The review of Net Profit Margin witnessed a declining trend. The Net Profit Margin declined from 13.58% in 2019 to 12.01% in 2023.
The average EBIT Margin for the period under analysis was 16.02%, with 2022 and 2019 performing the worst and best, respectively.
The Inventory turnover stood at 3.74 times in 2023 from 5.05 in 2019, implying a high performance on Inventory of the business in relation to revenue.
The Asset turnover stood at 0.73 times in 2023 from 0.72 in 2019, implying a low performance on Assets of the business in relation to revenue.
Profitability
The revenue of Nestle has increased year on year. The revenue increased by 3.29% between 2020 and 2021 and a further 8.36% increase was recorded between 2021 and 2022. There also occurred a decrease of –1.51% between 2022 and 2023 (the current period).
Nestle’s performance in profitability looks good as the return on capital employed also recorded good performance during the period of analysis.
Liquidity
The company’s result in liquidity looks strong, as current ratio/acid test increased from 0.87:1/0.60:1 to 0.83:1/0.74:1 on the last year. Which implies that the company has enough assets to settle its current liabilities.
Capital Structure
Nestle is both equity and debt financed.
The debt-to-equity (D/E) ratio has been increasing year on year. The gearing position of the company appears to be low as it stood at 0.86 in the current year.