Nestle Annual Report Analysis

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Financial Analysis of Nestle India Ltd

Introduction

Nestle is one company in India that has nutrition, health and wellness embedded in all its business, developing products for consumers through different stages of their lives.

It is an integral part of the social fabric and focused on understanding the changing life styles of India, to anticipate the consumer needs.

In the 150 years since its inception, it has continued to find newer and better applications of scientific knowledge to improve the quality of life of consumers across the world. Nestle’s expenditure for on going research in food and nutrition is the largest in the global food industry.

The Analysis

We have made an attempt to analyse Nestle’s overall performance and assess its current financial standing using 2007 and 2008 financial data. The purpose of this analysis is to assess company’s financial health and performance. Effective decision making requires evaluation of the past performance of the companies and assessment of the future prospects. Information about past performance is useful in judging future performance. An assessment of the current status will show where the company stands at present. Investors and creditors use information about past to assess the prospects of a company. Investors expect an adequate return from the company in the form of the dividends and market price appreciation. Creditors expect the company to pay interest and repay the principal in accordance with the terms of lending. Therefore they are interested in predicting the earning power and debt paying ability of the company. Investors and creditors try to balance expected risks and return.

Our approach to financial analysis followed a comprehensive framework of looking at various parameters of company performance and use different ratio’s to substantiate the analysis. The framework will be as under:

• Income and Sales Growth

• Profit and Profitability

• Liquidity Analysis...