NESTLE GROUP

BALANCE SHEET
HORIZONTAL & VERTICAL ANALYSIS
YEAR 2018-2017
Figures in million
ACCOUNTS 2018 2017 VERTICAL AMOUNT PERCENTAGE
ANALYSIS CHANGE CHANGE
2018 HORIZONTAL
ANALYSIS
Assets
Current assets  
Cash and cash 4,500
7,938 3.28%
equivalent -3,438 -43.31%
Short term 5,801
655 4.23%
investment 5,146 785.65%
inventories 9,125 9,177 6.66% -52 5.70%
Trade and other 11,167
12,036 8.15%
receivable -869 -7.22%
Prepayment and 530
573 0.39%
accrued income -43 -0.07504
Derivative assets 183 231 0.13% -48 -20.78%
Current income tax 869
917 0.63%
assets -48 -5.23%
Assets held for sale 8,828 357 6.44% 8,471 2372.83%
Total current assets 41,003 31,884 29.93% 9,119 28.60%

Non-current
Property Plant and
29,956 30,777 21.86%
Equipment -821 -2.67%
Goodwill 31,702 29,746 23.14% 1,956 6.58%
Intangible assets 18,634 20,615 13.60% -1,918 -9.60%
Investment in
associate and joint 10,792 11,628 7.88%
ventures -836 -7.19%
Financial assets 2,567 6,003 1.87% -3,436 -57.24%
Employees benefits
487 392 0.36%
assets 95 24.23%
Current income tax
58 82 0.04%
assets -24 -29.27%
Deferred tax assets 1,816 2,103 1.33% -287 -13.65%
Total Non-current
96,012 101,326 79.04%
assets -5,314 -5.24%
Total assets 137,015 133,210 100% 3,805 2.86%
 LIABILITIES AND 2018 2017 VERTICAL AMOUNT PERCENTAGE
EQUITY ANALYSIS CHANGE CHANGE
2018 HORIZONTAL
ANAYLYSIS
Liabilities Current:
Financial debt 14,694 11,211 10.72% 3,483 31.07%
Trade and other 17,800 18,864 13%
payable -1,064 -5.64%
Accruals and 4,075 4,299 2.97%
deferred income -224 -5.21%
Provisions 780 819 0.60% -39 -4.76%
Derivative tax 448 507 0.33 -59 -11.64%
Other payable 2,731 2,477 2% 254 10.25%
Liabilities directly 2,502 12 1.82%
associated with
assets held for sale 2,490 20750.00%
Total current 43,030 38,189 31.41% 4,841 12.68%

Non-current
Financial debt 25,000 18,566 18.25%

6,434 -16.76%
Employees benefits 5,919 7,111 4.32% -1,192 -9.94%
Provision 1,033 1,147 0.75% -114 -27.26%
Deferred tax 2,540 3,492 1.85% -952 -84.25%
Other payable 390 2,476 0.28% -2,086 8.51%
Total Non-current 35,582 32,792 25.97% 2,790 6.52%
Total Liabilities 78,612 70,981 57.37% 7,631 10.75%

Equity
capital 306 311 0.22% -5 -1.61%
Treasury share (6,948) (4,537) (5.07) -2,411 53.14%
Share Translation (20,432) (19,436) (14.91)
reserve -996 5.12%
Other reserve (183) 989 (0.13) -1172 -118.50%
Retained earnings 84,620 83,629 61.75% 991 1.18%
Total equity 57,363 60,956 41.87%
attributable -3,593 -5.89%
Non-controlling 1,040 1,273 0.75%
interest -233 -18.30%
Total equity 58,403 62,229 42.62% -3,826 -6.15%

Total liabilities and 137,015 133,210 100%

Equity 3,805 2.86%
 NESTLE GROUP

INCOME STATEMENTS

HORIZONTAL AND VERTICAL ANALYSIS

2017-1018

ACCOUNTS 2018 2017 VERTICAL AMOUNT PERCENTAGE

ANALYSIS CHANGE CHANGE
2018 HORIZONTAL
ANALYSIS

Sales 91,439 85,960 100% 1,903 2.12%

   
Other revenue 311 332 0.34% -21 -6.33%
Cost of goods sold -46,070 -46,571 50.38% -501 -1.08%
Distribution expense -8,469 -8,023 9.26% 446 5.56%
Marketing and
-20,003 -19,818
administrative expense 21.87% 185 0.93%
Research and
-1,687 -1,739
development expense 1.84% 52 -2.99%
Other trading income 37 112 0.04% -75 -66.96%
Other trading expense -1,769 -1,606 1.93% -163 10.15%
Trading operating
13,789 13,277
profits 15.08% 512 3.86%
   
Other operating income 2,535 379 2.77% 2,156 568.87%
Other operating expense -2,572 -3,500 2.81% -928 -26.51%
Operating profits 13,752 10,156 15.07% 3,596 35.41%

Financial income 247 152 0.27% 95 62.50%

Financial expense -1,008 848 1.10% -1,856 -218.87%
Profit Before taxes,
associates and joint 12,991 9,460
ventures 1.42% 3,531 37.33%
   
taxes -3,439 2,773 3.76% -666 24.02%
Income from Associates
916 824
and joint venture income 1.00% 92 11.17%
 Net profits 10,468 7,511 11.45% 2,957 39.37%

Vertical Analysis.

When it comes to total assets for year 2018, the big portion of the total available assets by the
firm is the total Non current assets which is equivalent to 79.04% compared to 29.93% current assets.
When it comes to total liabilities and equity of entity, liabilities got a big portion which is equivalent to
57.37 % which comprises 31.41% current liabilities and 25.97 non current liabilities. The Equity it's
percentage portion to the entities is equivalent to 42.62%. This data given to us implies that the entity
has more liabilities owed to its creditors compared to investment Of the shareholders and investors. For
income, the proportion of net profit to sales is only 11.45%, 50.38% incured by the total cost of goods
sold and the other 38.17% incured as an other expenses of the entity.

Horizontal Anlysis

In all for two consecutive years comparison of the operation of entity, many accounts increases
but some decreases. For total assets of the entity it increases for aboyt 2.86% a positive increase in
current asset of 28.60% and an decrease change of 5.24% in non current assets. For liabilities and
equity of the entity, the total liabilities increases for about 10.75%, an increase change of 12.68% in
current liabilities and 6.52% increase change in non current liabilities. The equity decreases for about
6.15%, which means the entity investment decrease and it's owes to creditors increases. When it
comes to sales the entity positively increased their sales for about 2.12% which is directly proportional
to increase in net profit for about 39.37%, it happens having a different because of decreasing the total
cost of goods sold and increasing a little bit in expense which resulted in having a big return of net profit.

II. F'S ANALYSIS IN APPLICATIONS TO DIFFERENT FINANCIAL RATIO

 LIQUIDITY
RATIO

Current ratio

=Current Assets /Current Liabilities

2018 2017

=41,003/43,030 31,884/38,189

=95.29% =83.49%

The business are in crisis when it comes to current ratio because the current asset can't
sustained to paid all current liabilities it implicates for creditor even investor that their cash
or investment in business is at high risk not to be return or valued by the Nestle Group
Company easily and fastly maybe it takes a year in able to meet the business to paid all
liabilities and investment of other entity. For year 2017 and 2018 current ratio of the
business increase for about 11.8% but still this increase implicates not all the current
liabilities will be paid using only available current assets.

STABILITY / LEVERAGE RATIO

Debt to Equity

=Total Liabilities /Total Equity

2018 2017

=78,612/58,403 =70,981/62,229

=134.60% =114.05%

It implies to the business that more assets is provided by the creditors to the business
compared to shareholders investment. The primary providers and the life blood of the
business operation depends only to creditors. For two consecutive years operation of entity,
debt to equity ratio increased for about 20.55%
 Debt Ratio Equity Ratio
= Total liabilities /Total assets =Total Equity /Total Assets
2018 2017 2018 2017
=78,612/137,015 =70,981/133,210 =58,403/137,015 =62,224/133,710
=57.37% =53.29% =42.63% =46.54%
More than half of the total assets of the The investment of the shareholder's to entities
entity owes by the business to its creditors. is decreased and less than to investment of
For two consecutive years of operation it creditors. Less than half only of the total assets
increased for about 4.08%. Nestle debt ratios is owned by the entities greater than to its
in 2018 and 2017 indicates a relatively owes to the creditors.
heavy reliance on borrowed capital .

PROFITABILITY RATIO

Return on Sales (ROS) Return on assets (ROA)

=Sales/Net Profits =Net Profit /Ave. Assets
2018 2017 2018 2017
=91,439/10,468 =85,960/7,511 =10,468/135,112.5 =7,511/133,210
=873.51% =1,144.45% =7.75% =5.64%
The return on sales of the entity decrease The return on assets Of entity increase for
even though its sales and net profits increase. about 2.11% It implies to us the profitability of
It implies to us the portion of net profit to the invested assets increase as it's portion to
sales is better than for 2017 compare to 2018. total net profit earned.
It decreased for about 270.94%

Return on Equity (ROE)

The Return on Equity of the entity
=Net Profit /Ave. Equity performed well as it increased for about
5.3%. It implies to us the profitability of the
2018 2017
investment of the entity to proportion of net
=10,468/60,316 =7,511/62,229 income in 2018 is better than compare to
2017.
= 17.36% =12.06%
Financial Leverage Index (FLI)
Rate of return on average current assets
=ROE/ROA
=Net Income /Ave. Current assets
2018 2017
2017 2018
=17.36/7.75 =12.06/5.64
=10,468/ 36,443.5 =7,511/31,884
=224% =213.83%
=28.72% =23.56%
FLI of 224% in 2018 and 213.83% in 2017
The Rate of return on average current assets of
indicates a successful use of financial
the entity Increase For about 5.16%. The
leverage although borrowing increased.
operation keep on going up little by little when it
The firm generated sufficient operating
comes to its rate of return on average current
return to more than cover the interest
asset.
payment on borrowed funds.

Operating Profit Margin (OPM) Gross Profit Margin (GPM)

=Operating Profit/Net sales =Gross Profit / Net sales

2018 2017 2018 2017

=13,752/91,438 =10,156/85,960 =45,369/91,439 =39,389/85,960

=15.04% =11.81% =50.62% =45.82%

The operating profit margin of the The Gross Profit Margin increase for this two
entity improved from 11.81% in 2017 consecutive years. It implies to us a positive
to 15.04% in 2018. This is favorable performance of entity in operation when it comes
because it indicates ability of the to gross profit it's proportion to sales earned from
company to control it's operating almost in 2017 to at most half to net sales in 2018.
expenses while sharply increasing
sales.