You are on page 1of 62

SUBMITTED BY: Yuthika Singh

.

ROLL NO – 48. SEC - A

RATIO ANALYSIS OF FINANCIAL STATEMENTS OF NESTLE
INDIA LTD.

TABLE OF CONTENTS ::

(1)INTRODUCTION TO FOOD AND BEVERAGES INDUSTRY
(2)PROFILE OF NESTLE INDIA LTD.
(3)OBJECTIVE OF ANALYSIS AND METHODOLOGY
(4)FINANCIAL ANALYSIS USING RATIO ANALYSIS
(5)INTERPRETATIONS OF THE RATIOS
(6)REFERENCES

INTRODUCTION TO FOOD AND BEVERAGES
INDUSTRY
Nestlé's relationship with India dates back to 1912, when it began trading as The Nestlé
Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished
products in the Indian market.

After India's independence in 1947, the economic policies of the Indian Government
emphasised the need for local production. Nestlé responded to India's aspirations by forming
a company in India and set up its first factory in 1961 at Moga, Punjab, where the
Government wanted Nestlé to develop the milk economy. Progress in Moga required the
introduction of Nestlé's Agricultural Services to educate, advise and help the farmer in a
variety of aspects. From increasing the milk yield of their cows through improved dairy
farming methods, to irrigation, scientific crop management practices and helping with the
procurement of bank loans.

Nestlé set up milk collection centres that would not only ensure prompt collection and pay
fair prices, but also instil amongst the community, a confidence in the dairy business.
Progress involved the creation of prosperity on an on-going and sustainable basis that has
resulted in not just the transformation of Moga into a prosperous and vibrant milk district
today, but a thriving hub of industrial activity, as well.

Nestlé has been a partner in India's growth for over nine decades now and has built a very
special relationship of trust and commitment with the people of India. The Company's
activities in India have facilitated direct and indirect employment and provides livelihood to
about one million people including farmers, suppliers of packaging materials, services and
other goods.

The Company continuously focuses its efforts to better understand the changing lifestyles of
India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness
through its product offerings. The culture of innovation and renovation within the Company
and access to the Nestlé Group's proprietary technology/Brands expertise and the extensive
centralized Research and Development facilities gives it a distinct advantage in these efforts.
It helps the Company to create value that can be sustained over the long term by offering
consumers a wide variety of high quality, safe food products at affordable prices.

BAR-ONE. KIT KAT. NESTLÉ SLIM Milk. MILKYBAR. MAGGI. MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTLÉ Milk.Nestlé India manufactures products of truly international quality under internationally famous brand names such as NESCAFÉ. NESTLÉ Dahi and NESTLÉ Jeera Raita. Nestlé India is a responsible organisation and facilitates initiatives that help to improve the quality of life in the communities where it operates. .

It started its journey in India in 1912 by entering into the dairy business. Maggi Noodles. prepared dishes & cooking aids & chocolate & confectionery segments. Nestlé India. The company has its headquarters at Gurgaon near Delhi and has seven factories spread all overIndia. Polo. Nestle India continuously focuses on understanding changing lifestyles in India. Kit Kat. second in healthy soups. This helps it to foresee needs in hts product offerings. making it one of the oldest company in India. one the biggest players in FMCG segment. Nestlé Everyday. Nestlé India is a subsidiary of Nestlé SA of Switzerland.Nestle has its presence in India for around nine decades. safe food products at affordable prices.1 in instant coffee.2 in overall chocolate category. Nestle has created brands like Nestlé Milkmaid. has a presence in milk & nutrition. As per the market-wise position Nestlé India stands first in instant noodles & ketchups. No. Maggi Soups. . Nescafe & many more. & No. beverages. The company innovates new product & renovates existing one providing high quality.

in the first half of 2004. More recent. so it would be best for Nestlé to focus a big portion of their core competences and resources on the fast growing dairy division. which is the LC1. Nestlé milk-based products. Recent developments The company has introduced products in milk segment for daily consumption and use such as Nestle Milk. the dairy business had accounted for 5% of the company’s sales revenue (Rodgers.  In 2006-2007 Nestlé India was awarded the ‘Best Exporter of Instant Coffee’. ‘Highest Exporter to Russia and CIS”. The amount of 60% is a big potion of the company’s earnings.  Business India has rated Nestlé India as No.Milestones achieved  CNBC Awaaz Consumer Awards has honoured Nescafe as the most preferred coffee brand. So their research team in Switzerland . and ice cream accounted for 60% of Nestlé revenue growth (Nutraingredients. Nestle Fresh 'n' Natural Dahi and Nestle Jeera Raita. Dairy Division / LC1 The dairy products at Nestlé are a big driving force for the growth of the company’s sales. Nestle Slim Milk. 2000). ‘Highest Exporter to Far East Countries’. Nestlé strives on being innovator and renovators. nutrition. Which leads us into the most recent yogurt produced by Nestlé’s.com).1 on Return On Capital Employed amongst Super 100 companies. it pushes the innovator and renovators of Nestlé to reach new height in finding better and healthier products for their consumers. With the health kick of the many individuals around the world. In 1998.

Nestlé India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction. PROFILE OF NESTLE INDIA LTD. With seven factories and a large number of co-packers. Nestlé set up its next factory at . which is living microbial feeding supplements that allow the lower intestine to function better (Rodgers. The Company insists on honesty. In 1967. Nestlé has now found a solution for their health conscious consumers. That when the researchers at Nestlé discovered that if they replace one of the mixes in their yogurt with the La-1 the same texture would be maintained. of Switzerland. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India PRESENCE IN INDIA Beginning with its first investment in Moga in 1961. Nestlé’s regular and substantial investments established that it was here to stay. This particular product was chosen because it contains a probiotic agent. La-1 helps the small intestine function by improving the body’s immune system. Nestlé India is a subsidiary of Nestle S. but now they need to find away to implement it into one of their products.A.discovered a culture called Lactobacillus acidophilus. and in turn helping the body in preventing diseases. 2000). or La-1. Now with the combination of Nestlé yogurt mix and the La-1. integrity and fairness in all aspects of its business and expects the same in its relationships. Nestlé has given their yogurt the name of LC1.

NESTLE & COMMUNITY Nestlé India has always focused on long term.Haryana.Mumbai.For more on Nestlé Agricultural Services. After independence. Nestlé commissioned two factories in Goa at Ponda and Bicholim respectively. sustainable and profitable growth and helped communities around its factories to improve their quality of life in a similar manner. the Samalkha factory (Haryana).Chennai and Kolkata.of Switzerland. Nestle India      Nestlé India is a subsidiary of Nestlé S.This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.integrity and fairness in all aspects of its business and expects the same in its relationships. The Company insists on honesty.Punjab. and medicines provided at wholesale cost.in response to the then economic policies. Nestlé’s relationship with India dates back to 1912. MILK PRODUCTS AND NUTRITION · EVERYDAY DAIRY WHITENER · EVERYDAY GHEE · MILK · SLIM MILK · SILM MILK .They are in Delhi.namely Nestle India Ltd.where the Government wanted Nestle to develop the milk economy. The 4 branch offices in the country help facilitate the sales and marketing of its products. The Nanjangud factory (Karnataka).Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. Milk storage facilities have been set up close to the farmers.importing and selling finished products in the Indian market. Veterinary services are provided free. became operational in 1989.when it began trading as The NestléAnglo-Swiss Condensed Milk Company (Export) Limited. Nestle formed a company in India.A. Company veterinarians and agronomists supervise the milk routes and advise farmers on various issues including proper feed for the herds. Nestlé Agricultural Services has used the experience gained by Nestlé across the world to set up a system of direct and efficient contact with the farmers. provides subsidy and helps them in procuring loans. The Nestlé India head office is located in Gurgaon. Nestlé India has commissioned in 2006 its 7th factory at Pant Nagar in Uttarakhand.and set up its first factory in 1961 at Moga. BRANDS . The company assists farmers in artificial insemination programs for their cattle. in 1993 and in 1995 and 1997.which emphasized local production.

DRINK · ICED TEA WITH GREEN TEA · NESTEA ICED TEA PREPARED DISHES AND COOKING AIDS · MAGGI 2 MINUTE NOODLES · VEG ATTA NOODLES · RICE NOODLES MANIA · CUPPA MANIA · SAUCES · PICHKOO · PIZZA MAZZA · MAGIC CUBES · BHUNA MASALA · COCONUT MILK POWDER · HEALTHY SOUPS · HEALTHY SOUP-SANJEEVNI CHOCOLATES AND CONFECTIONERY · KIT-KAT · KIT-KAT CHUNKY · MUNCH · MUNCH POP CHOC .· NEVISTA PRO-HEART MILK · FRESH ‘n’ NATURAL DAHI · FREAH ‘n’ NATURAL SLIM DAHI · JEERA RAITA · NESVITA DAHI · MILKMAID FRUIT YOGHURT · MILKMAID · MILKMAID FUNSHAKES · NIDO BEVERAGES · NESCAFE CLASSIC · SUNRISE PREMIUM · SUNRISE SPECIAL · CAPPUCCINO · MILO SMART PLUS READY –TO.

the degree of social awareness. It is also a Centre of expertise for local Indian cuisine within the Nestlé R&D network and offers assistance to Culinary. It will also strengthen . Nutrition and Dairy products in the South Asia Region (SAR). Its meaning changes with the stage of development. and scientific advancement. creating products that take the promise of taste and health to a broader economic and social section than ever before.· MILKYBAR · MILKYBAR CHOO · BAR-ONE · MILK CHOCOLATE · POLO · ECLAIRS · MILKYBAR ECLAIRS Research and Development Centre in India Research and Development (R&D) in India is part of Nestlé S. Confectionery. The new Nestlé R&D facility in India will help develop great tasting food solutions that are relevant for consumers in the South Asia Region.A.’s global R&D network and supports all markets worldwide with new product development and manufacturing excellence for Noodles. Better nutrition in the region is a perpetual challenge.

suited to the local consumer. It will in turn help Nestlé R&D to bring out strong local concepts that are in accordance with the Nestlé Group ambition to provide ‘affordable Nutrition. Better nutrition in the region is a perpetual challenge. Nutrition and Dairy products in the South Asia Region (SAR). It is also a Centre of expertise for local Indian cuisine within the Nestlé R&D network and offers assistance to Culinary.A. Confectionery. Now. suited to the local consumer. Nestlé South Asia Region will benefit from a greater ‘regional consumer’ focus. but could be transferred to Nestlé worldwide. Health and Wellness’. Production Facilities . It will also strengthen Nestlé’s position as the leader in Nutrition.Nestlé’s position as the leader in Nutrition. Research and Development (R&D) in India is part of Nestlé S. Health and Wellness in the emerging markets. the degree of social awareness. creating products that take the promise of taste and health to a broader economic and social section than ever before. with the new R&D Centre in Manesar. Its meaning changes with the stage of development. Ultimately. Ultimately. Nestlé South Asia Region will benefit from a greater ‘regional consumer’ focus. but could be transferred to Nestlé worldwide. with the new R&D Centre in Manesar. It will in turn help Nestlé R&D to bring out strong local concepts that are in accordance with the Nestlé Group ambition to provide ‘affordable Nutrition. Health and Wellness in the emerging markets. Health and Wellness’. Now. The new Nestlé R&D facility in India will help develop great tasting food solutions that are relevant for consumers in the South Asia Region. Nestlé India has always had Research and Development support from the Nestlé R&D network across the world. these concepts will not just be relevant for emerging markets like India. Having an R&D Centre in India also brings Research and Development closer to Nestlé India businesses. and reflects the Nestlé spirit of R&D-Business partnership towards developing winning concepts.’s global R&D network and supports all markets worldwide with new product development and manufacturing excellence for Noodles. Nestlé India has always had Research and Development support from the Nestlé R&D network across the world. and scientific advancement. these concepts will not just be relevant for emerging markets like India. Having an R&D Centre in India also brings Research and Development closer to Nestlé India businesses. and reflects the Nestlé spirit of R&D-Business partnership towards developing winning concepts.

Products Brands Beverages Milk Products .

happiness and peace of mind.employees. consumers.  Be a good corporate citizen and contribute positively to the society in which itoperates.  Conservation of natural resources and minimization of waste. but also pleasure. The centre will employ 100 people and will come out with new products in the popular foods category. VISION: People understand that food is a source of nourishment and satisfaction.Prepared dishes and cooking aids Chocolates and Confectionery Future Plans    Nestle India will invest Rs 700 crore in a factory in Himachal Pradesh for the production of noodles and chocolates. . OBJECTIVES:  To make company’s customers winners by constantly exceeding their expectations  Nestle India’s main objective is to manufacture and market the products in such away as to create value that can be sustained over the long term for shareholders. The company is also in the process of investing Rs 360 crore in the production facility for noodles at Nanjangud in Karnataka. and business partners. health. The company is spending Rs 200 crore on a R&D centre at Manesar. They are increasingly aware that their food and beverage choices can impact their quality of life and affect the lives of others.

safety and quality are non-negotiable. Ever since Henri Nestlé invented Farine Lactée to alleviate infant mortality. Each day we strive to make our products tastier and healthier choices that help consumers care for themselves and their families. systems and services that contribute to improving the quality of consumers’ lives. Whether it is in terms of convenience. regulatory specialists and consumer care representatives dedicated to earn our consumers’ trust with safe products of the highest quality: at Nestlé. We have the largest R&D network of any food company in the world.of high quality and provide optimal nutrient to meet physiological needs. Behind every one of Nestlé’s products there is a team of scientists. Our mission of "Good Food. most nutritious choices in a wide range of food and beverage categories and eating occasions. health or pleasure. This would not be possible without our unmatched R&D capability. Nestle helps provide selections for all individual taste and lifestyle preferences. Good Life" is to provide consumers with the best tasting.” .Innovation has been at the heart of our company since its beginning. health and wellness company. nutrition science and passion for quality in everything we do. nutritionists. engineers. “Nestlé's aim is to meet the various needs of the consumer everyday by marketing and selling foods of a consistently high quality. we are able and committed to create trustworthy products. from morning to night. designers. we have been dedicated to enhance people’s lives.000 people involved in R&D.” MISSION: Nestlé is the world's leading nutrition. “We strive to bring consumers foods that are safe. with 34 R&D facilities (3 Science & Research centres and 31 Product Technology Centres and R&D centres worldwide). and over 5.

35 Billion91.91 Billion83. An ideal company should have an steady upward trend. Compound Annual Growth Rate of Nestle India Limited 1 year Revenue Net Income EPS Basic 9.com Year to Year Sales Growth (%) Revenue or turnover or top line is income that a company receives from its normal business activities. Revenue Growth is used to measure how fast a company's business is expanding.01 BillionRevenue20112012201320140B50B100BCraytheon. EPS Growth Rate Sales/ Revenue/ Top line Rupees74. The figure shows the annual rate of increase/decrease in a company's revenue or sales growth in terms of percentage change from the previous year.20% 5% 5% . Year-over-year performance is frequently used by investors seeking to gauge whether a company's financial performance is improving or worsening.Revenue and Net Income.

. A high DSO may be a red flag. retained earnings growth is accompanied by subsequent increases in sales and profitability. Well established companies offer dividends back to its shareholders while high growth companies usually do not pay dividends since they reinvest the profits back in the business. Exports of culinary products.3 millions. Dividend Growth Nestle India LimitedSign up for premium membershipsign up for free membership A company paying dividends is generally a good sign. If a dividend paying company stops paying dividends then that is a big red flag. export sales grew during the year by 47% and were Rs. A company can use retained earnings to maintain current operations. If Recievables are growing much faster than sales. Nevertheless. Dividend per share is better metric compared to looking at just the dividends because DPS takes into account the number of shares as well. Reserves. it could possibly be due to accounting manipulation. An increase of receivables and inventory above 50% is usually not a good sign and needs to be investigated further. Dividends Growth Retained Earnings Growth Retained Earnings Growth is the percent increase / decrease of a company's retained net income or reserves/surplus over time. DSO = Accounts Receivables / ( Revenue / 365 ) Exports: It has been a tough year in the global market scenario.If Sales Revenue shows a moderate or stable growth while EPS shows an explosive growth. you should know why. A company can get into serious trouble very quickly if it's customers are not paying the bills or if its inventory is piling up in warehouses. Maybe the customers themselves are in financial trouble or maybe the company's operations and financial management are poor. Generally speaking. how fast customers pay their bill. This was mainly on account of good sales of coffee and Infant–nutrition products to Affiliate companies.Days Sales Outstanding Days Sales Outstanding or DSO is also known as "average collection period and receivable days". Accounts Receivable & Inventory GrowthSign up for premium membershipsign up for free membership Watch the Accounts (trade) Receivables (aka Sundry Debtors) and Inventory columns closely. in simple words. 6261. which suggests that customers aren't paying their bills in a timely fashion. DSO does tend to vary a good deal by industry sector. More inventory on the balance sheet means the company is having trouble delivering goods to customers. It's a measure of the average time it takes to collect the cash from sales. it usually means that the company is having trouble collecting money from customers. or to invest in new ventures. If the DSO is rising rapidly.

2 millions.5 per equity share of the face value of Rs.0 per equity share.2 millions. During the year 2013. The Coffee Board once again awarded your Company for being a leading exporter of coffee from India. 1205. 48. 3. amounting to Rs. 2013(amounting to Rs. 36. aggregating Rs. so that we have a broad–based direction of exports. The forthcoming year should see further improvement in this category. This is in addition to the two Interim Dividends for 2013. 10/– each for the year 2013. The same is in line with the financial strategy of the company.5 and the total dividend payout for 2013 is Rs. particularly into a few new markets.0 millions). The total dividend per share for 2013 aggregates to Rs. enabled tax collections at Central and State level Close to 7 20 billions. in aggregate. Contribution To The Exchequer Your Company has been a leading tax payer of the country and over the years has been enabling significant contribution to various taxes.destined for the Indian diaspora picked up during the year. . 4676. paid in August and November.471. the Company through its business. Dividends The Board of Directors has recommended a final dividend of Rs. 12. The strategy to develop new products and target new export regions would continue.

(2) Period of analysis : . • To establish the benchmark for good business practice. • By committing to resources. governmental authorities and business partners. • Conservation of natural resources and minimization of waste.OBJECTIVE OF ANALYSIS AND METHODOLOGY OBJECTIVE OF THE STUDY :: Marketing objectives are compatible with the overall corporate objectives of nestle. both human and financial. • Employing new technologies and processing. • To ensure continuous improvement of nestles environmental performance. • Measuring the cost and benefits to business of its activities METHODOLOGY USED :: (1) Source of data : The data extracted for the purpose of analysis is from a secondary but reliable source. • Total compliance with the laws. Its chief objectives are: • To achieve compatibility with international voluntary standards on environmental management systems. Company’s objective is to be the world’s largest and best branded food manufacturer while insuring that nestle name is synonymous with the products of the highest quality. • To build mutual trust with consumers.

The period taken into consideration for the purpose financial analysis is from years ranging from 2011 to 2015. That is : : 1/1/2011 to 31/12/2011 : 1/1/2012 to 31/12/2012 : 1/1/2013 to 31/12/2013 : 1/1/2014 to 31/12/2014 : 1/1/2015 to 31/12/2015 (3) Technique used for analysis : The technique used for the financial analysis is ratio analysis. They also reveal strong firms and weak firms. It is essentially concerned with the calculation of relationships which after proper identification and interpretation may provide information about the operations and state of affairs of a business enterprise. co-ordination. This assistance in decision-making reduces reliance on guesswork and intuition and establishes a basis for sound judgement. in its basic functions of forecasting. The analysis is used to provide indicators of past performance in terms of critical success factors of a business. . The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. Ratios can assist management.  Makes inter-firm comparison possible: Ratios analysis also makes possible comparison of the performance of different divisions of the firm. Why only ratio analysis is used for financial analysis?  Simplifies financial statements  Facilitates inter-firm comparison: It provides data for inter-firm comparison.  Helps in planning: It helps in planning and forecasting. A ratio is a statistical yardstick by means of which relationship between two or various accounting figures can be compared or measured. control and communications. overvalued and undervalued firms. Ratios highlight the factors associated with with successful and unsuccessful firm. Planning.

It represents the margin of safety or cushion available to the creditors.  Current Ratio : Current ratio may be defined as the relationship between current assets and current liabilities. a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. On the other hand. It is calculated by dividing the total of the current assets by total of the current liabilities. A ratio equal to or near 2 : 1 is considered as a standard or normal or satisfactory. It is also an index of technical solvency and an index of the strength of working capital. The main concern of liquidity ratio is to measure the ability of the firms to meet their short-term maturing obligations. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been a deterioration in the liquidity position of the firm. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. Help in investment decisions: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc. If a firm's current assets include debtors which . A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. This ratio is also known as "working capital ratio". Failure to do this will result in the total failure of the business. The type of ratios analyzed :: (a) LIQUIDITY RATIOS : Liquidity refers to the ability of a firm to meet its short-term financial obligations when and as they fall due. It is an index of the firms financial stability. as it would be forced into liquidation. However. the rule of 2 :1 should not be blindly used while making interpretation of the ratio. It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. The idea of having double the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. Current Ratio = Current Assets / Current Liabilities This ratio is a general and quick measure of liquidity of a firm.  Provides sufficient insight to appraise the future prospect of the firm.

 Quick Ratio : The quick ratio. Though this ratio is definitely an improvement over current ratio. a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. the interpretation of this ratio also suffers from the . Hence. a quick ratio of "one to one" (1:1) is considered to be satisfactory. In the same manner. Although liquidity ratio is more rigorous test of liquidity than the current ratio . Usually a high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. yet it should be used cautiously and 1:1 standard should not be used blindly. examines the ability of the business to cover its short-term obligations from its “quick” assets only (i. also referred to as acid test ratio. Quick Ratio = Quick Assets / Current Liabilities The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. As a convention. It is used as a complementary ratio to the current ratio. A firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventories. On the other hand.e.are not recoverable or stocks which are slow-moving or obsolete. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. As a general rule of thumb suggests that the quick ratio should be around 1. it ignores stock & prepaid expenses). the current ratio may be high but it does not represent a good liquidity position. generally. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid.

same limitations as of current ratio.

Absolute Liquid Ratio : The absolute liquid ratio is the measure of absolute liquid
assets (cash-in-hand, cash at bank, marketable securities, fixed deposits) of the
firm against the current liabilities. A standard of 0.5: 1 absolute liquidity ratio is
considered an acceptable norm. That is, from the point of view of absolute
liquidity, fifty paisa worth of absolute liquid assets are considered sufficient for
one rupee worth of current liabilities. This ratio gains much significance only
when it is used in conjunction with the current and liquid ratios.
Absolute Liquid Ratio = Absolute Liquid Assets / Current liabilities

(b) SOLVENCY RATIOS :
The ratios indicate the degree to which the activities of a firm are supported
by creditors’ funds as opposed to owners. The relationship of owner’s equity
to borrowed funds is an important indicator of financial strength. The debt
requires fixed interest payments and repayment of the loan and legal action
can be taken if any amounts due are not paid at the appointed time. A
relatively high proportion of funds contributed by the owners indicates a
cushion (surplus) which shields creditors against possible losses from default
in payment.
Note: The greater the proportion of equity funds, the greater the degree of
financial strength. Financial leverage will be to the advantage of the ordinary
shareholders as long as the rate of earnings on capital employed is greater
than the rate payable on borrowed funds.
The following ratios can be used to identify the financial strength and risk of
the business.

Equity Ratio : It is also known as equity ratio or net worth to total assets ratio.
This ratio relates the shareholder's funds to total assets. Proprietary/Equity ratio
indicates the long-term or future solvency position of the business. This ratio
throws light on the general financial strength of the company. It is also regarded as
a test of the soundness of the capital structure. Higher the ratio or the share of
shareholders in the total capital of the company, better is the long-term solvency

position of the company. A low equity ratio will include greater risk to the
creditors.
Equity Ratio = Shareholders funds / Total Assets

Fixed Assets to Shareholders fund Ratio : This ratio establishes the relationship
between fixed assets and shareholders funds. The purpose of this ratio is to
indicate the percentage of the owner's funds invested in fixed assets. The ratio of
fixed assets to net worth indicates the extent to which shareholder's funds are sunk
into the fixed assets. Generally, the purchase of fixed assets should be financed by
shareholder's equity including reserves, surpluses and retained earnings. If the
ratio is less than 100%, it implies that owners funds are more than fixed assets and
a part of the working capital is provide by the shareholders. When the ratio is
more than the 100%, it implies that owners funds are not sufficient to finance the
fixed assets and the firm has to depend upon outsiders to finance the fixed assets.
There is no rule of thumb to interpret this ratio.
Fixed Assets to Shareholders’ Fund = Fixed Assets / Shareholder’s Fund

Current Assets to Shareholders Fund Ratio : This ratio establishes the relationship
between current assets and shareholder's funds. The purpose of
this ratio is to calculate the percentage of shareholders funds invested in
current assets. Different industries have different norms and therefore, this
ratio should be studied carefully taking the history of industrial concern into
consideration before relying too much on this ratio.

Current Assets to Proprietors Funds = Current Assets / Proprietor's Funds

Debt-Equity Ratio of Hero MotoCorp: Debt-to-Equity ratio indicates the
relationship between the external equities or outsiders funds and the internal
equities or shareholders funds. It is also known as external - internal equity ratio.
It is determined to ascertain soundness of the long term financial policies of the
company. Debt to equity ratio indicates the proportionate claims of owners and the
outsiders against the firm’s assets. The purpose is to get an idea of the cushion
available to outsiders on the liquidation of the firm. However, the interpretation of
the ratio depends upon the financial and business policy of the company. The
owners want to do the business with maximum of outsider's funds in order to take
lesser risk of their investment and to increase their earnings (per share) by paying
a lower fixed rate of interest to outsiders. The outsider creditors on the other hand,
want that shareholders (owners) should invest and risk their share of proportionate
investments. A ratio of 1:1 is usually considered to be satisfactory ratio although
there cannot be rule of thumb or standard norm for all types of businesses.

Theoretically if the owner’s interests are greater than that of creditors, the
financial position is highly solvent. In analysis of the long-term financial position
it enjoys the same importance as the current ratio in the analysis of the short-term
financial position.
Debt Equity Ratio = External Equities / Internal Equities

Debt-Service Ratio of Hero MotoCorp : This ratio relates the fixed interest
charges to the income earned by the business. It indicates whether the business has
earned sufficient profits to pay periodically the interest charges. The debt service
ratio is very important from the creditor’s point of view. It indicates the number of
times interest is covered by the profits available to pay interest charges. It is an
index of the financial strength of an enterprise. A high debt service ratio assures
the creditors a regular and periodical interest income. But the weakness of the
ratio may create some problems to the financial manager in raising funds from
debt sources.

Debt-Service Ratio = Net Profit Before Interest and Tax / Fixed Interest Charge
(c) PROFITABILITY RATIOS :
Profitability is the ability of a business to earn profit over a period of time. Although the
profit figure is the starting point for any calculation of cash flow, as already pointed out,
profitable companies can still fail for a lack of cash.
Note: Without profit, there is no cash and therefore profitability must be seen as a
critical success factors.
-A company should earn profits to survive and grow over a long period of time.
-Profits are essential, but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximising profits, irrespective of social
consequences.
Profitability is a result of a larger number of policies and decisions. The profitability
ratios show the combined effects of liquidity, asset management (activity) and debt
management (gearing) on operating results. The overall measure of success of a business
is the profitability which results from the effective use of its resources.

Gross profit ratio: It is the ratio of gross profit to net sales expressed as a
percentage. It expresses the relationship between gross profit and sales. Gross
profit ratio may be indicated to what extent the selling prices of goods per unit
may be reduced without incurring losses on operations. It reflects efficiency with
which a firm produces its products. As the gross profit is found by deducting cost
of goods sold from net sales, higher the gross profit better it is. There is no
standard GP ratio for evaluation. It may vary from business to business. However,

It measures the cost of operations per rupee of sales. A business that has a higher operating margin than its industry’s average tends to have lower fixed costs and a better gross margin. Operating Ratio = [(Cost of goods sold + Operating expenses) / Net sales]×100  Operating profit ratio: The operating profit ratio is another measurement of management’s efficiency. This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition. Obviously.the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends. etc are excluded. in some firms. Gross Profit Ratio = (Gross profit / Net sales) × 100  Operating Ratio: Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is expressed as percentage. higher the ratio the better is the profitability. Moreover. etc. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. profit on sales of fixed assets and losses on sales of fixed assets. non-operating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results.  Net profit ratio: Net profit ratio is the ratio of net profit (after taxes) to net sales. But while interpreting the ratio it should be kept in mind that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales. It is generally expressed in percentage. Thus. the firm shall not be able to achieve a satisfactory return on its investment. This is closely related to the ratio of operating profit to net sales Operating ratio shows the operational efficiency of the business. The net profits are obtained after deducting income-tax and. This pricing flexibility provides an added measure of safety during tough economic times. Net Profit Ratio = (Net profit / Net sales) × 100 . non-operating expenses and incomes are excluded from the net profits for calculating this ratio. The ratio is very useful as if the net profit is not sufficient. NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. It compares the quality of a company’s operations to its competitors. low demand. generally. The two basic components of the net profit ratio are the net profit and sales. incomes such as interest on investments outside the business. Lower operating ratio shows higher operating profit and vice versa. which gives management more flexibility in determining prices.

It is the relationship between net profit (after interest and tax) and share holder's/proprietor's fund. higher the ratio. Interpretation of the ratio is similar to the interpretation of return on investments and higher the ratio better is. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased. Net profit means net income after payment of interest and income tax because those will be the only profits available for share holders. The earnings per share is a good measure of profitability and when compared with EPS of similar companies. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). this ratio indicates the extent to which this primary objective of businesses being achieved. As the primary objective of business is to maximize its earnings. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. The rate of dividends varies with the availability of profits in case of ordinary shares only. Return On Investment : It is the ratio of net profit to share holder's investment. This ratio is one of the most important ratios used for measuring the overall efficiency of a firm. They assume the highest risk in the company. Return on Equity Capital = [(Net profit after tax − Preference dividend) / Equity share capital] × 100  Earning Per Share ratio: EPS Ratio is a small variation of return on equity capital ratio and is calculated by dividing the net profit after taxes and preference dividend by the total number of equity shares. This ratio is of great importance to the present and prospective shareholders as well as the management of the company. The ratio is generally calculated in percentage. This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. it gives a view of the comparative earnings or earnings power of the firm. [Earnings per share (EPS) Ratio = (Net profit after tax − Preference dividend) / No. This ratio establishes the profitability from the share holders' point of view. better are the results. of equity shares (common shares)] . ordinarily shareholders are the real owners of the company. Shareholder's funds include equity share capital. Return on investment = [Net profit (after interest and tax) / Net worth] × 100  Return on Equity Capital : In real sense. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company.The two basic components of this ratio are net profits and shareholder's funds. As the ratio reveals how well the resources of the firm are being used. The interfirm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher. (preference share capital) and all reserves and surplus belonging to shareholders.

Activity ratios are therefore used to assess how active various assets are in the business. P/E ratio = market price per share/earning per share  Dividend Payout Ratio : It is calculated to find the extent to which earnings per share have been used for paying dividend and to know what portion of earnings has been retained in the business. It is an important ratio because ploughing back of profits enables a company to grow and pay more dividends in future. Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price. Generally.  Stock Turnover Ratio : Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business. Note: Increased turnover can be just as dangerous as reduced turnover if the business does not have the working capital to support the turnover increase. It is very essential to keep sufficient stock in business. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. But the level of inventory should neither be too high nor too low. assets will be idle as it is impossible to buy and sell fixed assets continuously as turnover changes. the business needs a high turnover. The payout ratio is the indicator of the amount of earnings that have been ploughed back in the business. A too high inventory means higher carrying costs and higher risk of stocks becoming obsolete whereas too low inventory may mean the loss of business opportunities. the higher will be the amount of earnings ploughed back in the business and vice versa. A lower payout ratio or higher retained earnings ratio means a stronger financial position of the company.This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular . investors in the business would rather take their money and place it somewhere else. higher the price earning ratio the better it is. If the P/E ratio falls. Unless the business continues to generate high turnover. overtrading occurs. In order for the assets to be used effectively. The ratio is useful in financial forecasting. Price Earning Ratio: Price earning ratio (P/E ratio) is the ratio between market price per equity share and earning per share. It also helps in knowing whether the share of a company are under or over valued. The lower the payout ratio. As turnover increases more working capital and cash is required and if not. Dividend Payout Ratio = Dividend per Equity Share / Earnings per Share (d) ACTIVITY RATIOS : If a business does not use its assets effectively. the management should look into the causes that have resulted into the fall of this ratio.

accumulation of obsolete and slow moving goods and low profits as compared to total investment. Similarly. This ratio indicates the number of times the debtors are turned over a year. It may also be mentioned here that there are no rule of thumb or standard for interpreting the inventory turnover ratio. low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. The inventory turnover ratio is also an index of profitability. dull business. The effect of a liberal credit policy may result in tying up substantial funds of a firm in the form of trade debtors (or receivables). a low ratio signifies low profit. This ratio indicates whether investment in stock is within proper limit or not. Sometimes.The working capital turnover ratio measures the . In simple words it indicates the number of times average debtors (receivable) are turned over during a year. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm. Credit is one of the important elements of sales promotion. The norms may be different for different firms depending upon the nature of industry and business conditions. The volume of sales can be increased by following a liberal credit policy. Debtor’s turnover ratio indicates the velocity of debt collection of a firm. However the study of the comparative or trend analysis of inventory turnover is still useful for financial analysis. Stock turnover ratio measures the velocity of conversion of stock into sales. the lesser amount of money is required to finance the inventory. Similarly a high turnover ratio may be due to under-investment in inventories. It is the reliable measure of the time of cash flow from credit sales. A low inventory turnover implies over-investment in inventories. Stock Turnover Ratio = Cost of goods sold / Average inventory at cost  Debtor’s Turnover Ratio: A concern may sell goods on cash as well as on credit. Hence. a high inventory turnover ratio may not be accompanied by relatively high profits. stock accumulation. It is expressed in number of times. Usually a high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold. poor quality of goods. Stock turn over ratio/Inventory turn over ratio indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory.period. where a high ratio signifies more profit. A low inventory turnover ratio indicates an inefficient management of inventory. Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors  Working Capital Turnover ratio: It indicates the velocity of the utilization of net working capital. The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost. This ratio represents the number of times the working capital is turned over in the course of year. the liquidity position of concern to pay its short term obligations in time depends upon the quality of its trade debtors. Trade debtors are expected to be converted into cash within a short period of time and are included in current assets.

60177 0. Lower ratio means under-utilization of fixed assets.96876 Dec'15 1.03570 5 Dec'13 Dec'14 1.62496 8 0. If the information about cost of sales is not available the figure of sales may be taken as the numerator. But a very high working capital turnover ratio may also mean lack of sufficient working capital which is not a good situation.23983 3 0.54018 9 0. in the data interpreted for the current ratio will be shown in this manner : Dec'11 1.84002 8 . Working Capital Turnover Ratio = Cost of goods sold / Net Working Capital  Fixed Assets Turnover Ratio: It is also known as sales to fixed assets ratio.65281 2 (ii) The firm’s performance pitched with the industrial performance and competitor (BRITANIA). A high ratio indicates efficient utilization of working capital and a low ratio indicates otherwise.07341 7 0.60128 7 0. For example. The ratio is calculated by using following formula: Fixed Assets Turnover Ratio = Cost of goods sold / Net Fixed Assets (1) Method used for interpretation : The interpretation of the various ratios are done at two levels : (i) The individualistic firm’s performance from years 1/1/20011-31/12/011 to 31/12/15.62496 8 1.54018 7 9 0.08722 0. This ratio measures the efficiency and profit earning capacity of the concern. in the case of interpreting the current ratio the data interpreted will be shown in this manner : Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 0. For example.137112 0. greater is the intensive utilization of fixed assets.08251 (4) Data of Industry : Dec'12 1.60177 1.60128 0. Higher the ratio.efficiency with which the working capital is being used by a firm.65281 2 0.69793 2 0.00217 3 1.

it stipulated that the value of the ship for limitation purposes should be assessed at not less than £15 per ton . The Members are both the insurer and the insured. for the first time. The funds of the Mutual are invested and the investment return is used to benefit the Members. Five years later Class 3 of Britannia took over the protection risks which had until then been covered by the Shipowners' Mutual Protection Society. In 1886 Britannia became a Protection & Indemnity (P&I) Club by treating cargo or 'indemnity' risks separately from the other 'protection' risks. the day the UK Merchant Shipping Act 1854 came into force. The first two Classes were subsequently wound up but Class 3 has continued to the present day to cover the liability risks of shipowners. Haritage Foods Ltd. the Shipowners' Mutual Protection Society commenced business in London as the first shipowners' Protection Association. Britannia Kwality Ltd. Now. The performance of the firm’s ratios with respect to industrial ratios for the period 09 to 13 is a relevant yardstick for gauging the firm’s overall performance. GlaxosmithKlin Consumer Helthcare Ltd. which is registered in the United Kingdom (see details at bottom of the page).many ships in fact had a lower value and the shipowner's liabilities potentially exceeded the value of his ship. reference number 202047. the cumulative data of the following firms are taken into consideration ::       Nestle India Ltd. Over succeeding years cover was widened to meet the increasing liabilities of shipowners. The fundamental distinction between a Mutual and other types of insurance company is that a Mutual is not trying to make a profit. . which the Protection Society met. : Britannia is a Mutual Insurance Association of shipowners throughout the world. The Britannia Steam Ship Insurance Association was formed in 1871 as a mutual insurance association for steamships with Classes 1 and 2 covering hull and machinery risks and freight risks respectively. with a measure of limitation of liability for loss of life and personal injury . not covered by the conventional marine market. Mutual insurance is collective self-insurance which operates at cost.For arriving at a rational interpretation the industry’s data is imperative. Formation and Development On May 1 1855. (4) Profile of Britania India Ltd. It was such liabilities. for calculating the industrial ratios. DFM Foods Ltd. authorised by the Prudential Regulation Authority ("PRA") and is regulated by the PRA and the Financial Conduct Authority ("FCA"). has no shareholders and exists purely for the benefit of its Members. Whilst the 1854 Act did provide shipowners.

(7) Why Britannia Ltd. including many who are exclusive to Britannia.  A world-wide network of correspondents. Strength and Quality Britannia is determined to maintain a position at the forefront of the P&I insurance world.Growth Britannia has grown substantially in the last 50 years.  Financial strength.  A successful investment policy which has made a substantial contribution to the reduction of Members' costs. marine and commercial expertise in the active management of claims so as to minimise Members' ultimate liabilities. A thorough understanding of Members' businesses backed up by a realistic risk management programme. accounting for over 10% of the world merchant fleet. with many of the world's best-known shipowners as Members. In summary. In 1960 the gross tonnage entered in the Association was 3 million.  The application of legal. The principal factors which have governed its successful progress and which will provide the foundation for its future development are:    A high quality membership selected from the world's leading shipowners. underpinned by total assets of over US$1 bn . the objective is to provide a strong membership with high quality service at low cost. Prudent underwriting leading to unrivalled predictability of insurance cost. who provide assistance to Members on all aspects of P&I. Service. By 1970 it had reached 10 million and by 1980 had quadrupled to 40 million. Britannia now insures approximately 138 million tons of owned and chartered tonnage and is one of the largest P&I Clubs. is chosen to be a competitor for comparison : .  A highly motivated management team which keeps close control on all aspects of the business.

the current ratio should be atleast 2 that is the current assets should meet current liabilities at least twice. by seeing the current ratios of Nestle India Ltd. will provide us with a rationale of appraising the futuristic position of NESTLE LTD. also is in a phase of sales that is going neck to neck with Britania Ltd. : Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 0. can maintain and improve the position. the managerial framework over BRITANNIA LTD. They can curtail each and every negative aspect and follow some of the positives of BRITANNIA LTD. in the industry as it tries to extend its advantage over BRITANNIA LTD. Additionally. that it has substantial presence in India as well as it is trying to expand globally. . will have slightly more market capitalization as BRITANNIA because of their low price skill sets and R&D techniques. NESTLE LTD.65281 2 As per the rule of thumb. from 2009 to 2013 we can easily examine that there is decreasing trend from 2010-12.60128 7 0. the policies followed.As we can reckon from the above profile BRITANNIA LTD. market capitalization and revenue centers than Nestle India Ltd. Now. .. The firm has greater exposure to the market.60177 0. so as to improve its operations. It also has 2 more manufacturing plants than its competitor.. Therefore comparing Nestle India Ltd.54018 9 0. Hence NESTLE INDIA LTD. Nestle India Ltd. In the future.62496 8 0. FINANCIAL ANALYSIS USING RATIO ANALYSIS LIQUIDITY RATIOS :: Current ratio of Nestle India Ltd.

0.84002 8 .62496 8 1. COMPARISON OF CURRENT RATIO WITH INDUSTRY AND BRITANNIA LTD. it had a weak liquid figure.23983 3 0. that is 0. it had a weak liquid figure and there was an increase in current liabilities by 86% from 2011 and hence the current ratio increased to a high of 0. In FY12. The firm was having a weakest current ratio as compared with the others i.03570 5 Dec'13 Dec'14 1.69793 2 0.07341 7 0. Current Ratio Dec'11 Industry 1. the current ratio showed a negetive sign and the firm managed to attain a current ratio of 0. 0.60 and it could not manage to sweep through its current liabilities.65281 2 0.54. This figure can be explained with the fact that the firm was trading with more current liabilities in its books. In 2012 also.Current Ratio (nestle Ltd. it was as same as in 2011.62 in 2012.137112 0.00217 3 1.08722 Nestle Ltd.54018 7 9 0.96876 Dec'15 1. In FY11.60177 Britania 1.e.) 6 5 4 Nestle ltd. as we compare the current liabilities of all the years.08251 Dec'12 1.60128 0. 3 2 1 0 As we can observe that the firm was having a low current ratio in FY09.6 which is lower than the standard.

Its current ratio position has been decreasing from 1. It just managed to cover up its current liabilities in 2009 and has to improve on its current ratio. On the other hand.38578 7 .5 Britania 2 Nestle Ltd. has always been underperforming and not being able to maintain a high current ratio above the industry benchmark.21816 9 Dec'15 0. This shows need of proper management of working capital as per current ratio performance. Industry 1. has been managing to fulfil its current liabilities and trying to match the industry standards and is above the levels of Nestle India Ltd.69 in 11.Current Ratio of Nestle vs britania vs industry 3 2. BRITANNIA LTD.29615 6 Dec'13 0.26953 Dec'12 0. :: Dec'11 0.5 0 As we can observe from the above chart that Nestle India Ltd.5 1 0.27018 5 Dec'14 0. Quick Ratio of Nestle India Ltd.08 in 2009 to .

38 mark in 2013.4 0. 0.1 0. has showed a decreasing trend from 2011 to 2014 and then stabilized around the 0.25 0.05 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As the quick ratio represents the ability of the firm to cover its current liabilities without considering its inventories and it also provides us with an insight much clear and deeper than the current ratio. Now.45 0.3 Nestle Ltd. as we can observe from the chart above that the quick ratio of Nestle India Ltd. 5 Quick Ratio 4 Nestle ltd.2 0. 0.Quick Ratio Nestle Ltd.is always following the same trend as that of the current ratio and the there is a slight difference .35 0. 3 2 1 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 This chart above in-depth interprets that the quick ratio of Nestle India Ltd.15 0. Current Ratio vs Quick Ratio 7 6 Nestle Ltd. But it is a bit higher than the standards and shows that the firm is dependent on its inventories for clearing its current liabilities and the firm needs to have an efficient inventory management. It shows the performance of quick assets in compensating the current liabilities and presents us with weight of funds blocked in inventories.

0.21816 0.26953 Britania 20. marketable securities. The difference reflects a need for improvement in the liquidity front for Nestle India Ltd.3185 Dec'12 0.3658 8.between the two ratios. A standard of . COMPARISON OF QUICK RATIO WITH INDUSTRY AND BRITANNIA LTD.96524 9 11.10248 7 Dec'14 0. cash at bank.10365 Dec'12 0. Quick Ratio Dec'11 Industry 0.14574 6 Dec'13 0.73889 Nestle Ltd.934811 0.27189 8 The Super Quick ratio is the measure of Super Quick Assets (cash-in-hand. Industry 10 5 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the chart above that Nestle India Ltd.29615 6 15.20319 3 Quick Ratio of Nestle vs Britannia vs industry 25 20 Britania 15 Nestle Ltd.3515 5 Dec'13 Dec'14 Dec'15 0. which is below than the industrial standards Super Quick Ratio of Nestle India Lttd.69808 8 0.as it should clear its current liabilities without liquidating its inventories. has always performed below the industry standards and has displayed it with moderate quick ratios. :: Dec'11 0.27018 0. This also reflects in a need for efficient planning in investing funds into its inventory and having least dependency on inventory for clearing its current liabilities. fixed deposits) of the firm against the current liabilities.75373 7 0.78285 0.38578 5 9 7 10.10234 4 Dec'15 0.

25 0.5: 1 Super Quick Ratio is considered an acceptable norm.27189 8 0. Super Quick Ratio Dec'11 Industry 0. The total current liabilities decreased by of the firm.15 0.) 0. It was as low as 0.10365 Britania 0. which was higher than the total current liabilities of that year. the firm again striked with Super Quick ratio recovering back from its lows and gaining a respectful Super Quick of position of 0. This can explained by introduction of heavy amount into fixed deposits and increase in cash balances as compared with 12.1 0.39073 6 0. That is.3 0. In 2015.0.31465 Nestle Ltd.04592 9 Dec'13 0.02752 3 Dec'14 0. from the point of view of absolute liquidity. which means the firm could not easily overcome its current liabilities from its absolute liquid assets.05 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 The firm was having a low absolute liquid ratio. COMPARISON OF SUPER QUICK RATIO WITH INDUSTRY & BRITANNIA LTD.48121 4 0.10234 4 0. 0.14574 6 0. 0.04579 Dec'12 0.25155 9 0. Super Quick Ratio ( Nestle Ltd.06669 .31532 2 0.07587 1 Dec'15 0. This low figure can explained by the fact that the firm had removed a quantum amount from fixed deposits.10.2 Nestle Ltd. fifty paisa worth of Super Quick Assets are considered sufficient for one rupee worth of current liabilities.10248 7 0.27.

Super Quick Ratio of Nestle vs Britania vs Industry 0. Bajaj Auto has been always an outperformer in its absolute liquid ratio.3 0.6 Nestle Ltd.2 0.53 3 Dec'14 1726. this means the firm depended upon its other sources of current assets. SOLVENCY RATIOS :: Debt Equity Ratio of Nestle India Ltd.91 4 . And through analyzing the balance sheet. which is not a healthy sign for its liquidity front.419 Dec'12 777. is at higher than the industrial standards.166 5 Dec'13 1200.5 Industry 0.7 Britania 0.8 0.Its above the industrial standard and was able to fulfil the 0. it was only weak in its absolute liquid assets in 2013 which was still higher than the industry.9 0.5 standard norm in 20011.(prompt in keeping making short term investment in deposits) On the other hand.00 3 Dec'15 2300.1 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the chart that Nestle India Ltd.The firm had low Super Quick Assets in 2013.: Dec'11 500. 0. It recovered its strong absolute liquidity integrity in 2015. it can be assumed that the firm has covered up its current liabilities by using its advances and loans.4 0.

COMPARISON WITH INDUSTRY AND BAJAJ AUTO Debt Equity Ratio Dec'11 Industry 1828.937 4 Dec'15 5335.585 5 . 2500 2000 1500 Nestle Ltd. In year 2013. This presents us a fact that the proportion of the debt in the firm’s capital structure has not been increasing than compared with shareholder’s equity. the debt-equity ratio of 500.92 5 2300. the debt. 500.53 showing an increase as compared with 2012. 1000 500 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the above chart there is increasing trend in the debt-equity ratio.96 6 1200. the debt equity ratio increased to 777. Let's take a closer look: In 2011.612 2 Dec'13 2974. This means that the proportion of debt increased substantially because of the secured loans.41 was showing a strong solvency figure with more funds invested by the shareholders than the creditors.205 3 Dec'14 3969.28 7 777. it has increased from 500.53 3 543.419 Britania 393. The shareholder funds were contributing more in the total liabilities of the firm as compared to the debt portion In 2013.75 Nestle Ltd.Debt Equity Ratio Nestle Ltd.00 3 644.41 in 2011 to 0.5 in 2015.91 4 870.16 showing a change compared with the previous year.equity ratio increased to 1200.166 5 453. This figure represents the fact that contribution of creditors in the capital structure of firm has not increased from that of the shareholders.712 Dec'12 2238.01 2 1726.

is that the firm will experience a high debt-interest burden and will have to generate the extra sales to cover-up the extra burden of debt. ACTIVITY RATIOS :: Debtors Turnover Ratio of Nestle India Ltd. we can say that Nestle India Ltd.6537 Dec'12 51. But BRITANNIA is highly leveraged in the industry and enjoys the advantages of a highly leveraged firm. By seeing this position. its following the industrial standards and is way above its peer. has a strong growth position as far as debtequity ratio is concerned.998 7 .: Dec'11 53. The creditors are liable to lesser risk than the shareholders. The disadvantage for Nestle India Ltd. The firm has no need to perform in each and every aspect to keep its creditors satisfied on their nominal investment.2575 8 Dec'15 107. is all together on a samelevel in its debt-equity ratio. 5000 Industry 4000 3000 2000 1000 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the chart that Nestle India Ltd.7372 7 Dec'13 47. It seems that it is following a policy to do the business with maximum of outsider's funds in order to take lesser risk of their investment and to increase their earnings (per share) by paying a lower fixed rate of interest to outsiders.0514 1 Dec'14 64.Debt Equity Ratio of Nestle vs Britania vs Industry 9000 8000 7000 Britania 6000 Nestle Ltd.

6866 51.4779 .This represents that the management is following.7372 7 50. COMPARISON WITH INDUSTRY AND BRITANNIA LTD.4985 6 7 64.DebtorsTurnover Ratio (Nestle Ltd.6063 1 Dec'13 14.2575 107.0393 17.6537 Britania 49.99 from 2012 to 2013.998 8 7 54.8422 3 Dec'14 Dec'15 12. 60 40 20 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the above chart that the debtor’s turnover ratio has followed an overall decreasing trend from 53.6075 7 47.45 in 2011 and then increased by 64.) 120 100 80 Nestle Ltd.65 in 2009 to 47.0132 7 117.0514 1 54. maintaining and implementing an optimum credit policy for its debtor’s.9772 17.25 to 107.1906 Nestle Ltd. 53.:: Debtors Turnover Ratio Dec'11 Dec'12 Industry 21.

This shows that the management has implemented an optimum credit policy for generating sales as well as converting the debtors into cash as soon as possible in the industry. Also the Nestle India Ltd.621133 Dec'13 3.91 of industry. has followed the respective trend of the industry but in an amplified manner and is way above its Industry. 150 Industry 100 50 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the above chart thatNestle India Ltd. Inventory Turnover Ratio of Hero MotoCorp: Inventory Turnover Ratio Nestle Ltd.76089 9 Dec'15 6. Dec'11 Dec'12 3.65 vs 21. has superior average debtor’s velocity. This shows a positive sign for the management’s activity as per debtor’s turnover ratio is concerned. Nestle India Ltd has better average debtor’s turnover ratio of 53. Hero MotoCorp has a better debtor’s turnover ratio performance as compared with the industry.64194 1 Dec'14 3.Debtors Turnover Ratio of Nestle vs Britania vs Industry 300 250 Britania 200 Nestle Ltd.18264 .46448 3.

90539 3 Britania Dec'13 4.5977 2 Inventory Turnover Ratio Of Nestle vs Britania vs Industry 30 25 20 15 10 5 0 Britania Nestle Ltd.08892 3 3.46448 3.06013 5 Industry 3.18264 10.Inventory Turnover Ratio Nestle Ltd.76089 9 6.51806 8 3. 7 6 5 Nestle Ltd.25359 5. Industry . 3.621133 6.88754 2 Dec'14 4.:: Inventory Turnover Ratio Dec'11 Dec'12 4. This is a positive sign for the management and their effective implementation of their efficient sales and inventory management policies as per stock turnover ratio is concerned COMPARISON WITH INDUSTRY AND BRITANIA LTD.18 in 2013 with increase in efficiency of converting its stock into sales.72579 Nestle Ltd. 4 3 2 1 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As per the chart the firm has shown a respectable performance in converting its inventory into stock.46 in 2011 to 6. The ratio has followed an increasing trend from 3.95630 4 Dec'15 8.64194 1 5.00318 1 6.

5 -5 As we can observe from the above chart that the working capital turnover ratio has performed in an overall decreased trend from -2. : Working Capital TurnOver Ratio Nestle Ltd Dec'11 -2.71408 Dec'15 -4.2354 30.84629 Dec'14 -2. Working Capital Turnover ratio of Nestle India Ltd.9425 Dec'12 -3.75513 Working Capital Turnover Ratio (Nestle Ltd. The firm has great efficiency in their inventory management and overall sales policies.10% in 2012 with a decrease.5 -4 -4.5 Dec'10 Dec'11 Dec'12 Dec'13 -1 -1.:: Working Capital TurnOver Ratio Industry Dec'11 Dec'12 Dec'13 15.7563 Dec'14 8.As we can observe from the chart above that Nestle India Ltd. in its management activity as far as the stock turnover ratio is concerned. The ratio has travelled a reverse path from 2011 to 2015 with overall decreasing in 2011 to 2015.60581 2 Dec'15 10.1785 1 .10738 Dec'13 -2.94 in 2011 to -3. is very good in respect to the stock-turnover ratio with an average stock velocity less than that of its peer and the industry.5 -3 -3.3433 28. This is a positive sign for Nestle India Ltd. The firm does not have positive working capital turnover ratio and means that the majority percent of net working capital requirements are not covered by the sales COMPARISON WITH INDUSTRY AND BRITANNIA LTD.) 0 Dec'09 -0.5 Nestle Ltd -2 -2.

This is a sign of improvement for the management of Nestle India Ltd.9425 47.10738 -21.38 -1329. unlike its peer which has shown volatile performance of working capital ratio. Fixed Assets Turnover Ratio of Nestle India Ltd. has followed the pattern of the industrial standards in case of working capital turnover ratio.with respect to the working capital turnover ratio.84629 -9.69 -1247.1443 -2. Britania -2. Dec'11 894.6396 orking Capital Turnover Ratio of Nestle vs Britania vs Indust 80 60 Britania 40 Nestle Ltd.3072 -2.514 Dec'12 Dec'13 Dec'14 Dec'15 -1087.78 -1796.75513 -24.: Fixed Assets Turnover Ratio Nestle Ltd.Nestle Ltd.61 .0014 -3. The firm may not have high working capital ratio as that of the industry but has a sustained its turnover ratio in a stable manner.71408 -33. Industry 20 0 -20 -40 As we can observe from the chart that Nestle India Ltd.9697 -4.

-800 -1000 -1200 -1400 -1600 -1800 -2000 As we can observe from the chart that the fixed assets turnover ratio as shown an decreasing trend from 894.02 -5456.38 -1329. The firm is operating at a high fixed assets turnover ratio. COMPARISON WITH INDUSTRY AND NESTLE INDIA LTD:: Fixed Assets Turnover Ratio Industry Nestle Ltd.514 548.57 -821. which means that the firm has high volume of sales as compared to the value of its fixed assets.69 -1247.51 894.78 -1796.542 -775.51 in 2011 to -1796. Britania Dec'11 3575.Fixed Assets Turnover Ratio (Nestle Ltd.06 -5262 -7038.61 in FY13 with a change.) 0 -200 -400 -600 Nestle Ltd.067 Dec'12 Dec'13 Dec'14 Dec'15 -4422. This is a positive aspect as per the trend analysis is concerned with respect to the fixed assets turnover ratio of the firm and will have a better insight after comparing the firm with its peer and the industry. This represents that the sales of the firm are doing well and the fixed assets are utilized efficiently.61 -643.506 -816.34 -1087.219 .

This is a negetive sign for the firm as per the ratio is concerned and the management has not worked forward efficiently. is an outperformer in its fixed assets turnover ratio. Industry -6000 -8000 -10000 -12000 As we can observe from the chart. Proprietary Ratio of Nestle India Ltd. This means that the fixed assets of the firm are unutilized and the sales volumes of the firm are not under pressure. Dec'11 Dec'12 1 1 Dec'13 0. The ratio is way below the industrial standards and it has not done well in terms of its peer.63133 1 Dec'15 0.Fixed Assets Turnover Ratio of Nestle vs Britania vs Industry 0 -2000 Britania -4000 Nestle Ltd. Nestle India Ltd. This shows that the management of the firm has not worked in generating more volumes of sales and unutilized its fixed assets in a more efficient manner. The firm has to stabilise in the coming years.56750 7 Dec'14 0.: Proprietary Ratio Nestle Ltd.66570 8 . By analyzing the chart we can now reckon distinctly that Nestle has not a good performance in its fixed assets turnover ratio.

669011 0.4798 0.) 1. COMPARISON WITH INDUSTRY AND BRITANNIA LTD:: Proprietary Ratio Dec'11 Industry 0.66570 8 0.7368 Dec'12 0.6 0.66076 4 0.Proprietary Ratio( Nestle Ltd.5 2 1.76659 Dec'15 0. 0.73983 7 1 1 Nestle Ltd.5 1 0.511243 Dec'13 Dec'14 0.71322 8 0. Britania 0.56750 0.66 in 2015 with a change which means that the firm has high volume of sales as compared to the value of its Proprietary Ratio.8 0.63133 7 1 0.2 0 As we can observe from the chart that the Proprietary ratio as shown an decreasing trend from 1 in 2011 to 0.5 0 Britania Nestle Ltd.2 1 Nestle Ltd. This is a positive aspect as per the trend analysis is concerned with respect to the net sales ratio of the firm and will not have a better insight after comparing the firm with its peer and the industry.94864 9 0. Industry . This represents that the sales of the firm are not doing well and the Propriety is not utilized efficiently.4 0.99461 6 Proprietary Ratio of Nestle vs Britania vs Industry 2.

00% of net sales in 2015.9931 Dec'12 45. . This shows that the management of the firm has not worked in generating more volumes of sales and unutilized its fixed assets in a more efficient manner.7520 6 Dec'15 50. The ratio is way below the industrial standards and it has not done well in terms of its peer. Gross Profit Ratio of Nestle India Ltd.5% of net sales in 2011 to 50. The firm has to stabilise in the coming years. This is a negetive sign for the firm as per the ratio is concerned and the management has not worked forward efficiently.0058 8 Gross Profit Ratio (Nestle) 51 50 49 48 Nestle 47 46 45 44 43 As we can observe from the above chart that the gross profit ratio of Nestle India Ltd. the cost of goods sold decreased from 2011 to 2015. Nestle India Ltd.1873 3 Dec'14 49.: Dec'11 46. This steady growth in gross profit ratio can be explained from the fact that as the net sales decreased from 2011 to 2015 and on the other hand. This means that the total of the firm are unutilized and the sales volumes of the firm are not under pressure. is an outperformer in its Proprietary ratio. By analyzing the chart we can now reckon distinctly that Nestle has not a good performance in its Proprietary ratio. has shown a less over steady growth from 46.4551 8 Dec'13 46.As we can observe from the chart.

: Net Profit Ratio Nestle Ltd. 46.8133 2 Dec'15 12.0058 8 38.2132 2 Dec'15 42.4684 Dec'12 37.8074 Nestle Ltd. The company has been able to generate sufficient growth rate in nets sales to maintain its high gross profit ratio in the industry.7385 13. has always performed with gross profit ratios similar as compared with the industrial standards.5149 3 Dec'13 40.4413 2 46.COMPARISON WITH INDUSTRY AND BRITANNIA LTD.6818 7 49. This is a positive sign for Nestle in case of general profitability position as it maintain its high gross profit margins from 2011 to 2015.: Gross Profit Ratio Dec'11 Industry 39.7870 8 50. Dec'11 Dec'12 12.3599 2 Gross Profit Ratio of Nestle vs Britania vs Industry 140 120 Britania 100 Nestle Ltd. Net profit ratio of Nestle India Ltd.7520 6 36.0772 Dec'13 12.1347 7 Dec'14 42.8363 8 Dec'14 12.4551 8 25.9931 Britania 26.1873 3 35.7985 4 45.2747 4 . 80 Industry 60 40 20 0 As we can observe from the chart above that Nestle India Ltd.

COMPARISON WITH INDUSTRY AND BRITANNIA LTD. the ratio showed a dip and decreased in 2012 net sales in 2012.8 As we can examine from the above chart that the net profit ratio which is represented by the percentage of net sales has shown an increasing trend from 12.86344 . But in 2011.34833 5 12.73 in 2011 to 13.:: Net Profit Ratio Dec'11 Industry 9.8133 2 Dec'15 9.4 12.17320 6 12.2 13 12.8363 8 3.75417 9 Dec'14 9. 12.20745 3 13.0772 3.2747 4 4.2 12 11.6 12.16473 5.42203 Dec'12 9. Net sales increased from 2009 to 2010.Net Profit Ratio (Nestle Ltd. This can be explained by the fact that the net sales decreased by a higher rate and the net profit increased by only which is lower than the percentage increase of the net sales.44490 7 Dec'13 9.07 in 2010.10565 Nestle 12.8 Nestle Ltd.29202 2 12.) 13.7385 Britania 3. This can be explained by the fact that net profit increased from 2011 to 2012 which is much higher than the increase in net sales.

Net Profit Ratio of Nestle vs Britania Industry 40 35 30 25 20 15 10 5 0 As we can examine from the chart above that Nestle India Ltd. has shown a stable performance in maintaining a good overall net profit ratio as compared with the industry as well as with its peer in 2015.97 5 Dec'14 4207.44 9 . 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Nestle Ltd. 3250. :: Operating Ratio Dec'11 Nestle Ltd. Dec'15 4570.9 Dec'12 4046.42 9 Operating Ratio Nestle Ltd.42 3 Dec'13 4731. Operating Ratio of Nestle India Ltd.

Operating profit Ratio of Nestle India Ltd. is a good performer in its operating profit ratio. The firm is above the industrial performance.10 3608. Industry 10000 5000 0 As we can reckon from the chart above that Nestle India Ltd. 3250.63 11346. The trend of increase and decrease continued every alternate financial year COMPARISON WITH INDUSTRY AND BRITANNIA LTD.35 Dec'12 Dec'13 Dec'14 10439.97 4207.:: .As we can observe from the above chart that the operating ratio followed an increasing trend of net sales in 2011 to in 2015.27 Nestle Ltd.2 2 11415.04 7 Operation Ratio of Nestle vs Britania vs Industry 25000 20000 15000 Britania Nestle Ltd. This increase in the operating ratio can be explained by the fact that the gross profit and the operating expenses increased more. This is again a positive sign for the firm’s general profitability as operating profit ratio is concerned.77 9 2 Dec'15 13886 4570.42 4731. This shows that the company has kept its operating expenses in control in an efficient manner for generating greater operating profits. which gives a strong numerator number for the ratio and for the denominator side the net sales increased from 2011 to 2015.98 3737.:: Operating Ratio Dec'11 Industry 8167.42 3 5 9 3253.9 Britania 3018.37 4046.44 9 3914.

46220 2 Dec'13 14.5 Nestle Ltd.:: Operating Profit ratio Dec'11 Industry 14.09305 Dec'12 14.Dec'11 19.74 in 2012 to 22.61357 7 Dec'14 15.2931 6 Dec'15 21.5 19 18. 19.7474 Britania 6. This increase in the operating profit ratio can be explained by the fact that the gross profit and the operating expenses increased more.61616 4 Dec'15 15. 21 20.5312 6 Dec'14 22.2931 6 6.1852 7 19.3995 1 Operating Profit Ratio (Nestle Ltd.5 22 21.0744 8 21.5145 Nestle Ltd.3995 1 9. The trend of increase and decrease continued every alternate financial year.4239 5 20.45906 3 .5 20 19.1303 5 22.29 in 2014.9145 1 5. which gives a strong numerator number for the ratio and for the denominator side the net sales increased from 2011 to 2014. COMPARISON WITH INDUSTRY AND BRITANNIA LTD.) 23 22.9145 1 Dec'13 20.5 18 As we can observe from the above chart that the operating profit ratio followed an increasing trend from 19.7474 Dec'12 19.5312 6 5.

This shows that the company has kept its operating expenses in control in an efficient manner for generating greater operating profits. This is again a positive sign for the firm’s general profitability as operating profit ratio is concerned.50 in 2010 and then from 40.67 in 2011 to 40.50 in 2009 to 48. The firm is above the industrial performance. 30 Industry 25 20 15 10 5 0 As we can perceived from the chart above that Nestle India Ltd is a good performer in its operating profit ratio.25 in .5002 5 Dec'13 40. 30 20 10 0 As we can observe from the above chart that DPS of Nestle India Ltd has followed mostly a straight trend from 48.2578 4 Dividend Per Share (Nestle Ltd.5002 Dec'12 48.Operation Profit Ratio of Nestle vs Britania vs Industry 50 45 40 Britania 35 Nestle Ltd.6322 6 Dec'15 40.) 60 50 40 Nestle Ltd.6799 7 Dec'14 40. Dividend per Share ratio of Nestle India Ltd:Dec'11 48.

8248 Nestle Ltd.6799 7 7.2578 4 9. This shows that both the firms have not enough earning power in the industry and they contribute negatively to the earnings of the whole industry as well as to the return to their respective shareholders. which in turn is a positive sign.1196 Dec'11 40. This represents a earning power of the firm as the ratio has followed a stable trend and has followed the same path as that of return on equity.05955 2 Dec'13 14. 60 Industry 40 20 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the above chart that both firms have followed a stable trend in their respective dividend per share ratio.12091 2 Dec'12 13.7901 Dec'12 36.6322 6 7.2013 with a some decreasing trend.5002 Britania 25.44574 8 Dec'11 12.96030 9 Dividend Per share of Nestle vs Britanis vs Industry 120 100 Britania 80 Nestle Ltd.:- Dividend Per Share Dec'09 Industry 31.3869 Dec'10 57. COMPARISON WITH INDUSTRY AND BRITANNIA LTD. The increasing DPS is a positive sign for the profitability of the firm but we have to compare it with its peers to have a rational projection of the profitability.8375 3 40.6849 Dec'13 34. 48.7439 .0021 Dec'10 16.5504 9 40.1819 3 40.5002 5 5. Dividend Payout Ratio of Nestle India Ltd: Dec'09 71.6023 2 48.

5401 Dec'12 9.7439 7 32.53148 9 36.7901 45.04289 5 40.34394 6 Nesttle 71.94298 9 34.74 in 2015 with a quantum decrease of just over 5 years decreasing from 2011 to 2015.78411 Dec'13 6. COMPARISON WITH INDUSTRY AND BRITANNIA LTD.0733 4 Dec'15 4.6 7 Dividend Payout Ratio (Nestle Ltd.5592 5 Dec'14 5.:Dividend Payout Ratio Dec'11 Industry 17.1196 Britania 51.6849 6 36.) 80 70 60 50 Nestle Ltd.38 in 2011 to 34.2653 44. A clear analysis about this ratio can be made after comparing it with its peer and industry. The chart reflects that after 2011.2967 2 .3869 57. 40 30 20 10 0 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 As we can observe from the above chart that the dividend payout ratio of Nestle India Ltd has followed a decreasing trend from 71. the firm started to payout less percent of dividend and retained the rest to build its retained earnings block for its long term/expansion objectives.

75 3 Dec'15 10000. Earning yield ratio of Nestle India Ltd:Dec'11 Dec'11 10000. BRITANIA’S dividend payout ratio has also followed the industrial trend and is a bit above the levels of Nestle India Ltd.3 8 .1 Dec'13 10000.Dividend Pay Out Ratio of Nestle vs Britania vs Industry 160 140 120 Britania 100 Nesttle Industry 80 60 40 20 0 As we can observe from the above chart that the industry has a stable trend in its dividend payout ratio. This means that the firm is paying out dividend at a same rate as compared with the industry and higher rate of its peer. so as to build their respective ‘retained earning’ block for utilizing the retained funds in its long term/expansion objectives. Hence we can comment that the firm is building up its ‘retained earning’ block with a greater rate as compared with its peer but can be more restrictive in its dividend paying out policy. Hence we can depict from this phenomena that the food industry in India is at its expansion.0 7 Dec'14 9999. Now.8 10000. Nestle India Ltd has done well as it has been above the industrial standards and has paid more dividend then industry. which means that the every player in the industry is trying to retain its earning to maximum and give the least dividend.

07 9997.8 10000.4 9999.2 As we can observe from the above chart that EYR of Nestle India Ltd has followed a decreasing trend from 10000.2 10000 9999.6 9999.7 10000.88 10000.1 9997. COMPARISON WITH INDUSTRY AND BRITANNIA LTD.76 in 2011 to 10000.10 in 2012. Britannia Dec'11 33963.8 9999.) 10001 10000.37 in 2015 which represents a strong earning power of the firm as the ratio has followed a stable trend and has followed the same path as that of return on equity. Industry .38 10000. 10000.34 10000.8 10000.4 Nestle Ltd.413 Dec'13 64163.75 in 2014 to 10000.81 Dec'15 59727.22 9999.59 Earning Yield Ratio of Nestle vs Britania vs Industry 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Britania Nesttle Ltd.2 10000.753 10001.6 10000. which in turn is a positive sign.Earning Yield Ratio (Nestle Ltd.96 Dec'14 62873.1 Dec'12 61967.:Earning Yield Ratio Industry Nestle Ltd.Then it has followed an increasing trend from 9999.

00155 9 0.01 0.01 Dec'12 0.01 As we can observe from the chart that the price earning ratio has followed an overall increasing and decreasing trend from 0. COMPARISON WITH INDUSTRY AND BRITANNIA LTD.01 0. Dec'11 0. Britania Dec'11 0.00161 4 0.01 0. The ratio also shows the markets response on the firm’s earnings that if the earnings of the firm are within the expectation of the market then the firm will trade on higher multiples of P/E ratio but if the firm’s earnings are under the expectations of the market then the firm will trade on lower multiples of the P/E ratio. 0.01 Price Earning Ratio (Nestle Ltd.01 0.01 0.00999 8 Dec'15 0.01 0.01 Nestle Ltd.00999 9 .01 Dec'13 0.01 Dec'12 0.01 0. This means that both the firms have earning power in the industry and they contribute positively to the earnings of the whole industry as well as to the return to their respective shareholders.01000 2 Dec'14 0.01000 3 Dec'13 0.01 0. Price Earning Ratio of Nestle India Ltd: Price Earning Ratio Nestle Ltd.01 0.01 Dec'14 0.01 0.01 0.01 0.01 Dec'15 0.:Price Earning Ratio Industry Nesttle Ltd.009 in 2009 to 0. The P/E ratio represents the change in the market price with every increase or decrease in the earning of the firm.00159 1 0.00294 0.01 0.00167 4 0.As we can observe from the above chart that both firms have followed a stable trend in their respective earning per share ratio.) 0.01 in 2012 with a increasing change.

03 0.02 Britania Nesttle Ltd. Nestle India Ltd has always exceeded and performed above the levels of the industry and has shown stable growth in terms of P/E ratio. . This represents that overall market expectation from the food industry was either neutral or under-valued the over the years it has increased and stabilized to its realistic figure.02 0.012 in 2015.01 in 2011 to 0.01 0. Industry 0.Price Earning Ratio of Nestle vs Britania vs Industry 0.01 0 As we can observe from the chart that the overall industrial P/E ratio has shown a steady trend from 0. BRITANNIA ALSO showed the same trend and outperformed the industry as a whole.

This involves lesser risk to the creditors. OVERALL SOLVENCY PERFORMANCE OF NESTLE INDIA LTD:1. 2.Nestle India Ltd.5:1 except for 2011 and shows the greater amount of current liabilities as compared to the absolute liquid assets of the company. Super Quick ratio is below standard of 0. The Gross Profit Ratio is varying between 45 to 50 and this means that there is more of net sales than the cost incurred on the goods. Equity ratio is nearer to 1:1 and that indicates that the shareholder’s funds and the total assets are almost being used in the same proportion. 2.economictimes. Current ratio is below the standard of 2:1 and that means the current liabilities are more and the company might plan to expand in future.com www.com www.nseindia.accounting-simplified. The operating ratio is varying between 19 to 22 and indicates that the company has operational efficiency. 3. OVERALL PROFITABILITY PERFORMANCE OF NESTLE INDIA LTD:1. Quick ratio is below the standard of 1:1 and it indicates that there is less quick asset at the company’s disposal as compared to current liabilities.com www. REFERENCES: The following are the references from where the relevant information and data for analysis purposes have been extracted:       Annual Report of Nestle India Ltd 2014-2015 www. 3. Debt equity ratio is well below the standard of 1:1 and it means that the external equity is very less as compared to internal equity.com www.moneycontrol.INTERPRETATIONS OF THE RATIOS OVERALL LIQUIDITY PERFORMANCE OF NESTLE INDIA LTD:1.com www.com . 2. The net profit ratio is varying between 12 to 13 and indicates that the net profit after taxes is greater than the net sales.ndtvprofit.