Final Project - Ratio Analyses.docx

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Nestle Pakistan Ltd1

Financial Accounting

Final Project

Presented To

Prof. Assadullah

Presented By

Naveed Ahmad

Date

05-June-2010


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Introduction

NestlInternational

Ever since Nestl was established, we have been committed to nurturing people

worldwide. Today, as the world's leading Food and Beverages Company, and leaders in

health and wellness, we try to cater to all your family's nutritional needs, no matter wherein the world you live.

Our story begins in 1867, when Henri Nestl developed a baby formula that saved a

child's life and marked the beginning of Nestl's decades-old commitment to nutrition.

In the 140 years since then, we have expanded around the world and developed a range ofproducts designed to suit every taste, need and cultural preference. Our distinctive seal is

recognized everywhere as a guarantee of quality and healthfulness.

Nutrition, quality and convenience remain the keystones of our products and even as weconfront the new century's challenges, we feel it is our duty to adapt to the changing

needs of our consumers.

Our responsibility does not simply lie in perfecting the products we develop at our R&D

centres spanning four continents, but the role our products play in making lives better -

both for our consumers and for communities in the countries we serve.

Thus, along with old favorites such as KITKAT chocolates and NESCAF, the world's

most popular coffee, we keep introducing new, exciting options worldwide.

Understanding that people in every country have different tastes and needs, we have

developed a range of food and lifestyle products. In India consumers enjoy healthy and

convenientMAGGI NoodlesAtta Noodles, in Pakistan you can findNESTL Raitaand inChina, flavoured water is strengthened with Prebio1; dietary fibre and traditional Chinese

ingredients such as Aloe Vera and Chrysanthemum.

Our popularity has come not just from acquisition and corporate expansion, but also froma care for the ever-evolving needs of customers at every point in their lives.
http://www.nestle.pk/brands/nestle-kit-kat.aspxhttp://www.nestle.pk/brands/nestle-kit-kat.aspxhttp://www.nestle.pk/brands/nescafe.aspxhttp://www.nestle.pk/brands/nescafe.aspxhttp://www.nestle.pk/brands/maggi.aspxhttp://www.nestle.pk/brands/maggi.aspxhttp://www.nestle.pk/brands/maggi.aspxhttp://www.nestle.pk/brands/nestle-raita.aspxhttp://www.nestle.pk/brands/nestle-raita.aspxhttp://www.nestle.pk/brands/nestle-raita.aspxhttp://www.nestle.pk/brands/nestle-raita.aspxhttp://www.nestle.pk/brands/maggi.aspxhttp://www.nestle.pk/brands/nescafe.aspxhttp://www.nestle.pk/brands/nestle-kit-kat.aspx


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NestlPakistan

Nestl Pakistan Limited is a subsidiary of Nestl S.A. - a company of Swiss origin

headquartered in Vevey, Switzerland. I t is a food processing company, registered on the

Karachi and Lahore stock exchanges. For nine years in a row, the company has won aplace among the top 25 companies award of the Karachi Stock Exchange.

Nestl has the unique ability to provide a wide range of food products and well-known

brands to meet the needs of consumers around the world. I t is not a faceless corporationcatering to faceless consumers, but a human company providing a response to individual

human needs. I t respects the cultures of the countries it operates in and recognizes the

need for quality of life of their people.

Nestl Pakistan is headquartered in Lahore; the Company operates four production

facilities. Two of its factories in Sheikhupura and Kabirwala are multi product factories.

One factory in Islamabad and one in Karachi produce bottled water. Through its effectivemarketing and a vast sales and distribution network throughout the country, it ensures

that its products are made available to consumers whenever, wherever and however.

In line with Nestls global philosophy, Nestl Pakistan is proud of its commitment to

excellence in product safety and quality and to providing value and services to its

consumers. O n the social front it acts very responsibly when it comes to environmentally

sound business practices and corporate social responsibility.

Nestl Pakistan operates in many ways but people, products and brands are the main flag

bearers of the companys image.

For Nestl Pakistan, milk is the core raw material for the production of UHT and powdermilk and other milk based products. Ever since the company commenced operations in

Pakistan, it has been committed to improve the quality and volume of its raw milk tomeet quality standards of it products. Driven by this commitment and given the

limitations of quality of raw milk available in the market it opted for self-collection in

1988. T o preserve the quality of raw milk in hot weather conditions in Punjab thecompany has made substantial investment in setting up an extensive cold chain by

installing over 2200 chilling units all over the milk shed area.

Nestl Pakistan now operates the biggest milk collection system, the basic unit of whichis the village milk collection center (VMC) where farmers deliver milk, morning and

evening. From over 3000 villages, milk is purchased, consolidated, chilled andtransported daily to factories in Sheikhupura and Kabirwala. Currently, Nestl Pakistancollects milk from an estimated 150,000 farmers spread over 145,000 sq Kms in the

province of Punjab and Sindh.


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Nestl believes in Creating Shared Value and is committed to the communities it works

and lives with. I n Pakistan, the company is working closely with the communities in

Areas related to Nutrition, Water and Rural Development.

A team of more than 80 people is committed to provide free technical advisory servicesto farmers for their development. Moreover, the company continues to build primary

schools, water filtration plants, merit / need base scholarships, women development,

vocational training, helping challenged individuals and sponsoring institutions forcommunity development. T he Pakistan Centre of Philanthropy- P CP, has awarded CSR

awards to Nestl Pakistan consecutively for the last two years for its contribution to

community development.

Additionally, Nestl Pakistan in collaboration with International development institutions

have initiated programmed for rural poverty alleviation through livestock training and

development and had partnered with institutions like UN DP and Swiss Agency for

Development and Cooperation (SDC) to train a sizeable number of women livestockworkers and small farmers for becoming skilled based small entrepreneurs in their

villages and earn additional income for their households.

Products & Brands

Ambient Dairy

Chilled Dairy

Infant Dietetic Beverages

Confectionery Culinary Water

Nestl Professional


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Vision and Strategy

The Nestl global vision is to be the leading health, wellness, and Nutrition Company inthe world. Nestl Pakistan subscribes fully to this vision. In particular, we envision to:

Lead a dynamic motivated and professional workforceproud of its heritage and bullish

about the future.

Meet the nutritional needs of consumers of all age groupsfrom infancy to old age, fromnutrition to pleasure, through an innovative portfolio of branded food and beverage

products of the highest quality.

Deliver shareholder value through profitable long-term growth, while continuing to play

a significant and responsible role in the social, economic and environmental sectors of thecountry.

We have profitable and diversified high quality food and beverage product portfolio,

delivering 60:40+ advantage to consumers, available across all sales channels.

Our brands are the preferred choice in their categories. Consumer insight drives all

aspects of our marketing and communication efforts.

Our communications to the consumer are relevant, cutting-edge, and adhere to the higheststandards of responsible communication.

Our company is seen as the No. 1 career destination for talented, motivated and ambitious

professionals.

Our result-oriented organizational structure ensures effective communication and

empowered self-management.

Our milk collection and agri services will continue to play the primary role in

development of the dairy sector in rural Pakistan.

Our proactive innovation and renovation culture is the key to our success in the

marketplace.

Fully integrated systems (Nestl Pakistan, suppliers, customers) ensure efficient business

processes.

Non-strategic activities and products are outsourced or discontinued.


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New Ski l ls Development in F inance

The mission of Finance at Nestl is to drive sound business decision making and

innovative planning to maximize long term profitable growth, cash flow and total return

to shareholders. Therefore, Finance plays a major role not only in control, but also by

participating in value creation.

To deliver on this important role, the F&C function has moved beyond the back-office

and has taken its place within the very heart of business activities. Finance employees actas Co-Pilots to business and functional leaders helping guide them to higher levels ofperformance.

The success achieved was made possible by helping everyone in Finance to build on theirnon-technical training. We have focused on the most important behaviors necessary to be

effective business partners; including general business acumen and highly effective

communication skills.

We have also helped department heads build their leadership and performance

management skills to ensure the focus on people development is consistent throughout

the organization.

Today the people of Finance are fully integrated into the business, working in cross-

functional teams, and leveraging their leadership abilities to deliver on the Financemission!


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Financial StatementsNestl Pakistan Limited

For the Year Ended December 31, 2009

Balance Sheet Profit and Loss Account

Statement of Comprehensive Income


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Analyses of F inancial Statement

Ratio Analyses

1.Profitability Ratios:a)Net Profit Ratio =Net Profit / Sales * 100

= 2,985,832,000 / 41,155,822,000 *100

Net Profit is 7.25 % of Total Sales

b)Gross Profit Ratio = Gross Profit / Sales * 100= 11,898,920,000 / 41,155,822,000 *100

Gross Profit is 28.9 % of Total Sales

c)Return on Equity =Net Profit After Tax / Share Holder Equity* 100

= 3,005,133,000 / 4,426,955,000 *100

Return on Equity is 67.88 % of Share Holder Equity

d)

Operating Profit Ratio = Operating Profit / Sales * 100= 5,575,311,000/ 41,155,822,000 * 100

Operating Profit Ratio is 13.5% of Sales


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e)Asset Turnover Ratio = Sales / Total Assets * 100= 41,155,822,000 / 18,586,980,000 * 100

Asset Turnover Ratio is 221.4% of Total Assets

2.Liquidity Ratios:a) Current Ratio = Current Assets / Current Liabilities

= 6,845,528,000/ 8,083,130,000

Current Ratiois 0.85

b) Liquid Ratio = Liquid Assets / Current Liabilities= 315,770,000/ 8,083,130,000

Liquid Ratiois 0.040

3.Solvency Ratios:a) Debt Equity Ratio = Long Term Loan / Share Holder Equity

= 4,210,750,000/ 4,426,955,000

Debt Equity Ratiois 0.95

b) Total Debt Ratio = Total Liabilities / Share Holder Equity= 14,160,025,000/ 4,426,955,000

Total Debt Ratiois 3.20


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4.Market Price & Dividend Ratios:a) Dividend Payout Ratio = Dividend Per Share / Earnings Per

Share= 20 / 66.27

Dividend Payout Ratiois 0.30

b) Earnings Per Share = Total Profit After Tax / Total No Shares= 3,005,133,000 / 45,346,808

Earnings per Shareis 66.27

c) Price Earnings Per Share = Market Price per Share / Earnings

Per Share= 1484.47 / 66.27

Price Earnings per Shareis 22.40

NESTLE PAKISTAN LIMITED 31/12/2009 1484.47 0.00 0.00 1505.45 0.00 +20.98 0


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Final Project - Ratio Analyses.docx

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