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THE INSTITUTE OF MANAGEMENT & SCIENCES
FINAL PROJECT
ANALYSIS OF FINANCIAL SITUATION
OF
NESTLE PAKISTAN
SYED HAIDER HASSAN (MBA Executive)
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TABLE OF CONTENTS
1. COMPANY INFORMATION (overall) --------------------------------------------05
2. NESTLE PAKISTAN -----------------------------------------------------------------07
3. PRESENT BOAD OF DIRECTOR -------------------------------------------------08
4. COMPANY DIRETORY ------------------------------------------------------------10
5. REGINOL SALE OFFICE -----------------------------------------------------------12
6. VISION STATEMENT / DIRECTORS REPORT TO SHAREHOLDER ----14
7. DIRECTOR REPORT ON COOPERATE GOVERNANCE -------------------17
8. ROLE AND RESPONSIBILITY OF CHAIRMAN AND CEO ---------------18
9. BUSINESS REVIEW ----------------------------------------------------------------19
10. PRODUCTS AND BRAND ---------------------------------------------------------20
11. RATIO ANALYSIS OF NESTLE PAKISTAN ----------------------------------21
12. LIQUDITY RATIO -------------------------------------------------------------------22
13. PROFITIBILITY RATIO ------------------------------------------------------------25
14. DEBT RATIO -------------------------------------------------------------------------27
15. ACTIVITY RATIO -------------------------------------------------------------------28
16. SUMMARY OF RATIO ANALYSIS ----------------------------------------------29
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COMPANY INFORMATION
Nestle world’s largest food company and Switzerland’s largest industrial company.
Nestle makes and markets a wide variety of foods and beverages, including
chocolate, confectionery, instant and roasted coffee, powdered milk, infant and baby
food, mineral water, pet food, breakfast cereals, ice cream and frozen desserts,
frozen meals, condiments, sauces, soups, and pasta. The company also makes Alcon
eye-care products and is a major shareholder in L’Oréal, one of the world’s largest
manufacturers of cosmetics. In 2001 Nestle acquired Ralston Purina, making it the
world’s largest producer of pet foods. Nestle is based in Vevey, Switzerland, but
derives only a tiny portion of its revenues from sales in Switzerland. Its largest
market is the United States. The company operates production facilities in numerous
countries around the world.
Nestlé’s well-known confectioneries include Nestle and Nestle Crunch chocolate bars,
Baby Ruth and Butterfinger candy bars, Kit Kat wafer bar, Rolo caramels, and Toll
House chocolate chips. Its line of beverages includes Nescafé and Taster’s Choice
instant coffees, Nestle Quick and Milo chocolate-based drinks, Nestea iced tea, Perrier
mineral water, and Carnation evaporated milk.
In the mid-1860s Henri Nestle, a pharmacist, led efforts to find a healthy alternative to
breast milk. He hoped to reduce mortality among infants who could not be breastfed.
Nestle developed an infant cereal that combined cow’s milk, wheat flour, and sugar and
in 1867 tested it on a sick, premature baby boy who had refused his
mother’s milk. The baby accepted the formula and recovered. Later that year Nestle
formed his own company, Farine Lactée Henri Nestle, in Vevey, to manufacture the
infant formula, called Farine Lactée Nestle.
Only a year earlier, in 1866, Americans Charles and George Page had founded the
Anglo-Swiss Condensed Milk Company in Cham, Switzerland, to sell canned milk
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in Europe. It expanded in the mid-1870s to include infant formulas, entering into direct
competition with Nestlé’s company. In 1875 Nestle sold his company to three local
business executives. The company began selling chocolate in 1904 when it
acquired the Swiss General Chocolate Company. In 1905 Farine Lactée Henri Nestle
merged with the Anglo-Swiss Condensed Milk Company to become the Nestle and
Anglo-Swiss Milk Company
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NESTLE PAKISTAN
Nestle Pakistan is the largest food & beverages company of in Pakistan, reaching the
remotest of location through Pakistan to serve the consumers. Nestle Pakistan is also
pride itself in being the leaders in nutrition, health & Wellness. Ever since 1876, when
Henri Nestle invented the first invent food, nutrition has been in our DNA, today more
and more consumers mirror our emphasis on nutrition, as they realize that food choices
affect their health and quality of life.
We have personally to make available to every one every where the best quality food-
whether in trendy party of London, or a remote village in Madagascar and also in
Pakistan from Karachi to Gilgit. This is good for consumers but also good for us.
Quality is our basic approach to consumers.
As we report the result at the year ending 2008 and steps in 2009, we complete 21
years of doing successful business in Pakistan. Nestle first entered in Pakistan
market in 1988 through a joint venture with Milk pack Ltd. In 1992 Nestle took
pavers the management of the company and changed the name of the company to
Nestle Milkpak Ltd in 1996. In 2005 the name was formally changed to Nestle
Pakistan Ltd.
Nestle Pakistan operates four production facilities with its Headquarters in Lahore.
Two of its factories n Sheikhupura and Kabirwala are multi product factories. One
factory in Islamabad and one factory in Karachi produced bottled water. The largest
Milk reception is in Kabirwala in the world.
The company priority is to bring the best and most relevant products to people
where they are, where their needs are, and for all age groups.
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In line with Nestles global philosophy, Nestle Pakistan is proud of its commitment to
excellence in product safety and quality and to providing value and services to its
consumers.
Nestle Pakistan remains committed to high quality products and consumer trust,
where people, products and brands are the main flag bearers of the Company’s
image.
Management
Present board of Directors as on December 31, 2008
Syed Yawar Ali Pakistani June 26, 2010 Chairman
Trevor Clayton South Africa June 26, 2010 Managing Director
Fritz Van Dijk Dutch June 26, 2010 Director
Raymond Franke Canadian June 26, 2010 Director
Alexendre Cantacuzene French June 26, 2010 Director
Syed Babar Ali Pakistani June 26, 2010 Director
Syed Hyder Ali Pakistani June 26, 2010 Director
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Officers
Trevor Claton CEO
Raymond Frank CEO
Muhammad Ali Sadozai Company Secretary
Management
Trevor Clayton MD
Raymond Frank Head of Finance & Control
Peter Wuethrich Head of Technical
Haseeb Aslam Country Business Manager Water
Salman Nazir Head of Supply Chain
Uzma Qaiser Butt Head HR
Khurram Zia Business Exceutive Manager
Dr.Usmand Bahtti Country Business Manager
Khurram Javed Business Manager Chilled Dairy
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Muhammad Ali Aziz Business Manager Beverages
Shaheen Sadiq Head of Communication
Syed Fakhar Ahmed Head of Corporate Affairs
Nauman Khan Country Business Manager
Samra MAqbool Product Unit Manager
Audit Committee
Syed Haider Ali Chairman
Syed Babar Ali Member
Peter Wuethrich Member & Secretary
Company Directory
Registered Corporate Office 308 Upper Mall Lahore PABX: 042-5789303
Corporate Office Annex 304 Upper Mall 1st & 2nd Floor, 172-Tufail Road Lahore Cantt. PABX: 042-6099300
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Auditors
K.P.M.G. Taseer Hadi & Company Chattered Accountants
Legal Advisors
Cheema & Ibrahim Advocate
Bankers
Royal Bank OF Scotland
City Bank N.A
Deutsche Bank Ltd
Habib Bank Ltd
MCB Bank Ltd
Standard Chartered Bank Ltd
United Bank Ltd
National Bank of Pakistan Ltd
Allied Bank Ltd
Factories
Sheikhupura 29th KM, Lahore-Sheikhupura Road Sheikhura Punjab PABX: 042-411433-36
Kabirwala Khanewal-Kabirwala Road Kabirwala, District Khenewal Pakistan PH# 06512-411433-36
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Islamabad 32, St. 3, I-10/3 Islamabad Ph# 051-4445991-3
Karachi Plot # A-23 Northwest Industrial Zone, Port Qasim Karachi Ph# 021-4720151-4
Regional Sales Offices
North Zone
Islamabad 92, East, 3rd Floor, Razia Sharif Plaza Fazal-e-Haq Road Islamabad Tel# 051-2271874
Jehlum House # 53-E, Jafar Road Jehlum Cantt. Jehlum Tel# 0544-720004
Peshawar Jalala House 42-D Old Jamrud Road, University Town Peshawar Tel# 091-5700859
Central Zone
Lahore 29-B, Main Gulberg Lahore Tel # 042-5754335
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Gujranawala Habib Bank Plaza 1st Floor, Statelife Town Gujranawala 055-3733415
Faislabad 2nd Floor, Al -Haq Plaza, 271-A Small D Ground Peoples Colony Faislabad Tel # 041-8716937
Multan Al-Syed House, Street # 2, Iqbal Park Sabzazar Colony, Bosan Road MUltan Tel# 061-6512800
South Zone
Karachi F77/1, Block 7, Kehkashan Clifton, KDA Scheme 5 Karachi Tel # 021-5876770
Quetta 63-B-D, Chaman Housing Scheme Opp. Aslari Park Quetta Tel# 081-2834887
Hydrebad House # 178, Block-C, Uit 2, LAtifabad Hydrabad Tel# 022-3860403
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VISION STATEMENT
The Nestle global vision is to be the leading nutrition, health and Wellness Company in
the world. Nestle Pakistan subscribes fully to this vision and of being the number one
nutrition, health and wellness company in Pakistan. In particular, we vision to,
1) Lead a dynamic, motivated and professional workforce
2) Meet the nutrition needs of consumers of all age groups 3) Deliver
shareholder value through profitable long term growth.
Directors Report to ShareHolders
The directors are pleased to submit their Annual Report along with the audited
financial statements of the Company for the year ended December 31. 2008,
Financial Performance
2008 was indeed a very challenging year for the world economy for Pakistan, and
for Nestle Pakistan. The dramatic inflation and energy crises were the most
significant impact that directly affected our operations and indirectly customers at
large.
In our largest business area collection of fresh milk grew by 11% versus last year,
but fell short of our production requirements, while inflation on fresh milk was more
then 20%, meanwhile company continued its dairy development initiatives.
Despite the adversely, we successfully enhanced our portfolio with several
important new product launches including everyday mixed Tea, Nestle milk iron
fortified MAGGI lemon Chaska noodles and new Guava nectar addition to the nestle
juices range.
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PKR Million 2008 2007
Sales 34184 28235
Gross Profit 26.20% 28.20%
Operating Profit Margin 12.00% 12.40%
Net Profit Margin 4.50% 6.40%
Net Profit 1553.00% 1805.00%
Earnings per Share 34.24% 39.81%
Sale of the year did surpass PKR 34 billion, and the growth of 21% was split
relatively between real growth and pricing movements.
Gross profit margin declined in 2008 as our consumer pricing could not keep up
with the significant inflation on virtually all input commodities particularly fresh
milk and energy. Operating profit level where decline by only 40 bps versus 2007.
Net profit and margin declined further due to the significant increase in the cost of
financing.
Corporate Governance
The directors confirm compliance with the corporate and financial reporting
Framework of the SECP code of corporate governance for the following,
1) The financial statement prepared by the management of the company present
Fairly it’s state of affairs the results of its operations, cash flows and changes in
Equity.
2) Proper books of accounts of the company have been maintained.
3) There are no significant doubts upon the company ability to continue as going
Concerns
4) Appropriate accounting policies have been consistently applied in preparation
of finical statements.
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5) International accounting standards as applicable in Pakistan have been
followed in preparation of finical statements.
External auditors
Messer KPMG Taseer Hadi and company chartered accounts have completed
assignment for the year 2008 and retire at the conclusion of the 31st annual general
meeting.
Corporate social responsibility
The company continues its commitment to social wellness and our CSR spending has
been significant during the year. Our focus continue to be on
1) Rural education projects for children’s
2) Infrastructure support for health facilities
3) Nutrition support to vulnerable women and children groups in collaborations
with specialized institutions
4) Academic enhancement and scholarship funding for several universities
program.
5) Our project with UNDP to develop rural women
Future Out look
We see 2009 as another challenging year for Pakistan with continued economic
volatility. As there is often opportunity in adversity, the company build further on the
focus efforts 2008 in stream lining our operation and re doubling our focus on
consumer innovation.
Nestle Pakistan is committed to Pakistan and bringing products to consumer that
deliver nutrition, health and wellness.
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Directors report on corporate governance
The company is committed to adopt and implement high standards of corporate
governess. it has adopted and implemented the corporate governess principle of its
parent company, nestle SA Switzerland, which cover the following four business
area.
Rights and responsibilities of share holder
Equitable treatment of share holder
Duties and responsibilities of board of directors
Disclosure and transparency
Board of directors
The board of directors currently comprises a non executive chairman, Chief
executive/Managing director with one executive and four non executive directors
The directors meet four times a year to review the company performance
Board of directors meetings
During the year the board of directors had the following meeting
Date of Meeting Time Place
February 07, 2008 10:00AM Corporate Office Lahore
March 24, 2008 09:00AM Corporate Office Lahore
April 18, 2008 09:30AM Corporate Office Lahore
August 07, 2008 10:00AM Corporate Office Lahore
October 28, 2008 10:00AM Corporate Office Lahore
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Role and responsibilities of chairman and chief executive
The role of the chairman and the chief executive are segregated and they have distinct
responsibilities the chairman of the board has responsibilities and covers vested in him
by law and the articles of associations of the company as well as duties assigned to him
by the board. The managing director is the CEO of the
company and is responsible for day to day operations and conduct business with the
power vested in him by law the managing director recommend the policy and
strategic directions and annual business plans for board of directors approval and
responsible for exercising the over all control and supervision for sound
management and conduct of the business of the company.
Audit committee
The audit committee comprises three members including chairman of the committee. All
members are no executive directors the audit committee held four meetings in
2008. The CFO, internal auditors as well as external auditors were invited to the
meetings.
Remuneration committee
The company has not established this committee as it does not deem it necessary to do
so. All issue of remuneration are fully disclosed and decided at the meeting of the
directors.
Strategic planning
The company strategic direction was reviewed at the meeting of directors a process has
been put into the place where by long term market business strategies and annual
operation plan established by management are regularly review by the directors in line
with the companies overall business objective.
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Key Financial Data
2008 2007 Trading Results
Sales 34184 28235 Goss Profit 8952 7950 Operating Profit 4105 3511 Profit Before tax 2227 2550 Profit After Tax 1553 1805
Balance Sheet
Share Holders Funds 4389 4112 Reserves 3935 3658 Operating Fixed Assets 9177 8913 Net Current assets/Liabilities 432 -325 Long Term Liabilities 7043 5788
Investor Information For Two years
Gross Profit Ratio 26% 28% Operating Profit Ratio 12% 12% Profit before tax Ratio 7% 9% Profit After Tax Ratio 5% 6% Inventory Turnover Ratio 10.3:1 9.4:1 Total Assets Turnover Ratio 2.1:1 2:1 Price Earning Ratio 38.9 45.2 Return on Capital employed 20% 26% Market Value Per Share 1334 1800 Debt Equity ratio 63:37 62:38 Current Ratio 1.1:1 0.9:1 Interest Cover Ratio 5:1 5.4:1
Business Review
Human Resources
Nutrition, Health & Wellness
Marketing and Sales
Nestle Quality Management System
Production
Milk Collection & Agri Services
Finance and Control
Corporate Social Responsibly
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Product & Brands
Dairy
Nestle Child Dairy
Infant Dietetic
Beverages
Confectionary
Culinary
Water
Nestle Professional
Financial Statements
1. Auditors Report to the Members
2. Balance Sheet
3. Profit and Loss Account
4. Cash flow Statement
5. Statement of changes of equity
6. Statement of Recognized Income and Expenses
7. Notes to the Financial Statements
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Ratios Analysis Of Nestle Pakistan Ltd
ASSESSMENT OF THE
SUPPLIERS’ FINANCIAL RISKS
BASIC MODEL
Z-Score Altman: A simple and quick formula to
identify the risk of bankruptcy of a company:
Abbreviations:WC = Working Capital
TA = Total Assets
RE = Retained Earnings
EBIT = Earnings before interest and taxes VE
= Value of Equity
TL = Total Liabilities
S = Net Sales
ANALYSIS OF FINANCIAL RATIOS (I)
In the event that:
Score (Z):Z > 2, 99: Good shape1, 81 < Z < 2, 99: Warning signs Z < 1, 81: Bankruptcy
Z-Score < 1, 81 (Warning signs) the following 6 Financial Ratios should be
analyzed in order to identify where the potential risks are:
Liquidity:
Quick ratio (acid test ratio) THE
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Solvency:
Current ratio
Debt quality
Financial leverage
Profitability:
ROE
ROA
LIQUIDITY RATIOS
1. CURRENT RATIO
The ability to meet short term obligations. “Generally, a high Current Ratio
indicates the company has enough liquid assets to continue normal operations.”
This is the most commonly used measure of short-term solvency.
Current Ratio = Current Asset Current Liabilities
2008 5,684,078,000 / 5,306,571,000 107%
2007 5,623,823,000 / 5,978,522,000 94%
It is an indicator of a Company’s ability to meet short-term debt obligations. If the
current assets are more than twice the current liabilities, the company is
generally considered to have good short-term financial strength.
If the current liabilities exceed current assets, the company may have
problems meeting its short-term liabilities.
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2. ACID TEST RATIO
A stringent test that indicates whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory. The acid-test ratio is far
more strenuous than the working capital ratio, primarily because the working
capital ratio allows for the inclusion of inventory assets.
Acid Test Ratio = Quick Assets Current Liabilities
2008 3195505000 / 5306571000 60.22%
2007 3230517000 / 5978522000 54%
It’s an indicator of a Company’s ability to meet its obligations without selling
inventories.
It’s viewed as a sign of company’s financial strength or weakness (higher
number means stronger, lower number means weaker).
3. INVENTORY TURNOVER RATIO
Inventory turnover ratio is one of the Accounting Liquidity ratios, a financial ratio. This
ratio measures the number of times, on average; the inventory is sold during the period.
Its purpose is to measure the liquidity of the inventory. A popular variant of the
Inventory turnover ratio is to convert it into average days to sell the inventory in terms
of days. Remember that the Inventory turnover ratio is figured as "turnover times" and
the average days to sell the inventory is in "days".
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Inventory Turnover Ratio = Cost Of Goods Sold Average Inventory
2008 25231532000 / 2440939500 10.34
2007 20285142000 / 2393306000 8.48
4. AVERAGE AGE OF INVENTORY
365 / INVENTORY TURNOVER
2008 365 / 10.34 35.29
2007 365 / 8.48 81.47
5. AVERAGE COLLECTION PERIOD
Receivable Turnover = Net Credit Sales Average Net Receivables
2008 34183847000 / 400433000 85 Days
2007 28235393000 / 344053000 82 Days
Average Collection Period = 365 Days Receivable Turnover
2008 365 / 85 4.29
2007 365 / 82 4.45
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6. OPERATING CYCLE
Average time period between buying inventory and receiving cash proceeds from its
eventual sale. It is determined by adding the number of day’s inventory is held and the
collection period for accounts receivable.
Operating Cycle = Avg Collection Period + Average Age Of Inventory
2008 85 + 35.29 120.29
2007 82 + 81.47 163.47
PROFITABILITY RATIOS
A class of financial metrics that are used to assess a business's ability to generate
earnings as compared to its expenses and other relevant costs incurred during a
specific period of time. For most of these ratios, having a higher value relative to a
competitor's ratio or the same ratio from a previous period is indicative that the
company is doing well.
1. Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits
divided by sales. It measures how much out of every dollar of sales a company
actually keeps in earnings.
Profit margin is very useful when comparing companies in similar industries. A higher
profit margin indicates a more profitable company that has better control over its costs
compared to its competitors. Profit margin is displayed as a percentage.
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Profit Margin = Net Income Net Sales
2008 1552894000 / 34183847000 4.54
2007 1805212000 / 28235393000 6.39
2. ASSET TURNOVER RATIO
An overall measure of how effectively assets are used during a period; computed
by dividing net sales by average total assets
Asset Turnover Ratio = Net sales Average Total Assets
2008 34183847000 / 16266375000 2.10
2007 28235393000 / 15848574000 1.78
3. RETURN ON ASSETS
It gives an idea of how effectively the company is converting the invested money into net income.
It determines the company’s capacity to pay all the financial resources (internal & external).
Return On Assets = Net Income Average Total Assets
2008 1552894000 / 16266375000 9.54%
2007 1805212000 / 15848574000 11.39%
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It gives an idea of how effectively the company is converting the invested
money into net income.
It determines the company’s capacity to pay all the financial resources (internal & external).
4. DEBT RATIO
Debt Ratio = Total Liabilities Total Assets
2008 12295329000 / 16684176000 73.69%
2007 11736869000 / 15848574000 74.05%
It shows the percentage of long term debt in the total debt. it is more
positive for the Company to be indebted on the long term.
5. NET WORKING CAPITAL!
Net Working Capital = Current Assets _Current Liabilities
2008 5684078000 - 5306571000 377507000
2007 5623823000 - 5978522000 (354699000)
6. GROSS PROFIT MARGIN!
The excess of sales over the variable costs, which is always expressed as a
percentage of sales. It shows the accuracy of pricing policies, in terms of the
direct costs involved in producing/providing the products/services and is
calculated by dividing the gross profit by sales.
Gross Profit Margin = Gross Profit
Sale
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2008 8952315000 / 34183847000 26.18%
2007 7950251000 / 28235393000 28.16%
7. NET PROFIT MARGIN!
Net Profit Margin equals the Total Net Income divided by Revenue,
expressed as a percentage. The percentage represents the amount of each
rupee of Revenue that results in Total Net Income.
Net Profit Margin = Net Profit Sale
2008 1552894000 / 341838470000 4.54%
2007 1805212000 / 28235393000 6.39%
ACTIVITY RATIOS
Used in standard costing to express the actual work produced as a percentage of the
budgeted work for the same period when both are expressed in standard hours.
1. ACCOUNTS RECEIVABLE TURNOVER
Net Credit Sales
Average Accounts Receivable
2008 2842640 / 671409.5 = 4.23
2003 2632060 / 591537.5 = 4.44
MARKET VALUE
The most probable price that a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue
stimulus.
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1. PRICE / EARNING RATIO
Price / Earning Ratio = Market Price Per Share
Earning Per Share
2008 96.77 / 34.24 2.82
2007 90.66 / 39.81 2.27
2. DIVIDEND PAYOUT
Dividend per share/Earning per share
2008 26.49 / 34.24 0.77
2007 5 / 39.81 0.12
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SUMMARY OF RATIO ANALYSIS
The analysis of these above ratios should enable us to compare the financial
health of Nestle Pakistan Limited:
Data of last two years.
Liquidity Ratio
Profitability Ratio
Activity Ratio
Market Value
The over all analysis of the NESTLE PAKISTAN shows good financial position of company and financial position is stable & above average.
All the main types of ratios which help in finding out the pure financial condition of any industry are good as compared to the previous years
All ratios as indicated above shows a better condition.
In short we can say overall financial position of Nestle Pakistan is better.
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RATIO ANALYSIS
RATIOS 2008 2007 AVG
CURRENT RATIO 107 94 100.5
QUICK RATIO 60.22 54 57.11
INVENTORY T/O 10.34 8.48 9.41
AVG. COLLECTION .P 4.29 4.45 4.37
TOTAL ASSETS T/O 2.1 2.78 2.44
DEBT RATIO 73.69 74.05 73.87
AVG AGE OF INVENTORY 35.29 81.47 58.38
NET PROFIT RATIO 4.54 6.39 5.465
RETURN ON T. ASSET 9.54 10.39 9.965
EARNING PER SHARE 2.82 2.27 2.545
OPERATING CYCLE 120.29 163.47 141.88
ACCOUNT RECEIVABLE T/O 85 82 83.5
GROSS PROFIT MARGIN 26.18 26.16 26.17
DIVIDEND PAYOUT 0.77 0.12 0.445
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CROSS OVERANAYSIS ALL
Stronger Stronger
Ok Ok
Above Avg Above Avg
Stronger Stronger
Good Good
Normal Normal
Good Normal
Above Avg Above Avg
Good Good
Good Good
Average Average
Good Good
Above Avg Above Avg
Ok Ok
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GLOSSARY
Total Assets = Current Assets (1) + Long-term Assets (2). Total
Liabilities = Current Liabilities (3) + Long-term Liabilities (4). Equity
Value = Total Assets - Total Liabilities.
Working Capital = Current Assets - Current Liabilities.
(1) Current Assets: Value of all assets that are reasonably expected to be
converted into cash within 1 year in the normal course of business. It
includes cash, accounts receivable, inventory, marketable securities,
prepaid expenses and other liquid assets that can be readily converted to
cash.
(2) Long-term assets: Value of a company's property, equipment and other
capital assets, minus depreciation. It includes manufacturing equipment, real
estate and furniture.
(3) Current Liabilities: A company's debts or obligations those are due
within 1 year. It includes short term debt, accounts payable (suppliers),
accrued liabilities and other debts.
(4) Long-term liabilities: A company's debts or obligations for leases,
bond repayments and other items due in more than 1 year.
EBIT (Earnings before Interests and Taxes) = Revenue - Operating
Expenses.
Net Earnings = EBIT - Operational Interests - Taxes - Depreciation.
Retained Earnings = Net Earnings - Dividends. It’s the percentage of net
earnings not paid out as dividends but retained by the company to be
reinvested in its core business or to pay debt.
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