KASBIT - MBAAnalysis of Financial Statements

Financial Statement Analysis of Nestle Pakistan

Presented by.

Khosh Wali Khan Anjas ID No. 4503

Rehmat Amin Hunzai ID No. 4415

Altaf Abdul Khowja ID No. 4804

Nestle Pakistan Ratio Analysis for the year 2008 & 2009

Description 2009 2008

Gross Profit Ratio (GP 11898920/SALE 41155822)*100 29% 26%

Operating Profit Ratio (OP 5575311/SALES )*100 14% 12%

Profit Before Tax Ratio (PBIT 4628307 / SALE )*100 10% 7%

Profit After Tax Ratio (PAT 3005133/ SALE)*100 7% 5%

Inventory Turnover Ratio (INV 3895038 /SALE)*100 9.4 : 1 10.3 : 1

Total Assets Turnover Ratio (TA 18586980/ SALE)*100 2.2 : 1 2.1 : 1

Earning Per Share (P.O SHRE 3005133 / NOS 45349600) 66.27 34.24

ROCE (PBIT / SHARE CAPITAL+RESERVE+L.LIB)*100 40% 20%

Market Value Per Share 1,246 1,334

Debt Equity Ratio 66 :34 63 : 37

Current Ratio 1.1 : 1 1.1 : 1

Interest Cover Ratio 10.5 : 1 5 : 1

Nestle Pakistan Ratio Analysis for the year 2008 & 2009

Description 2009 2008

Financial Expenses against Sales 1.1 1.63

Operating Expenses Against Sales 3.7 4.0

Sales Growth 20% 21%

Cost of Goods sold 71.1% 73.8%

Cost of Good Sold Changes 16% -

Long Term Finance ( in thousand) 4210750 5139875

Nestle Pakistan

Financial Analysis 2008 & 2009

Gross Profit Ratio 29% 26%

Indicator of how much profit is earned on your products without consideration of selling and administration costs.

Sales value increased 20.40% during 2009 and Gross Profit increased during 2009 by 32.9% it means the cost has been decreased during 2009 OR price increse.

Profit Ratio 14% 12%

Net profit increased 93.5% during 2009, because the sales volume increased and cost and expenses decreased

PBT Ratio , PAT Ratio Shows that Profitability performance has been enhanced from 2008 to 2009 and Growth was 20 %

Profit After Tax is 7.3 % of Sales in 2009, it was 4.5% of sales in 2008 Shows the cost of goods has been decreased or expenses has been decreased during 2009

Nestle Pakistan Financial Analysis 2008 & 2009

Financial Analysis 2008 & 2009

Inventory Turnover Ratio 9.2 : 1 in 2009 & 10.3 : 1 in 2008

Stock in Trade value inceased by 56.6 % in 2009 therefore Inventory Turnover Ratio decreased in 2009,

Earning Per Share 66.27 in 2009 34.24 in 2008

Earning per share Increased 93.54% in 2009 because of net profit increased and also market value of share decreased in 2009.

Return on Capital Employed 40% in 2009 20% in 2008

ROCE Increased during 2009 by 100 % , because profit before interest and tax increased during 2009 by 66.20 % and current liabilities increased 52.5%

Nestle Pakistan Financial Analysis 2008 & 2009

Financial Analysis 2008 & 2009

Interest Cover Ratio 10.5 : 1 in 2009 5 : 1 in 2008

Nestle has increased their interest cover ratio by increasing profit and decreasing the financial cost

Conclusion:Nestle Pakistan has increased sales during 2009 the growth was 20% also increased their profit margin, the changes in net profit was 94% which shows their successful strategy, net profit margin in 2008 was 4.5% of sales, but during 2009 it has been increased to 7.3% which is good sign.

Some reasons of increasing profit margin is decreasing the expenses, during 2009 the 21% decrease in operating expenses , cost , financial cost.

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