1. Ratio Analysis on the Business Based on the Year 2011 & 2012
Profitability Ratios
Return of
Equity(ROE)
2011
2012
=
=
100
100
Interpretation
=
=
=16.22%
= 18.30%
Net Profit
Margin(NPM)
=
=
=
=11.72%
=
= 11.99
Gross Profit
Margin(GPM)
=
=
=
=29.90%
=
= 30.31%
Selling Exp.
Ratio(SER)
=
=
=
15.79%
=
15.44%
General Exp.
Ratio(GER)
=
=
=
=15.79%
=
=15.44%
100
100
During the period 2011 to
2012, the ROE has increase
from 16.22% to 18.30%. This
means that the owner is
getting a higher return of his
capital this year.
During the period 2011 to
2012, the NPM has increase
from 11.72% to 11.99%. This
means that the business is
getting better at controlling
expenses.
During the period 2011 to
2012, the GPM has increase
from 29.90% to 30.31%. This
means that the business is
getting better at controlling
its COGS.
During the period 2011 to
2012, the SER has decrease
from 15.79% to 15.44%. This
means that the business is
getting better at controlling
its selling expenses.
During the period 2011 to
2012, the GER has decrease
from 15.79% to 15.44%. This
means that the business is
getting better at controlling
its general expenses.
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2. Stability Ratios
2011
2012
Working
Capital(WCR)
=
=
=
=0.94:1
=
=0.91:1
Total Debt
=
=
=
=48.92%
=
=50.40%
= 365
= 365
=365
=365
=71.05 days
= 69.30 days
=365
=365
=365
=365
=55.47 days
= 52.94 days
=
=
=
=19.60 times
=
=14.40 times
Stock Turnover(ICR)
Debtor
Turnover(DTR)
Interest
Coverage(ICR)
Interpretation
During the year 2011 to 2012,
the working capital has
decrease from 0.94:1 to
0.91:1. This means that the
business ability to pay off its
current liabilities with using
current asset is getting better.
During the year 2011 to 2012,
the total debt has increase
from 48.92% to 50.40%. This
means that the total debt has
getting worse.
During the year 2011 to 2012,
the stock turnover has
decrease from 71.05 days to
69.30 days. This means that
the business has been selling
its stock faster.
During the year 2011 to 2012,
the debtor turnover has
decrease from 55.47 days to
52.94 days. This means that
the business is getting faster
in getting its debt.
During the year 2011 to 2012,
the interest coverage has
decrease from 19.60 times to
14.40 times. This means that
the business its ability to pay
back the interest expenses is
worse.
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3. Appendix 1
P/E Ratio
=
=
=21.06
The high P/E Ratio for this company will not have any investors because they have to
wait for such a long time to claim back their original principal.
Appendix 2: investment Recommendation
Profitability:
Based on our calculations, we found out that the business we chose, Nestle is doing
well at controlling its profitability ratios. In 2011, Nestle was listed number 1 in the
fortune global 500 as the world’s most profitable co-operation. With a market
capitalization of $ two hundred and thirty three billion, Nestle ranked number 9 in
the fortune global 500 of 2013.
Stability:
Based on our calculations, we found out that the business we chose, Nestle is doing
slightly bad on controlling its total dept and interest coverage. Not only that, it is
doing good on its working capital, stock turnover and deptor turnover.
Price:
Based on the company’s P/E Ratio, it is 21.06, it means that an investor needs to
wait for a long time claim back his original principal. We would say that, we would
not invest on it.
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4. APPENDIX
7|Page

5. P & L Statement for the year 2011
8|Page

6. Balance Sheet for the year 2011
9|Page

7. P & L for the year 2012
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8. Balance Sheet for the year 2012
11 | P a g e

9. Reference
Bursamalaysia.com.
NESTLE (MALAYSIA) BERHAD [S] (4707) | Bursa Malaysia Market
In-text: (Bursamalaysia.com, 2014)
Bibliography: Bursamalaysia.com. 2014. NESTLE (MALAYSIA) BERHAD [S] (4707) | Bursa
Malaysia Market. [online] Available at: http://www.bursamalaysia.com/market/listedcompanies/list-of-companies/plc-profile.html?stock_code=4707 [Accessed: 22 Jan 2014].
Businesscasestudies.co.uk.
Introduction - Nutrition, Health & Wellness - New Product Development at Nestlé - Nestlé |
Nestlé case studies, videos, social media and information | The Times 100
In-text: (Businesscasestudies.co.uk, 2014)
Bibliography: Businesscasestudies.co.uk. 2014. Introduction - Nutrition, Health & Wellness -
New Product Development at Nestlé - Nestlé | Nestlé case studies, videos, social media and
information | The Times 100. [online] Available at:
http://businesscasestudies.co.uk/nestle/nutrition-health-wellness-new-product-development-atnestle/introduction.html#axzz2r7ENaBtn [Accessed: 22 Jan 2014].
Nestle
History
In-text: (http://www.nestle.com, 1866)
Bibliography: http://www.nestle.com. 1866. History. [online] Available at:
http://www.nestle.com/aboutus/history [Accessed: 22 Jan 2014].
Nestle.
Consolidated Financial Statement of the Nestle Group 2012
In-text: (Nestle, 2012)
Bibliography: Nestle. 2012. Consolidated Financial Statement of the Nestle Group 2012. [online]
Available at: http://www.nestle.com/assetlibrary/Documents/Library/Documents/Financial_Statements/2012-Financial-Statements-EN.pdf
[Accessed: 22 Jan 2014].
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10. Nestle.
Consolidated Financial Statement of the Nestle Group 2011
In-text: (Nestle, 2011)
Bibliography: Nestle. 2011. Consolidated Financial Statement of the Nestle Group 2011. [online]
Available at: http://www.nestle.com/assetlibrary/documents/library/documents/financial_statements/2011-financial-statements-en.pdf
[Accessed: 22 Jan 2014].
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