Nestle is a multinational food and beverage company headquartered in Switzerland.

With a
rich history spanning over 150 years, Nestle has established itself as a global leader in the
industry, offering a wide range of products including baby food, bottled water, chocolate,
coffee, and pet care. Known for its commitment to quality, innovation, and sustainability,
Nestle continues to thrive and maintain a strong presence in markets worldwide, catering to
the evolving tastes and preferences of consumers.

Ratio Analysis:

Ratio analysis is a fundamental tool used by investors, analysts, and financial professionals to
assess the financial health and performance of a company. By examining various ratios
derived from a company's financial statements, such as the balance sheet and income
statement, ratio analysis provides valuable insights into the company's profitability, liquidity,
efficiency, solvency, and market valuation.

2022 DATA of NESTLE:

▪ Total current assets = 36741.47

▪ Total fixed assets= 104915.7
▪ Total Assets = 141,657.2
▪ Total current liabilities= 41890.85
▪ Total fixed liabilities= 54924.63
▪ Total liabilities = 96815.48
▪ Total Equity= 44841.74
▪ Revenue/Sales= 99319.96
▪ Cost of goods sold= 54223.59
▪ Gross profit= 45096.38
▪ Operation expenses= 32179.96
▪ Operating income/Profit= 12916.41
▪ Net income/profit= 9714.033
▪ EBIT=12916.41
▪ Shares Outstanding =2709
▪ Basic shares of outstanding=2707
▪ Earnings per share (EPS) =3.58
 ▪ Interest paid= (953)
▪ dividend=2.95
▪ A/C Receivables = 11648.46
▪ Inventory = 15738.41
▪ Pre-paid expenses – 575738.41
▪ Price per share = 115
CALCULATE:
➢ Liquidity
➢ Activity
➢ Leverage
➢ Profitability
➢ Marketability

Additional calculations:

(Market capitalization = Price per share * Shares outstanding = 115 * 2709 = 312,435)

Liquidity:

1. Current ratio = Current assets / Current liabilities

= 36741.47 / 41890.85

= 0.88

This ratio measures a company's ability to pay its short-term obligations using its current
assets. A ratio of less than 1 indicates that the company may have difficulty meeting its short-
term obligations.

2. Quick ratio = (Current assets - Inventory) / Current liabilities

= (36741.47 - 15738.41) / 41890.85

= 0.54

This ratio is a more conservative measure of a company's ability to pay its short-term
obligations, as it excludes inventory from current assets. A ratio of less than 1 indicates that
the company may have difficulty meeting its short-term obligations.

Activity:

1. Average collection period = (Accounts receivable / Annual credit sales) * 365

= (11648.46 / 99319.96) * 365

= 42.76 days

This ratio measures how long it takes a company to collect payments from its customers. A
lower number indicates that the company is collecting payments more quickly, which is
generally considered favorable.

2. Average payment period = (Accounts payable / Cost of goods sold) * 365

= (0 / 54223.59) * 365

= 0 days

This ratio measures how long it takes a company to pay its suppliers. A lower number
indicates that the company is paying its suppliers more quickly, which is generally considered
favorable.

3. Inventory turnover = Cost of goods sold / Inventory

= 54223.59 / 15738.41

= 3.44 times

This ratio measures how many times a company's inventory is sold and replaced over a given
period. A higher ratio indicates that the company is selling its inventory more quickly, which
is generally considered favorable.

4. Asset turnover = Revenue / Total assets

= 99319.96 / 141657.2

= 0.70 times

This ratio measures how efficiently a company uses its assets to generate revenue. A higher
ratio indicates that the company is using its assets more efficiently, which is generally
considered favorable.

Leverage:

1. Debt ratio = Total liabilities / Total assets

= 96815.48 / 141657.2

= 0.68
This ratio measures the proportion of a company's assets that are financed by debt. A higher
ratio indicates that the company is more heavily reliant on debt to finance its operations.

2. Debt to equity ratio = Total liabilities / Total equity

= 96815.48 / 44841.74

= 2.16

This ratio measures the amount of debt a company has relative to its equity. A higher ratio
indicates that the company is more heavily reliant on debt to finance its operations.

3. Interest coverage ratio = EBIT / Interest paid

= 12916.41 / (-953)

= -13.57

This ratio measures a company's ability to meet its interest payments using its earnings before
interest and taxes (EBIT). A higher ratio indicates that the company is better able to meet its
interest obligations.

Profitability:

1. Gross profit margin = Gross profit / Revenue

= 45096.38 / 99319.96

= 0.45 or 45%

This ratio measures the amount of gross profit a company generates for each dollar of
revenue. A higher ratio indicates that the company is generating more gross profit per dollar
of revenue, which is generally considered favorable.

2. Operating profit margin = Operating income / Revenue

= 12916.41 / 99319.96

= 0.13 or 13%

This ratio measures the amount of operating profit a company generates for each dollar of
revenue. A higher ratio indicates that the company is generating more operating profit per
dollar of revenue, which is generally considered favorable.

3. Net profit margin = Net income / Revenue

= 9714.033 / 99319.96

= 0.10 or 10%

This ratio measures the amount of net income a company generates for each dollar of
revenue. A higher ratio indicates that the company is generating more net income per dollar
of revenue, which is generally considered favorable.

4. EPS = Net income / Basic shares of outstanding

= 9714.033 / 2707

= 3.58

This ratio measures the amount of net income earned per share of outstanding stock. A higher
EPS indicates that the company is generating more earnings per share, which is generally
considered favorable.

5. ROE = Net income / Total equity

= 9714.033 / 44841.74

= 0.22 or 22%

This ratio measures the amount of net income earned relative to the amount of equity
invested in the company. A higher ROE indicates that the company is generating more
income per dollar of equity, which is generally considered favorable.

6. ROA = Net income / Total assets

= 9714.033 / 141657.2

= 0.07 or 7%

This ratio measures the amount of net income earned relative to the amount of assets invested
in the company. A higher ROA indicates that the company is generating more income per
dollar of assets, which is generally considered favorable.

Marketability:

1. P/E ratio = Price per share / EPS

= 115 / 3.58

= 32.12
This ratio measures the price investors are willing to pay per dollar of earnings. A higher P/E
ratio indicates that investors are willing to pay more for each dollar of earnings, which could
indicate that they expect the company's earnings to grow in the future.

2. B/M ratio = Total equity / Market capitalization

= 44841.74 / 312435

= 0.14

This ratio measures the amount of equity a company has relative to its market capitalization.
A higher B/M ratio indicates that the company has a larger proportion of its value tied up in
its equity.

3. Dividend cover = Net income / Dividend

= 9714.033 / 2.95

= 3.29

This ratio indicates the number of times that a company's earnings can cover its dividend
payments. A higher dividend cover indicates that the company is generating enough profits to
cover its dividend payments and can potentially increase its dividends in the future.

4. Dividend yield = Dividend / Price per share

= 2.95 / 115

= 0.0257 or 2.57%

This ratio measures the return on investment for shareholders in the form of dividends. A
higher dividend yield indicates that the company is returning a larger percentage of its profits
to shareholders in the form of dividends.