FINANCIAL RATIO ANALYSIS

NESTLE INDIA 2018

SUBMITTED BY:
AKASH SINGH NIRAJ
ABHIJEET PANDE
RAMYA E
10 - Year Financial Highlights
 in millions (except otherwise stated)

201 201 201 201 201 201 201

  2018 2017 2009
6 5* 4 3 2 1 0
Results                    
  1,12,1                  
Sales 62 1,01,351 94,096 81,233 98,063 90,619 83,023 74,908 62,547 51,294
Profit from 23,50                  
Operations 9 18,305 16,542 13,338 17,926 16,941 15,400 13,840 11,387 9,167
as % of Sales 21 18 18 16 18 19 19 18 18 18
16,06
Profit after Tax 12,252 10,014 5,633 11,847 11,171 10,679 9,615 8,187 6,550
9
as % of Sales 14 12 11 7 12 12 13 13 13 13
 
Balance
Sheet and
                   
Cash flow
Statement
Shareholders 36,73                  
Fund 7 34,206 32,823 28,178 28,372 23,687 17,984 12,740 8,554 5,813
Return on                    
Average Equity
(%) 45 37 33 20 46 54 70 90 114 124

Operating Cash 20,52                  

flow 5 18,178 14,659 10,981 16,440 17,964 16,934 11,582 10,368 9,279
as % of Sales 18 18 16 14 17 20 20 15 17 18
Capital                  
1,628
Expenditure 1,959 1,133 1,493 4,044 3,282 9,744 15,552 4,459 2,552
as % of Sales 1 2 1 2 4 4 12 21 7 5
 
Data per
                   
Share
Earnings per
166.7 127.1 103.9 58.4 122.9 115.9 110.8 99.7 84.9 67.9
share (`)
Dividend per
115 86 63 48.5 63 48.5 48.5 48.5 48.5 48.5
share (`)
 
Market
capitalisati
on, end                    
December
1,07,0
(` in crores) 75,638 58,137 56,153 61,511 51,074 48,115 40,231 36,592 24,566
91
 

Number of
7,604 7,527 7,588 7,495 7,228 7,159 7,008 6,639 5,573 4,983
employees

NOTES Year ended Year

31 December 2018 ended 31
 (` in million) December 2017
(` in
million)
A INCOME
Domestic Sales 105,075.4 94,724.5
Export Sales 7,086.9 6,626.6
Sale of products 33 112,162. 101,351.1
3
Other operating revenues 26 760.4 570.7
i Revenue from operations 112,922. 101,921.8
7
ii Other Income 27 2,589.2 1,769.2
Total Income 115,511. 103,691.0
9
B EXPENSES
i Cost of materials consumed 28 43,656.8 42,316.6
ii Purchases of stock-in-trade 2,305.6 1,747.6
iii Changes in inventories of finished goods, 29 (60.1) (795.6)
work-in- progress and stock-in-trade
iv Excise duty - 1,825.8
v Employee benefits expense 30 11,241.5 10,174.5
vi Finance costs (including interest cost on 31 1,119.5 919.0
employee benefit plans)
vii Depreciation and Amortisation 5 3,356.7 3,422.5
vii Other expenses 32 28,181.1 24,170.2
i
ix Impairment loss on property, plant and 5 110.8 371.8
equipment
Net provision for contingencies 37
x - Operations 621.7 383.6
xi - Others 415.1 1036.8 492.9 876.5
xii Corporate social responsibility expense 38 273.7 269.1
Total Expenses 91,222.4 85,298.0
C PROFIT BEFORE TAX (A-B) 24,289.5 18,393.0
D Tax expense
Current tax {includes ` 190.8 million 39 8,848.7 6,491.7
(2017 : Nil) of earlier years}
Deferred tax 39 (628.5) 8,220.2 (350.6) 6,141.1
E PROFIT AFTER TAX (C-D) 16,069.3 12,251.9
Liquidity Ratios
CURRENT ASSET 4736
1. Current Ratio = =
CURRENT LIABILITY 1854

= 2.55
Current Ratio is greater than 1.0 , a desirable situation to be in for nestle india.
QUICK ASSET
2. Quick Ratio =
QUICK LIABILITY

CURRENT ASSETS−INVENTORY
=
CURRENT LIABILITY −BANK OVERDRAFT

4736−965 3771
= = =2.03
1854−0 1854
If quick ratio is higher, company may keep too much cash on hand or have a problem
collecting its accounts receivable.

ABSOLUTE QUICK RATIO

3. Absolute Quick Ratio =
CURRENT LIABILITY

CASH + BANK BALANCE +SHORT TERM INVESTMENT

=
CURRENT LIABILITY

1598+11+1925 3534
= = = 1.9
1854 1854
Acceptable norm of this ratio is 50 percent. It means absolute liquid assets worth one half of
the value of current liabilities are sufficient for satisfactory liquid position of a business.

QUICK ASSET
4. Basic Defensive Ratio =
PROJECTED DAILY CASH REQUIREMENT

It cannot be calculated as cash requirement is not given.

CAPITAL STRUCTURE RATIO

LONG TERM DEBT ( BORROWINGS)
5. DEBT EQUITY RATIO =
SHAREHOLDER EQUITY (TOTAL EQUITY )
 35
= = 0.01
3673

Low debt equity ratio means finances of company are very stable.
NET WORTH (TOTAL EQUITY )
6. Proprietary Ratio =
TOTAL ASSET
3673
= = 0.45
8088
It shows shareholders have 45% contribution in company’s capital.
7. Capital Gearing Ratio =
¿ DIVIDEND FUND +¿ INTEREST FUND
EQUITY
As fixed dividend fund and fixed interest fund is not given in balance sheet, it was not
calculated.
¿ ASSET
8. Fixed Asset Ratio= CAPITAL EMPLOYED
(SHAREHOLDERS EQUITY + LONG TERM DEBT )

2400 2400
= = = 0.647
3673+35 3708

Higher fixed asset ratio indicate that company has become more effective in operating
with fixed asset.
PROFIT BEFORE INTERST ∧TAX
9. Interest Coverage Ratio =
¿ I NTEREST

As fixed interest was not given in balance sheet, it was not calculated.

PROFIT AFTER TAX

10. Dividend Coverage Ratio =
PREFERENCE DIVIDEND

As preference dividend is not given in balance sheet , it was not calculated.

11. Debt Service Coverage Ratio =

PROFIT BEFORE INTERST ∧TAX

PERIODICAL LOAN INSTALLMENT
INTEREST +
1−RATEOF TAX
As periodical loan installment and rate of tax is not given in balance sheet, it was not
calculated.

TURNOVER RATIO
 12. Inventory Turnover Ratio =

365
COGS 365
(OPENING STOCK −CLOSING STOCK ¿+ PURCHASES) = 903−965+10985 =
AVERAGE SALES 933.5
(OPENING STOCK + CLOSING STOCK )/ 2
31.17
It means inventory will be over in 31 days.

365
NET CREDIT SALES 365
13. Debtor Turnover Ratio = = =3.47
(TOTAL SALES −CASH SALES ) 11216/106.5
AVERAGE DEBTOR
Assuming all sales to be on credit. All debtors will be cleared in span of 4 days
approx.
365
365
14. Creditor Turnover Ratio = NET CREDIT PURCHASES ¿ ¿ = =87.74
¿ 4595/1104
¿
Assuming all purchases in credit. All credit will be cleared in 88 days approx..
SALES 11216
15. Fixed Asset Turnover Ratio = = = 4.67
¿ ASSETS 2400

Higher fixed to asset turnover ratio represent company is doing great in converting
fixed asset in sales.
SALES 11216
16. Total Asset Turnover Ratio = = = 1.38
TOTAL ASSETS 8088
Higher total asset turnover ratio shows company is efficiently converting assets into
sales.

PROFITABILITY RATIO
GROSS PROFIT (SALES−COGS) 11216−10923
17. Gross Profit Ratio= ∗100 = = ∗100
SALES 11216
= 2.6%
Higher gross profit ratio means gross profit is enough to cover for all expenses.
NET PROFIT 1606
18. Net Profit Ratio = ∗100 = ∗100 = 14.3%
SALES 11216
This shows profit remaining after all expenses & taxes.
OPERATING PROFIT
19. Operating Profit Ratio= ∗100
SALES
As operating profit is not given in balance sheet, it was not calculated.
 OPERATING COST
20. Operating Cost Ratio= ∗100
SALES
As operating cost is not given in balance sheet, it was not calculated.
PBIT 2428
21. Return On Capital Employed = = = 0.65
CAPITAL EMPLOYED 3708
Higher Return On Capital Employed means Nestle India is efficiently generating
profit from its capital employed.
PAT 1606
22. Return On Net Worth = = = 0.437
NET WORTH 3673
It represent how company is utilizing shareholders fund for their operation. 43.7%
represent Nestle India is sufficiently utilizing shareholders fund.
PAT −PREFRENCE DIVIDEND 2428
23. Return On Equity = = =0.66
EQUITY SHAREHOLDER FUND 3673
It is a measure of profit. 66% means company has been very efficient in generating
profit without utilizing much capital.
PAT 1606
24. Return On Total Asset = = = 0.1985
TOTAL ASSET 8088
It measure profitability of assets. 19.85% represent profitability on asset is low.
PAT −PREFERENCE DIVIDEND 2428
25. Earnings Per Share = = =674.4
NO . OF SHARE 3.6
It represent amount earned per share.
DIVIDEND DECLARED∧PAID
26. Dividend Per Share =
NO .OF SHARE
As dividend declared and paid is not in balance sheet, it was not calculated.
DIVIDEND PER SHARE 115
27. Dividend Payout Ratio = = =0.69
EARNING PER SHARE 166
It shows how much share of profit company is keeping for operations and how much
it is giving to shareholders.
MARKET VALUE PER SHARE
28. Price Earning Ratio =
EARNING PER SHARE
As market value per share is not given balance sheet, it was not calculated.
NET WORTH 3673
29. Book Value Share = = =1020
NO .OF SHARE 3.6
When a stock is undervalued, it will have a higher book value per share in relation to
its current stock price in the market.

COMPARITIVE ANALYSIS
COMPARITIVE ANALYSIS(ALL FIGURE IN CRORES)
PARTICULARS 2018 2017 CHANGE
SALES 11216 10135 1.1066601
PROFIT FROM OPERATION 2350 1830 1.284153
PROFIT AFTER TAX 1606 1252 1.2827476
SHAREHOLDER'S FUND 3673 3420 1.0739766
OPERATING CASH FLOW 2052 1817 1.1293341
CAPITAL EXPENDITURE 1628 1959 0.8310362
MARKET CAPITALISATION 10709 7563 1.4159725
NO. OF EMPLOYEES 7604 7527 1.0102298

COMPARITIVE ANALYSIS (ALL FIGURES IN CRORES)

PARTICULARS 2018 2017 CHANGE
NON CURRENT ASSETS 3351 3425 0.978394161
CURRENT ASSETS 4736 3937 1.202946406
TOTAL ASSETS 8088 7362 1.098614507
EQUITY 3673 3420 1.073976608
NON CURRENT LIABILITY 2559 2449 1.044916292
CURRENT LIABILTY 1854 1492 1.242627346
TOTAL EQUITY AND LIABILITIES 8088 7362 1.098614507
1121 1013
SALE OF PRODUCTS 6 5 1.106660089
1129 1019
REVENUE FROM OPERATIONS 2 2 1.107927786
1155 1036
TOTAL INCOME 1 9 1.113993635
TOTAL EXPENSES 9122 8529 1.069527494
PBIT 2428 1839 1.320282762
PAT 1606 1251 1.283772982

TREND ANALYSIS
2009 has been considered as base year for all calculation.

COMPARITIVE ANALYSIS(ALL FIGURE IN CRORES)

PARTICULARS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
SALES 11216 10135 9409 8123 9806 9061 8303 7490 6254 5129
PROFIT FROM
OPERATION 2350 1830 1654 1333 1792 1694 1540 1384 1138 916

PROFIT AFTER TAX 1606 1252 1001 563 1184 1117 1067 961 818 655
SHAREHOLDER'S
FUND 3673 3420 3282 2817 2832 2368 1798 1274 855 581
OPERATING CASH
FLOW 2052 1817 1465 1098 1644 1796 1693 1158 1036 927
CAPITAL
EXPENDITURE 162 195 113 149 404 328 974 1555 445 255

MARKET
CAPITALISATION 10709 7563 5813 5615 6151 5104 4811 4023 3659 2456
NO. OF EMPLOYEES 7604 7527 7588 7495 7228 7159 7008 6639 5573 4983

Change In Sales
2.5

1.5

0.5

0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Change in profit
3
2.5
2
1.5
1
0.5
0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Change in PAT
3

2.5

1.5

0.5

0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
 change shareholder fund
7

0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

change in operating cash flow

2.5

1.5

0.5

0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

change in Capital Expenditure

7

0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
 Change in Market Capital
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Change in No. of Employee

1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

COMMON SIZE ANALYSIS

COMMON SIZE ANALYSIS

INCOME STATEMENT
PARTICULARS AMOUNT COMMON SIZE(%)
SALES 11216.23 97.10096874
Add : Other operating revenues 76.04 0.658292284
Add : Other Income 258.92 2.241518124
Total Income 11,551.10 100
Less : Total Expense 9,122.24 78.97291167
Profit before tax 2,428.95 21.02786748
Less: Tax expense 822.02 7.116378527
Profit after tax 1,606.93 13.91148895
Add : Other Comprehensive Income 40.41 0.349836812
Total Comprehensive Income 1,566.52 13.56165214

BALANCE SHEET
ASSETS Values COMMON SIZE
Non-current assets 2400.622 29.68%
Property, Plant and Equipment 105.2 1.30%
Capital work-in-progress 733.36 9.07%
Financial Assets Investments 40.14 0.50%
Loans 71.81 0.89%
Other non-current assets 965.55 11.94%
Current assets Inventories 1921.53 23.76%
Financial Assets Investments 124.59 1.54%
Trade receivables 1598.77 19.77%
Cash and cash equivalents 11.29 0.14%
Bank Balances other than cash and cash
equivalents 17.89 0.22%
Loans 52.49 0.65%
Other financial assets 18.85 0.23%
Current tax assets 22.39 0.28%
Other current assets 4736.95 58.57%
Total Assets 8088.08 100.00%

EQUITY AND LIABILITIES EQUITY

Equity Share Capital 964.2 11.92%
Other Equity 3577.32 44.20%

LIABILITIES
Non-current liabilities
Financial Liabilities Borrowings 351.4 4.34%
Provisions 2464.92 30.48%
Deferred tax liabilities (net) 588.82 7.28%
Other non-current liabilities 0.51 0.01%
CURRENT LIABILITIES
Financial liabilities
Trade payables
Total outstanding dues of micro enterprises and
small enterprises 10.77 0.13%

Total outstanding dues of creditors other than

micro enterprises 122.96 1.52%
Other financial liabilities 316.18 3.91%
Provisions 157.26 1.94%
Other current liabilities 141.14 1.75%
Total Equity and liabilities 8088.08 100.00%