Accounting assignment (group 3)

 Summary of company profile:-

Nestle India Limited is an India-based company engaged in food business. Nestle is the world`s leading
Nutrition, Health and Wellness Company the company was founded in 1866 by Henri Nestle. The food
business incorporates product groups through milk products and nutrition, beverages, prepared dishes
and cooking aids, chocolates and confectionery. The Company brands include NESCAFE, MAGGI,
MILKYBAR, KIT KAT, BAR-ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE SLIM Milk, NESTLE Dahi and
NESTLE Jeera Raita. The Company beverages include NESCAFE CLASSIC, NESCAFE My First Cup, NESCAFE
CAPPUCCINO, NESCAFE SUNRISE Premium, NESCAFE SUNRISE and NESTEA ICED TEA.

NESTLÉ India is a subsidiary of NESTLÉ S.A. of Switzerland. The company has attendance across India
with 7 manufacturing facilities and four branch offices extend across the region. The four branch offices
in the country help facilitate the sales and marketing of its products. They are in Delhi, Mumbai, Chennai
and Kolkata.

The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same
in its relationships. 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'.

 Financial status of the company:-

The financial status of a company is measured by the performance it takes in company

financial statements: a positive and growing cash flow statement, growing profits in the profit
and loss statement and a balance of assets, liabilities, and owner’s equity in the balance sheet.
If we talk about Nestle India the company has a lot of potential and is having very good financial
status as of right now. Going by latest the annual report of nestle it can be easily traced that
company profits have grown significantly from last year. Also the company witnessed growth in
sales by 9.6%. Also the Earning per Share (EPS) and Dividend per Share (DPS) increased
significantly as the company was able to generated good cash from its operating activities and
increase net profit.
Also if we compare various financial ratio of the company as per the industry norms, we can see
that Nestle is doing very good in all the areas
 Results 2019 2018

Sales 122,953 112,162

Profit from the 25,863 23,509
operations
Profit after Tax 19,696 16,069

Return on Average Equity (%) 70.3 45.3

Operating Cash Flow 22,337 20,525

Earnings per share (`) 204.3 166.7

Dividend per 342.0 115.0

share
Market capitalization, end
December 1,425,983 1,070,913

Particulars NESTLE INDUSTRY

Operating Profit Margin (%) (Profit From Operations/Sale of 21.0 8.09

Products)
Net Profit margin (%) (Profit After Tax/Sale of products) 16.0 4.8

Return on Net Worth (%) (Profit After Tax/Average Equity) 70.3 9.94

Current Ratio (Current Assets/Current liabilities) 1.8 1.05

Inventory turnover Ratio (Sale of products/Average 10.9 9.58

Inventories)
Debtors Turnover Ratio (Sale of products/Average trade 98.8 11.81
receivables)
Details of component of financial statement assigned to your respective group

 Current liability: - Current liabilities are a company's short-term financial

obligations that are due within one year or within a normal operating cycle.
Sometimes, companies use an account called "other current liabilities" as a
catch-all line item on their balance sheets to include all other liabilities due
within a year that are not classified elsewhere. Current liability accounts can
vary by industry or according to various government regulations.
Current liabilities are listed on the balance sheet under the liabilities section
and are paid from the revenue generated from the operating activities of a
company. Some examples- accounts payables, short-term debt, accrued
expenses, and dividends payable.

BALANCE SHEET AS AT 31 DECEMBER 2019

LIABILITIES

Current liabilities As at 31st December 2019 As at 31st December 2019

(in millions) (in millions)

Trade payables 14,946.90 12,403.70

Other financial liabilities 4,314.8 3,161.8

Provisions 854.6 1,572.6
Current tax liabilities 19.2 -
Other current liabilities 1,339.6 1,411.4
TOTAL 21475.1 18,549.5
 Explanation:-
1. Trade Payables: - It is the total amount payable by a business for goods purchased
or services availed as a part of their business operations. Trade payables comprise of
Creditors and Bills Payables. Trade payables arise due to credit purchases

2. Other financial liabilities:- It basically include debt payable and interest payable
which is as a result of the use of others' money in the past, accounts payable to other
parties. In the above table this is further classified as: - Payables for capital
expenditure, Customers’ credit balances and payables, Employee costs and
reimbursements, Book Overdraft, Unpaid dividends, Security deposits and Derivative
liabilities - forward contracts.

3. Current Provisions: - Provisions in Accounting are an amount set aside to cover a

probable future expense, or reduction in the value of an asset. Often provision
amounts need to be estimated. It further includes items such as- Employee benefits,
other incentives and welfare benefits and Contingencies.

4. Current tax liabilities: - Tax liability is the amount of money you owe to tax
authorities, such as your local, state, and federal governments. When you have a tax
liability, you have a legally binding debt to your creditor. Current tax liabilities are such
short-term tax obligations that an individual must pay within a year .

5. Other Current liabilities: - Other current liabilities, in financial accounting, are

categories of short-term debt that are lumped together on the balance sheet.
Companies add the word "other" to describe those current liabilities that are not
significant enough to identify separately on their own lines in financial statements.
These further includes- Statutory liabilities (Goods & Services tax, TDS etc.) and
Advance from customers.