Analysis of Nestle's Financial Statements

Pages: 10 (2564 words) Published: December 14, 2010
Title: Analysis of Financial Statements of Nestle Company (M) Submission Date: 10 Decemer 2010
Lecturer : Theang Kok Foo
Financial management

Name :Albina Assanbayeva

Student ID# :109072016
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Table of contents
1. Introduction3
1.2. Objectives of the study:3
1.3. Background3
1.4. Sections:4
2. Ratio Analysis6
3. Conclusion10

1. Introduction
Companies strive from day to day to make their business publicly strong, financially strong, and appeasing and profitable for its shareholders.   Shareholders as well as the company's management use several tools to determine a company's health and direction.   These tools are better known as ratio analysis.   Ratios are among the more widely used tools of financial analysis because they provide clues to and symptoms of underlying conditions. In this way, this study will evaluate different financial ratios of Nestle Company Malaysia. The main purpose of the current study is to calculate ratios and calculate the financial position of the Nestle Malaysia Berhad.

1.2. Objectives of the study:

• Demonstrate the ability to calculate various ratios using audited financial statements. • Evaluate the financial positions of company using various ratio analyses. 1.3. Background

Name of company: Nestle (Malaysia) Berhad
Location: Malaysia
Nestle (Malaysia) Berhad is a Malaysia-based investment holding company. Nestlé began in Malaysia in 1912 as the Anglo-Swiss Condensed Milk Company in Penang and later, growth and expansion made a move to Kuala Lumpur necessary in 1939. Its products are categorized into coffee and beverages; culinary aids/prepared foods, milks, liquid drinks, junior foods, breakfast cereals, chilled dairy, ice cream, chocolate and confectionery, healthcare nutrition, performance nutrition and Nestle professional. The Company has seven factories and six sales offices, as well as one national distribution center. The Company was publicly listed on the KLSE on 13 December, 1989. Today, the Company employs 5000 people and manufactures as well as markets more than 300 Halal products in Malaysia. Its brand name such has MILO, NESCAFÉ, MAGGI, NESPRAY and KIT KAT have become trusted household names and enjoyed for generations. As ratios help measure a company's liquidity, activity, profitability, leverage and coverage, the study will discuss and calculate five ratios for Nestle Berhad. These five measured sections show how ratio analysis is used in decision-making, how a firm can measure its financial situation and financial performance, and the strengths and weaknesses of the company. The term ratio analysis can be broken down into smaller sections.   The first is a current ratio which is the ratio of current assets to current liabilities.   This ratio shows how well a company's current liabilities are covered.   Even though this ratio is used often, it does have its limitations.   Since it shows all current assets it does not differentiate among the assets with regard to their degrees of liquidity, show it can show skued results .Another commonly used ratio is the acid-test ratio, also known as the quick ratio.   This ratio shows an investor how the short-term liquidity, or how quickly the company's assets can be turned into cash. Inventory turnover is an important and often overlooked ratio that indicates inventory levels.   A low turnover is usually a bad...
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