Ratio 2017 2018

Current ratio 0.834 0.952

Quick Ratio 0.594 0.74
Inventory turnover 4.96 times 5.04 times
Average collection period 3.68 days 3.34 days
Total assets turnover 0.672 0.667
Gross profit margin 14.8% 15%
Operating profit margin 11.3% 15%
Return on assets 5.3% 7.3%
Return on equity 11.4% 17.3%

Analysis
1- Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
payables. A company with a current ratio less than one does not, in many cases, have the
capital on hand to meet its short-term obligations

In the case of nestle in 2017 the current ratio was 0.843 which mean that it doesn’t have
capital on hand to pay its short-term obligation this ratio have been improved in 2018 and
reach 0.952 

2- Quick Ratio

The quick ratio is an indicator of a company’s short-term liquidity position and measures

a company’s ability to meet its short-term obligations with its most liquid assets in our
case by excluding the inventory we still found there is an improvement in the
performance of the company to meet its short term obligation as the ratio show it was 0.5
om 2017 the performance become better in 2018 as the ratio become 0.7

3- Inventory turnover

Inventory turnover is the number of times a company sells and replaces its stock of goods
during a period. Inventory turnover provides insight as to how the company manages
costs and how effective their sales efforts have been.
 The inventory turnover ratio in nestle is improving slightly as in 2017 was 4.96 which
mean the company is selling its inventory close to 5 times a year this ratio improved in
2018 and it became 5.04

4- Average collection period

The average collection period indicates how many times the company can collect its
receivables and when look to the ratio of nestle in 2017 and 2018 we notice that there is
improving in performance as in 2017 the company was collecting its receivables every
3.68 days this ratio improved in 2018 and become 3.34.

5- Total assets turnover

The asset turnover ratio is an efficiency ratio that measures a company’s ability to
generate sales from its assets by comparing net sales with average total assets.in
comparing 2017 and 2018 there is a slightly decrease in how the company use its assets
to generate sales as

6- Gross Profit margin

Gross profit, the first level of profitability, tells analysts how good a company is at
creating a product or providing a service compared to its competitors. Gross profit margin
in the case of nestle there is an improvement from 14.8% to 15%

7- Operating Profit margin

The operating margin measures how much profit a company makes on a dollar of sales,

after paying for variable costs of production nestle make an improvement in profit from
11.3% in 2017 to 15% in 2018

8- Return on Assets

is an indicator of how profitable a company is relative to its total assets. ROA gives a

manager, investor, or analyst an idea as to how efficient a company's management is at
using its assets to generate earnings nestle return on assets improved from 5.3% to count
7.3%

9- Return on equity
 is a measure of the profitability of a business in relation to the equity, nestle ratio have
been improved from 11.4% to 17.3%