FINAL TASK IN

FUNDAMENTALS OF
ACCOUNTANCY,
BUSINESS, AND
MANAGEMENT 2

Montero, Romar S.
Gr.12 – Archdiocese of Zamboanga
 Nestle Group
Statement of Financial Position
For the year ended December 31, 2018
(with comparative figures for 2015)
(In Million of Swiss Franc)
 Nestle group
Income Statement
For the year ended December 31, 2018
(with comparative figures for 2015)
(In Millions of Swiss Franc)
 Nestle Group
Statement of Cash Flow
For the year ended December 31, 2018
(with comparative figures for 2015)
(In Million Swiss Franc)
 Nestle Group
Statement of Changes in Shareholder’s Equity
For the year ended December 31, 2018
(with comparative figures for 2015)
(In Million Swiss Franc)
HORIZONTAL ANALYSIS OF STATEMENT OF FINANCIAL POSITION

AMOUNT OF PERCENTAGE
NAME OF ACCOUNT 2016 2015 INCREASE OF CHANGE
(DECREASE)
ASSETS
Current Asset
Cash and Cash Equivalent 7,990 4,884 3,106 63.60%
Short-term Investment 1,306 921 385 41.80%
Inventories 8,401 8,153 248 3.04%
Trade and other receivable 12,411 12,252 159 1.30%
Prepayment and accrued income 573 583 (10) (1.72%)
Derivative Asset 550 337 213 63.20%
Current income tax asset 786 874 (88) (10.07%)
Assets held for sale 25 1,430 (1,405) (98.25%)
Total Current Asset 32,042 29,434 2,608 8.86%
Non-Current Asset
Property, Plant and Equipment 27,554 26,576 979 3.68%
Goodwill 33,007 32,772 235 0.72%
Intangible Assets 20,397 19,236 1,161 6.04%
Investments in associate and 10,709 8,675 2,034 23.45%
joint venture
Financial Assets 5,719 5,419 300 5.54%
Employee Benefit Asset 310 109 201 184.40%
Current income tax Asset 114 128 (14) (10.94%)
Deferred Tax Asset 2,049 1,643 406 24.71%
Total Non-Current Asset 99,859 94,558 5,301 5.61%
TOTAL ASSETS 131,901 123,992 7,909 6.38%

Current Liabilities
Financial Debt 12,118 9,629 2,489 25.85%
Trade and other payables 18,629 17,038 1,591 9.34%
Accruals and deferred income 3,855 3,673 182 4.96%
Provision 620 564 56 9.93%
Derivative liabilities 1,068 1,021 47 4.60%
Current Income Tax Liabilities 1,221 1,124 97 8.63%
Liabilities directly associated with 6 272 (266) (97.80%)
assets
Total Current Liabilities 37,517 33,321 4,196 12.60%
Non-Current Liabilities
Financial Debt 11,091 11,601 (510) (4.40%)
Employee Benefits Liabilities 8,420 7,691 729 9.48%
Provision 2,640 2,601 39 1.50%
Deferred Tax Liabilities 3,865 3,063 802 26.18%
Other Payable 2,387 1,729 658 38.06%
Total Non-Current Liabilities 28,403 26,685 1,718 6.44%
TOTAL LIABILITIES 65,920 60,006 5,914 9.86%
Shareholder’s Equity
Share capital 311 319 (8) (2.51%)
Treasury Shares (990) (7,489) 6,499 86.78%
Translation Reserves (18,799) (19,851) 1,052 5.30%
Other Reserves 1,198 1,345 (147) (10.92%)
Retained Earnings 82,870 88,014 (5,144) (5.84%)
Non-Controlling interest 1,391 1,648 (257) (15.60%)
Total Shareholder’s Equity 65,981 63,986 1,995 3.12%
TOTAL LIABILITIES AND 131, 901 123,992 7,909 6.38%
SHAREHOLDER’S EQUITY
VERTICAL ANALYSIS OF STATEMENT OF FINANCIAL POSITION

2016 2016 2015 2015

NAME OF ACCOUNT AMOUNT PERCENT AMOUNT PERCENT
ASSETS
Current Asset
Cash and Cash Equivalent 7,990 6.12% 4,884 3.94%
Short-term Investment 1,306 0.99% 921 0.74%
Inventories 8,401 6.37% 8,153 6.58%
Trade and other receivable 12,411 9.41% 12,252 9.88%
Prepayment and accrued income 573 0.43% 583 0.47%
Derivative Asset 550 0.42% 337 0.27%
Current income tax asset 786 0.60% 874 0.70%
Assets held for sale 25 0.02% 1,430 1.15%
Total Current Asset 32,042 24.29% 29,434 23.74%
Non-Current Asset
Property, Plant and Equipment 27,554 20.89% 26,576 21.43%
Goodwill 33,007 25.02% 32,772 26.43%
Intangible Assets 20,397 15.46% 19,236 15.51%
Investments in associate and 10,709 8.12% 8,675 7.00%
joint venture
Financial Assets 5,719 4.34% 5,419 4.37%
Employee Benefit Asset 310 0.24% 109 0.09%
Current income tax Asset 114 0.09% 128 0.10%
Deferred Tax Asset 2,049 1.55% 1,643 1.33%
Total Non-Current Asset 99,859 75.71% 94,558 76.26%
TOTAL ASSETS 131,901 100% 123,992 100%
LIABILITIES
Current Liabilities
Financial Debt 12,118 9.19% 9,629 7.77%
Trade and other payables 18,629 14.12% 17,038 13.74%
Accruals and deferred income 3,855 2.92% 3,673 2.96%
Provision 620 0.47% 564 0.45%
Derivative liabilities 1,068 0.81% 1,021 0.82%
Current Income Tax Liabilities 1,221 0.91% 1,124 0.91%
Liabilities directly associated with 6 0.004% 272 0.22%
assets
Total Current Liabilities 37,517 28.44% 33,321 26.87%
Non-Current Liabilities
Financial Debt 11,091 8.41% 11,601 9.36%
Employee Benefits Liabilities 8,420 6.38% 7,691 6.20%
Provision 2,640 2.00% 2,601 2.10%
Deferred Tax Liabilities 3,865 2.93% 3,063 2.47%
Other Payable 2,387 1.80% 1,729 1.39%
Total Non-Current Liabilities 28,403 21.53% 26,685 21.52%
TOTAL LIABILITIES 65,920 49.98% 60,006 48.40%
SHAREHOLDER’S EQUITY
Share capital 311 0.24% 319 0.26%
Treasury Shares (990) (0.68%) (7,489) (6.04%)
Translation Reserves (18,799) (14.25%) (19,851) (16.01%)
Other Reserves 1,198 0.91% 1,345 1.08%
Retained Earnings 82,870 62.83% 88,014 70.98%
Non-Controlling interest 1,391 1.05% 1,648 1.33%
Total Shareholder’s Equity 65,981 50.02% 63,986 51.60%
TOTAL LIABILITIES AND 131, 901 100% 123,992 100%
SHAREHOLDER’S EQUITY

HORIZONAL ANALYSIS OF INCOME STATEMENT

AMOUNT OF
ACCOUNT NAME 2016 2015 INCREASE PERCENT OF
(DECREASE) CHANGE
Net Sales 89,469 88,785 684 0.77%
Other Revenue 317 298 19 6.36%
Cost of Goods sold (44,119) (44,730) 611 1.37%
Distribution Expenses (8,059) (7,899) (160) (2.03%)
Marketing and administration (21,485) (20,774) (711) (3.42%)
expenses
Research and development costs (1,736) (1,678) (58) (3.46%)
Other trading income 99 78 21 26.92%
Other trading expenses (713) (728) 15 2.06%
Trading Operating Profit 13,693 13,382 311 2.32%
Other Operating Income 354 126 228 180.95%
Other Operating Expense (884) (1,100) 216 19.64%
Operating Profit 13,163 12,408 755 6.08%
Financial Income 121 101 20 19.80%
Financial Expense (758) (725) (33) (4.55%)
Profit before taxes, associates, and 12,526 11,784 742 6.30%
joint ventures
Taxes (4,413) (3,305) (1,108) (33.52%)
Income from associates and joint 770 988 (218) (22.06%)
ventures
PROFIT FOR THE YEAR 8,883 9,467 (584) (6.17%)

VERTICAL ANALYSIS OF INCOME STATEMENT

2016 2016 2015 2015

ACCOUNT NAME AMOUNT PERCENT AMOUNT PERCENT
Net Sales 89,469 100% 88,785 100%
Other Revenue 317 0.35% 298 0.34%
Cost of Goods sold (44,119) 49.31% (44,730) 50.38%
Distribution Expenses (8,059) 9.01% (7,899) 8.90%
Marketing and administration (21,485) 24.04% (20,774) 23.40%
expenses
Research and development costs (1,736) 1.94% (1,678) 1.89%
Other trading income 99 0.11% 78 0.09%
Other trading expenses (713) 0.80% (728) 0.82%
Trading Operating Profit 13,693 15.30% 13,382 15.07%
Other Operating Income 354 0.40% 126 0.14%
Other Operating Expense (884) 0.99% (1,100) 1.24%
Operating Profit 13,163 14.71% 12,408 13.98%
Financial Income 121 0.14% 101 0.11%
Financial Expense (758) 0.85% (725) 0.82%
Profit before taxes, associates, and 12,526 14.00% 11,784 13.27%
joint ventures
Taxes (4,413) 4.93% (3,305) 3.72%
Income from associates and joint 770 0.86% 988 1.11%
ventures
PROFIT FOR THE YEAR 8,883 9.93% 9,467 10.66%

ANALYSIS OF STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT USING

A. Current Ratio

Current Asset
Current Ratio=
Current Liabilities
Current Ratio of 2016: 0.85:1
Current Ratio of 2015: 0.88:1

In 2016, there is 0.85 CHF in current asset to pay 1 CHF in current liability. In 2015, there is 0.88 CHF
in current asset to pay 1 CHF in current liability. This shows that the current asset of Nestle and their
ability to pay current obligation has grown after a year though if something unexpected negative
circumstance happens, they may not pay all the current liabilities easily because the current liability
outweighs the current asset.

B. Acid-test/Quick Ratio

Cash+ Short Term Investment + Short Term Receivables

Quick Ratio=
Current Liabilities
Quick Ratio of 2016: 0.58:1
Quick Ratio of 2015: 0.54:1

In 2016, Nestle has 0.58 CHF of quick assets to pay for every 1 CHF of current liabilities. In 2015,
Nestle has 0.54 CHF of quick assets to pay for every 1 CHF of current liabilities. This shows that the quick
assets of Nestle has grown for only a small significant amount. Again, if there is unexpected negative
circumstances that force Nestle to pay its current obligation, the quick assets is not enough to pay its
current obligation.

C. Gross Profit Ratio

Gross Profit
Gross Ratio=
Net Sales
Gross Profit Ratio of 2016: 0.51:1
Gross Profit Ratio of 2015: 0.50:1

In 2016, for every 1 CHF of sales Nestle generate, they earn 0.51 CHF in profit before other
business expenses are paid. In 2015, for every 1 CHF of sales Nestle generate, they earn 0.50 CHF in
profit before other business expenses are paid. This shows that the profitability of a product in 2016
has grown for only 0.01. If Nestle wants to be profitable in the following year, their cost must be less
than 45,350 CHF (in million).

D. Net Profit Ratio

Net Profit
Net Profit Ratio=
Net Sales
Net Profit Ratio of 2016: 0.10:1
Net Profit Ratio of 2015: 0.11:1

In 2016, for every 1 CHF of sales Nestle generate, they earn 0.51 CHF in profit after other
business expenses are paid. In 2015, for every 1 CHF of sales Nestle generate, they earn 0.50 CHF in
 profit after other business expenses are paid. This shows that the efficiency of managing the affairs
of Nestle is low and it has dropped for a margin of 0.01. The overall profitability of Nestle has
dropped for about 1,000 CHF in million.

E. Operating Ratio

Cost of sales+Operating Expenses

Operating Ratio=
Net Sales
Operating Ratio of 2016: 0.50:1
Operating Ratio of 2015: 0.52:1

In 2016, for every 1 CHF of sales Nestle generate, they cost 0.50 CHF to make the goods. In
2015, for every 1 CHF of sales Nestle generate, they cost 0.52 CHF to make a good. This shows that
the efficiency of 2016 is somewhat efficient because as reflected in the gross profit ratio, Nestle
creates a gross profit of 0.50 CHF after costing 0.50 CHF. The efficiency of Nestle has increased after
a year.

F. Debt to Equity Ratio

Total Liabilities
Debt ¿ Equity Ratio=
Total Shareholder ' s Equity
Debt to Equity Ratio of 2016: 1:1
Debt to Equity Ratio of 2015: 0.93:1

With Debt to Equity Ratio, it shows that in 2015, Assets are financed more by shareholders
rather than debt thus when unexpected negative circumstances happened, the risk of shareholders not
getting their investment back with earnings is low. In 2016, Half of assets are financed by Shareholders
and the other half is financed by debt. This shows that the exact of amount of assets invested by
shareholders, if bankruptcy has occurred, they will received the exact amount of their investment.

G. Debt to Asset Ratio

Total Liabilites
Debt ¿ Asset Ratio=
Total Assets
Debt to Asset Ratio of 2016: 0.50:1
Debt to Asset Ratio of 2015: 0.48:1

Using Debt to Asset Ratio, it shows that half of the assets in 2016 were covered by creditors or debts
and the other half was covered by shareholders. In 2015, 48% of assets were covered by debt of
creditors and 52% where covered by shareholders. This shows that the risk of investing in Nestle and
receiving less of what the investor has invest, has increase for only a margin of 0.02.

H. Proprietary Ratio

Total Shareholder ' s Equity

Proprietary Ratio=
Total Assets
Proprietary Ratio of 2016: 0.50:1
Proprietary Ratio of 2015: 0.52:1

Using Proprietary Ratio, it shows that half of the assets in 2016 were covered by creditors or debts
and the other half was covered by shareholders. In 2015, 52% of assets were covered by Shareholders
and 48% where covered by shareholders. This shows that the risk of investing in Nestle and receiving
less of what the investor has invest, has increase for only a margin of 0.02.