, which suggest higher margin ratios
46. 46. Dividend per share or DPS=
47. 47. Equity dividend/ No. of equity shares
48. 48. 2004= 24.50
49. 49. 2005= 25.00
50. 50. 2006= 25.50
51. 51. 2007= 33.00
52. 52. 2008= 42.50
53. 53. Comment: DPS was increasing consistently, but in 2008 it has quite high change in 2008, which suggest that high dividend to it’s shareholder’s.
54. 54. Book Value per share= Eq. share holder fund
55. 55. or net worth/no. of eq. shares
56. 56. 2004= 33.13
57. 57. 2005= 36.73
58. 58. 2006= 40.33
59. 59. 2007= 43.40
60. 60. 2008= 49.09
61. 61. Comment: Book value of the share is increasing considerably well , which suggests higher profits to the shareholders.</li></ul>LIQUIDITY RATIO:<br />1. Current RATIO = Current asset/ current liabilities<br />2004= 0.612007= 0.66<br />2005= 0.662008= 0.66<br />2006= 0.67<br />Comment: The Company’s current ratio is not ideal. It will have to increase it’s current assets or decrease it’s current liabilities or both in order to increase its liquidity position. Ideal is 2:1<br />2. Absolutely ratio= Quick assets/current liabilities<br /><ul><li>2004= 0.21
62. 62. 2005= 0.28
63. 63. 2006= 0.31
64. 64. 2007= 0.23
65. 65. 2008= 0.29
66. 66. Comment: Though it is fluctuating it is not ideal so the company has to decrease current liabilities and increase fixed assets or both.
67. 67. Cash ratio= Cash & bank balance+ Short term investment/ current liabilities
68. 68. 2004= 13.43
69. 69. 2005= 14.66
70. 70. 2006= 13.43
71. 71. 2007= 13.85
72. 72. 2008= 14.43
73. 73. Comment: The Company’s cash ratio has increased which suggest that the company is maintaining ideal cash and short term investments</li></ul>ACTIVITY RATIOS:<br />1. Current assets turn over ratio= net sales/ c. assets<br />2004= 9.41 2007= 7.75<br />2005= 9.20 2008= 9.10<br />2006= 8.70<br />Comment: The Company’s current asset turn over ratio is fluctuating but it’s ideal.<br />2. Fixed asset turn over ratio= Net sales/Fixed asset<br />2004= 5.33 2007= 6.10<br />2005= 5.61 2008= 3.20<br />2006= 5.77<br />Comment: Company needs to improve it’s fixed asset turn over ratio by increasing sales or by fixed asset or by both<br />3. Total assets turn over ratio= net sales/fixed assets + current assets<br />2004= 6.81 2007= 9.52<br />2005= 7.672008= 10.29<br />2006= 8.02<br />Comment: The Company’s total assets turn over ratio has increased consistently, which is considerably good.<br /><ul><li>Working capital turn over ratio= Net sales/
74. 74. Current assets-c. Liabilities
75. 75. 2004= 12.42
76. 76. 2005= 12.02
77. 77. 2006= 12.01
78. 78. 2007= 10.02
79. 79. 2008= 11.39
80. 80. Comment: The company’s working capital turn over ratio is fluctuating, however it has increased in 2008 which is ideal.
81. 81. Inventory turn over ratio= COGS or Sales/Avg. stock
82. 82. 2004= 10.34
83. 83. 2005= 9.87
84. 84. 2006= 10.28
85. 85. 2007= 8.79
86. 86. 2008= 11.39
87. 87. Comments: The inventory turn over ratio is fluctuating however, its increasing in 2008, which suggest that the company is having less stock with it.
88. 88. Debtors turn over ratio= Sales/Avg. receivables
89. 89. 2004= 77.05
90. 90. 2005= 87.32
91. 91. 2006= 65.35
92. 92. 2007= 64.09
93. 93. 2008= 87.37
94. 94. Comments: The debtors turn over has increased which suggest higher activity ratio.
95. 95. Average collection period= 365/ debtors ratio
96. 96. 2004= 4.74
97. 97. 2005= 4.18
98. 98. 2006= 5.85
99. 99. 2007= 5.70
100. 100. 2008= 4.20
101. 101. Comment: The average collection period has decreased which is ideal as the debtors are paying early, which reduces the risk.
102. 102. LEVERAGE RATIO:</li></ul>1 Debt-equity ratio= loan funds/net worth<br /> 2004= 0.02 2007= 0.01<br /> 2005= 0.042008= 0.02<br /> 2006= 0.04<br /> Comment: The company’s debt equity ratio is fluctuating which suggests that the company has lesser loan funds which is considerably good.<br />2. Total debt ratio= Debt/equity+ debt<br /> 2004= 0.022007= 0.01<br /> 2005= 0.042008= 0.02<br /> 2006= 0.04<br /> Comment: The Company’s total debt is fluctuating and is less when compared to equity and debt, which suggest that the leverage level is ideal.<br />3 Debt asset ratio= total debt/total asset-misc. asset<br /> 2004=0.0242007=0.08<br /> 2005=0.0622008=0.02<br /> 2006=0.064<br /> Comments: The company’s total debt is less when compared to total assets which indicates that the company has lesser debts.<br /><ul><li>Interest coverage ratio= PBIT/ Interest
103. 103. 2004= 498.90
104. 104. 2005= 2208.29
105. 105. 2006= 1103.09
106. 106. 2007= 741.20
107. 107. 2008= 473.22
108. 108. Comments: The Company’s Interest coverage is fluctuating but in the year 2008 it has decreased ,it has to increase it’s profits as they are less in 2008.</li></ul>Ratios (in graphs)<br /><ul><li>Profitability Ratios</li></ul> <br /> <br /> <br /> <br /><ul><li>(b)Liquidity Ratios:</li></ul> <br />(C)Activity Turnover ratios:<br /> <br />(D) LEVERAGE RATIOS<br /><ul><li>Overall Recommendations:
109. 109. The overall financial position of the company is satisfactory.
110. 110. The company’s needs to improve it’s profitable position which is ideal, but less when compared to other years, in order to earn return on the resources committed to business.
111. 111. The company’s liquidity position is satisfactory but not ideal, as the current assets and the current liabilities have being considerably decreased when compared to previous year, in order to meet it’s current obligations.
112. 112. The company’s leverage or capital gearing ratios are improving and the company’s total debt is less, and it has secured loans rather than unsecured loans which holds good trust among the suppliers for the company & it can also raise additional capital from public as it offers profitable and stable dividends.
113. 113. The activity ratio of the company is i.e. current asset turn over ratio needs to be improved, the rest of the ratios give satisfactory result.
114. 114. On the whole, the company’s overall position is satisfactory, and has the name, fame and trust of people. It is listed in one among top 25 FMCG’S of India & has potential to survive.
115. 115. </li></ul>THANK YOU..<br /> <br />