Nestle

Key Performance Metrics

  • The review of Net Profit Margin witnessed a declining trend. The Net Profit Margin declined from 14.61% in 2020 to 12.33% in 2023.
  • The average EBIT Margin for the period under analysis was 18.30%, with 2022 and 2021 performing the worst and best, respectively.
  • In the current year, Nestle was able to cover its interest liabilities 0 times in the current year- compared to 2019 when it was 18.94 times.
  • 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 fluctuated 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.

Source: Nestle Annual Report

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