KASBIT - MBA

Analysis 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.
Thank You