Nestle

Key Performance Metrics

  • The review of Net Profit Margin witnessed a declining trend. The Net Profit Margin declined from 13.81% in 2017 to 11.38% in 2021.
  • The average EBIT Margin for the period under analysis was 23.66%, with 2021 and 2019 performing the worst and best, respectively.
  • In the current year, Nestle was able to cover its interest liabilities 6.12 times in the current year- compared to 2017 when it was 4.10 times.
  • The Asset turnover stood at 1.26 times in 2021 from 3.33 in 2017, 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 9.1% between 2017 and 2018 and a further 6.7% increase was recorded between 2018 and 2019. There also occurred an increase of 22.6% between 2020 and 2021 (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 0.91:1/0.60:1 to 1.04:1/0.74:1 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 high as it stood at 15.70 in the current year.

Source: Nestle Annual Report

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