Fs_Analysis

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS a. Liquidity Ratios Ratio | Formula | Computation | Current Ratio or Working Capital Ratio or Bankers’ Ratio | Current AssetsCurrent Liabilities | 38,997,00030,146,000=1.29:1 | Acid Test Ratio or Quick Ratio | Quick Assets*Current Liabilities*Quick Assets = Cash + Cash Equivalents + Net Receivables + Marketable Securities | 8,057,000+8,189,000+12,083,00030,146,000=0.94:1 | Cash Ratio | Cash+Cash Equivalents+Marketable SecuritiesCurrent Liabilities | 8,057,000+8,189,00030,146,000=0.54:1 | Cash to Current Assets Ratio | Cash+Cash Equivalents+Marketable SecuritiesCurrent Assets | 8,057,000+8,189,00038,997,000=0.42:1 | EARNING POWER Ratio | Formula | Computation | Total Debt Ratio | Total LiabilitiesTotal Assets | 49,043,000111,641,000=0.44:1 | Debt to Equity Ratio | Total LiabilitiesEquity | 49,043,00062,598,000=0.78:1 | Times-Interest-Earned Ratio | EBITInterest Expense | 38,820,000828,000=46.88:1 | ASSET MANAGEMENT RATIOS Ratio | Formula | Computation | Merchandise Inventory Turnover | Cost of SalesAverage Inventory | 45,849,000(7,734,000+7,925,000)/2=5.86 Times | Average Age of Inventory | # of days/yearInventory | 365 Days5.86=62.3 Days | Receivable Turnover Ratio | Net Credit SalesAverage Accounts Receivable | 109,722,00012,196,000=9 Times | Average Collection Period | # of Days in a YearReceivable Turnover Ratio | 365 Days9 Times=40.56 Days | Fixed Assets Turnover Ratio | Net SalesAverage Net Fixed Assets | 109,722,000(21,438,000+21,599,000)/2=5.1 TImes | Total Assets Turnover Ratio | Net SalesAverage Total Assets | 109,722,000(111,641,000+110,916,000)/2=1 Times | Payout Ratio | Dividends Earnings | 5443+72935384 = .174 | PROFITABILITY RATIOS Ratio | Formula | Computation | Profit Margin on Sales or Net Profit Percentage | Net IncomeNet Sales | 35,384,000109,722,000=32.25% | Net Operating Income to Sales | EBITNet Sales | 38,820,000109,722,000=35.40% | Return on Investment | Net IncomeAverage Total Assets | 35,384,000111,279,000=31.8% | Return on Asset | Net Income+InterestAverage Total Assets | 35,384+828111,278.5 =32.54% | Return on Equity | Net IncomeAverage Equity | 35, 38458,114.5 =60.89% | Cash Coverage ratio | EBIT+DepreciationInterest payments | 16,193+2,713828 =22.83% | NWC to Total Asset | Net Working CapitalTotal Asset | 38,9971-30146111,641 =0.07 | Vertical analysis (In millions) Nestlé Group | Income Statement | For The Year Ended December 31, 2010 | | | | | | | | | | 2010 | Percentage | | | | | | Sales | 109 722 | 100 | | | | | | Cost of goods sold | 45 849 | 41.79 | | Distribution expenses | (8 510) | (7.76) | | Marketing and administration expenses | (37 288) | (33.98) | | Research and development costs | (1 881) | 1.71 | | EBIT Earnings Before Interest, Taxes, | 16 194 | 14.76 | | restructuring and impairments | | | | | | | | Other income | 24 741 | 22.55 | | Other expenses | (2 115) | 1.93 | | Profit before interest and taxes | 38 820 | 35.38 | | Financial income | 94 | 0.09 | | Financial expense | (847) | 0.77 | | Profit before taxes and associates | 38 067 | 34.69 | | | | | | Taxes | (3 693) | 3.37 | | Share of results of associates | 1 010 | 0.92 | | Profit for the year | 35 384 | 32.25 | | of which attributable to non-controlling interests | 1 151 | 1.05 | | of which attributable to shareholders | 34 233 | 31.19 | | of the parent (Net Profit) | | | | (In millions Nestlé Group | Statement of Financial Position | As of December 31, 2010 | | | | | | | | | | 2010 | Percentage | | Assets | | | | | | | | Current assets | | | | Cash and cash equivalents | 8 057 | 7.22 | | Short-term investments | 8 189 | 7.34 | | Inventories | 7 925 | 7.10 | | Trade and other receivables | 12 083 | 10.83 | | Prepayments and accrued income | 748 | 0.67 | | Derivative asset | 1 011 | 0.91 | | Current income tax assets | 956 | 0.86 | | Assets held for sale | 28 | 0.23 | | Total current assets | 38 997 | 34.93 | | | | | | Non-current assets | | | | Property, plant and equipment | 21 438 | 19.20 | | Goodwill | 27 031 | 24.21 | | Intangible asset | 7 728 | 6.92 | | Investments in associates | 7 914 | 7.09 | | Financial assets | 6 366 | 5.70 | | Employee benefits assets | 166 | 0.15 | | Current income tax assets | 90 | 0.08 | | Deferred tax assets | 1 911 | 1.71 | | Total non-current asset | 72 644 | 65.07 | | | | | | Total assets | 111 641 | 100 | | | | | | | | | | Liabilities and equity | | | | | | | | Current liabilities | | | | Financial debt | 12 617 | 11.30 | | trade and other payables | 12 592 | 11.28 | | Accruals and deferred income | 2 798 | 2.51 | | Provisions | 601 | 0.54 | | Derivative liabilities | 456 | 0.41 | | Current income tax liabilities | 1 079 | 0.97 | | Liabilities directly associated with assets held for sale | 3 | 0.27 | | Total current liabilities | 30 146 | 27 | | | | | | Non-current liabilities | | | | Financial debt | 7 483 | 6.7 | | Employee benefits liabilities | 5 280 | 4.73 | | Provisions | 3 510 | 3.14 | | Deferred tax liabilities | 1 371 | 1.23 | | Other payables | 1 253 | 1.12 | | Total non-current liabilities | 18 897 | 16.92 | | | | | | Total liabilities | 49 043 | 43.93 | | | | | | Equity | | | | Share capital | 347 | 0.31 | | Treasury shares | (11 108) | (9.95) | | Translation reserve | (15 794) | (14.15) | | Retained earnings and other reserves | 88 422 | 79.20 | | Total equity attributable to shareholders of the parent | 61 867 | 55.42 | | Non-controlling interests | 731 | 0.65 | | Total equity | 62 598 | 56.07 | | | | | | Total liabilities and equity | 111 641 | 100 | |