Nestle

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THE INSTITUTE OF MANAGEMENT & SCIENCES

FINAL PROJECT

ANALYSIS OF FINANCIAL SITUATION

OF

NESTLE PAKISTAN

SYED HAIDER HASSAN (MBA Executive)


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TABLE OF CONTENTS

1. COMPANY INFORMATION (overall) --------------------------------------------05

2. NESTLE PAKISTAN -----------------------------------------------------------------07

3. PRESENT BOAD OF DIRECTOR -------------------------------------------------08

4. COMPANY DIRETORY ------------------------------------------------------------10

5. REGINOL SALE OFFICE -----------------------------------------------------------12

6. VISION STATEMENT / DIRECTORS REPORT TO SHAREHOLDER ----14

7. DIRECTOR REPORT ON COOPERATE GOVERNANCE -------------------17

8. ROLE AND RESPONSIBILITY OF CHAIRMAN AND CEO ---------------18

9. BUSINESS REVIEW ----------------------------------------------------------------19

10. PRODUCTS AND BRAND ---------------------------------------------------------20

11. RATIO ANALYSIS OF NESTLE PAKISTAN ----------------------------------21

12. LIQUDITY RATIO -------------------------------------------------------------------22

13. PROFITIBILITY RATIO ------------------------------------------------------------25

14. DEBT RATIO -------------------------------------------------------------------------27

15. ACTIVITY RATIO -------------------------------------------------------------------28

16. SUMMARY OF RATIO ANALYSIS ----------------------------------------------29


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COMPANY INFORMATION

Nestle world’s largest food company and Switzerland’s largest industrial company.

Nestle makes and markets a wide variety of foods and beverages, including

chocolate, confectionery, instant and roasted coffee, powdered milk, infant and baby

food, mineral water, pet food, breakfast cereals, ice cream and frozen desserts,

frozen meals, condiments, sauces, soups, and pasta. The company also makes Alcon

eye-care products and is a major shareholder in L’Oréal, one of the world’s largest

manufacturers of cosmetics. In 2001 Nestle acquired Ralston Purina, making it the

world’s largest producer of pet foods. Nestle is based in Vevey, Switzerland, but

derives only a tiny portion of its revenues from sales in Switzerland. Its largest

market is the United States. The company operates production facilities in numerous

countries around the world.

Nestlé’s well-known confectioneries include Nestle and Nestle Crunch chocolate bars,

Baby Ruth and Butterfinger candy bars, Kit Kat wafer bar, Rolo caramels, and Toll

House chocolate chips. Its line of beverages includes Nescafé and Taster’s Choice

instant coffees, Nestle Quick and Milo chocolate-based drinks, Nestea iced tea, Perrier

mineral water, and Carnation evaporated milk.

In the mid-1860s Henri Nestle, a pharmacist, led efforts to find a healthy alternative to

breast milk. He hoped to reduce mortality among infants who could not be breastfed.

Nestle developed an infant cereal that combined cow’s milk, wheat flour, and sugar and

in 1867 tested it on a sick, premature baby boy who had refused his

mother’s milk. The baby accepted the formula and recovered. Later that year Nestle

formed his own company, Farine Lactée Henri Nestle, in Vevey, to manufacture the

infant formula, called Farine Lactée Nestle.

Only a year earlier, in 1866, Americans Charles and George Page had founded the

Anglo-Swiss Condensed Milk Company in Cham, Switzerland, to sell canned milk


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in Europe. It expanded in the mid-1870s to include infant formulas, entering into direct

competition with Nestlé’s company. In 1875 Nestle sold his company to three local

business executives. The company began selling chocolate in 1904 when it

acquired the Swiss General Chocolate Company. In 1905 Farine Lactée Henri Nestle

merged with the Anglo-Swiss Condensed Milk Company to become the Nestle and

Anglo-Swiss Milk Company


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NESTLE PAKISTAN

Nestle Pakistan is the largest food & beverages company of in Pakistan, reaching the

remotest of location through Pakistan to serve the consumers. Nestle Pakistan is also

pride itself in being the leaders in nutrition, health & Wellness. Ever since 1876, when

Henri Nestle invented the first invent food, nutrition has been in our DNA, today more

and more consumers mirror our emphasis on nutrition, as they realize that food choices

affect their health and quality of life.

We have personally to make available to every one every where the best quality food-

whether in trendy party of London, or a remote village in Madagascar and also in

Pakistan from Karachi to Gilgit. This is good for consumers but also good for us.

Quality is our basic approach to consumers.

As we report the result at the year ending 2008 and steps in 2009, we complete 21

years of doing successful business in Pakistan. Nestle first entered in Pakistan

market in 1988 through a joint venture with Milk pack Ltd. In 1992 Nestle took

pavers the management of the company and changed the name of the company to

Nestle Milkpak Ltd in 1996. In 2005 the name was formally changed to Nestle

Pakistan Ltd.

Nestle Pakistan operates four production facilities with its Headquarters in Lahore.

Two of its factories n Sheikhupura and Kabirwala are multi product factories. One

factory in Islamabad and one factory in Karachi produced bottled water. The largest

Milk reception is in Kabirwala in the world.

The company priority is to bring the best and most relevant products to people

where they are, where their needs are, and for all age groups.


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In line with Nestles global philosophy, Nestle Pakistan is proud of its commitment to

excellence in product safety and quality and to providing value and services to its

consumers.

Nestle Pakistan remains committed to high quality products and consumer trust,

where people, products and brands are the main flag bearers of the Company’s

image.

Management

Present board of Directors as on December 31, 2008

Syed Yawar Ali Pakistani June 26, 2010 Chairman

Trevor Clayton South Africa June 26, 2010 Managing Director

Fritz Van Dijk Dutch June 26, 2010 Director

Raymond Franke Canadian June 26, 2010 Director

Alexendre Cantacuzene French June 26, 2010 Director

Syed Babar Ali Pakistani June 26, 2010 Director

Syed Hyder Ali Pakistani June 26, 2010 Director


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Officers

Trevor Claton CEO

Raymond Frank CEO

Muhammad Ali Sadozai Company Secretary

Management

Trevor Clayton MD

Raymond Frank Head of Finance & Control

Peter Wuethrich Head of Technical

Haseeb Aslam Country Business Manager Water

Salman Nazir Head of Supply Chain

Uzma Qaiser Butt Head HR

Khurram Zia Business Exceutive Manager

Dr.Usmand Bahtti Country Business Manager

Khurram Javed Business Manager Chilled Dairy


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Muhammad Ali Aziz Business Manager Beverages

Shaheen Sadiq Head of Communication

Syed Fakhar Ahmed Head of Corporate Affairs

Nauman Khan Country Business Manager

Samra MAqbool Product Unit Manager

Audit Committee

Syed Haider Ali Chairman

Syed Babar Ali Member

Peter Wuethrich Member & Secretary

Company Directory

Registered Corporate Office 308 Upper Mall Lahore PABX: 042-5789303

Corporate Office Annex 304 Upper Mall 1st & 2nd Floor, 172-Tufail Road Lahore Cantt. PABX: 042-6099300


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Auditors

K.P.M.G. Taseer Hadi & Company Chattered Accountants

Legal Advisors

Cheema & Ibrahim Advocate

Bankers

Royal Bank OF Scotland

City Bank N.A

Deutsche Bank Ltd

Habib Bank Ltd

MCB Bank Ltd

Standard Chartered Bank Ltd

United Bank Ltd

National Bank of Pakistan Ltd

Allied Bank Ltd

Factories

Sheikhupura 29th KM, Lahore-Sheikhupura Road Sheikhura Punjab PABX: 042-411433-36

Kabirwala Khanewal-Kabirwala Road Kabirwala, District Khenewal Pakistan PH# 06512-411433-36


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Islamabad 32, St. 3, I-10/3 Islamabad Ph# 051-4445991-3

Karachi Plot # A-23 Northwest Industrial Zone, Port Qasim Karachi Ph# 021-4720151-4

Regional Sales Offices

North Zone

Islamabad 92, East, 3rd Floor, Razia Sharif Plaza Fazal-e-Haq Road Islamabad Tel# 051-2271874

Jehlum House # 53-E, Jafar Road Jehlum Cantt. Jehlum Tel# 0544-720004

Peshawar Jalala House 42-D Old Jamrud Road, University Town Peshawar Tel# 091-5700859

Central Zone

Lahore 29-B, Main Gulberg Lahore Tel # 042-5754335


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Gujranawala Habib Bank Plaza 1st Floor, Statelife Town Gujranawala 055-3733415

Faislabad 2nd Floor, Al -Haq Plaza, 271-A Small D Ground Peoples Colony Faislabad Tel # 041-8716937

Multan Al-Syed House, Street # 2, Iqbal Park Sabzazar Colony, Bosan Road MUltan Tel# 061-6512800

South Zone

Karachi F77/1, Block 7, Kehkashan Clifton, KDA Scheme 5 Karachi Tel # 021-5876770

Quetta 63-B-D, Chaman Housing Scheme Opp. Aslari Park Quetta Tel# 081-2834887

Hydrebad House # 178, Block-C, Uit 2, LAtifabad Hydrabad Tel# 022-3860403


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VISION STATEMENT

The Nestle global vision is to be the leading nutrition, health and Wellness Company in

the world. Nestle Pakistan subscribes fully to this vision and of being the number one

nutrition, health and wellness company in Pakistan. In particular, we vision to,

1) Lead a dynamic, motivated and professional workforce

2) Meet the nutrition needs of consumers of all age groups 3) Deliver

shareholder value through profitable long term growth.

Directors Report to ShareHolders

The directors are pleased to submit their Annual Report along with the audited

financial statements of the Company for the year ended December 31. 2008,

Financial Performance

2008 was indeed a very challenging year for the world economy for Pakistan, and

for Nestle Pakistan. The dramatic inflation and energy crises were the most

significant impact that directly affected our operations and indirectly customers at

large.

In our largest business area collection of fresh milk grew by 11% versus last year,

but fell short of our production requirements, while inflation on fresh milk was more

then 20%, meanwhile company continued its dairy development initiatives.

Despite the adversely, we successfully enhanced our portfolio with several

important new product launches including everyday mixed Tea, Nestle milk iron

fortified MAGGI lemon Chaska noodles and new Guava nectar addition to the nestle

juices range.


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PKR Million 2008 2007

Sales 34184 28235

Gross Profit 26.20% 28.20%

Operating Profit Margin 12.00% 12.40%

Net Profit Margin 4.50% 6.40%

Net Profit 1553.00% 1805.00%

Earnings per Share 34.24% 39.81%

Sale of the year did surpass PKR 34 billion, and the growth of 21% was split

relatively between real growth and pricing movements.

Gross profit margin declined in 2008 as our consumer pricing could not keep up

with the significant inflation on virtually all input commodities particularly fresh

milk and energy. Operating profit level where decline by only 40 bps versus 2007.

Net profit and margin declined further due to the significant increase in the cost of

financing.

Corporate Governance

The directors confirm compliance with the corporate and financial reporting

Framework of the SECP code of corporate governance for the following,

1) The financial statement prepared by the management of the company present

Fairly it’s state of affairs the results of its operations, cash flows and changes in

Equity.

2) Proper books of accounts of the company have been maintained.

3) There are no significant doubts upon the company ability to continue as going

Concerns

4) Appropriate accounting policies have been consistently applied in preparation

of finical statements.


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5) International accounting standards as applicable in Pakistan have been

followed in preparation of finical statements.

External auditors

Messer KPMG Taseer Hadi and company chartered accounts have completed

assignment for the year 2008 and retire at the conclusion of the 31st annual general

meeting.

Corporate social responsibility

The company continues its commitment to social wellness and our CSR spending has

been significant during the year. Our focus continue to be on

1) Rural education projects for children’s

2) Infrastructure support for health facilities

3) Nutrition support to vulnerable women and children groups in collaborations

with specialized institutions

4) Academic enhancement and scholarship funding for several universities

program.

5) Our project with UNDP to develop rural women

Future Out look

We see 2009 as another challenging year for Pakistan with continued economic

volatility. As there is often opportunity in adversity, the company build further on the

focus efforts 2008 in stream lining our operation and re doubling our focus on

consumer innovation.

Nestle Pakistan is committed to Pakistan and bringing products to consumer that

deliver nutrition, health and wellness.


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Directors report on corporate governance

The company is committed to adopt and implement high standards of corporate

governess. it has adopted and implemented the corporate governess principle of its

parent company, nestle SA Switzerland, which cover the following four business

area.

Rights and responsibilities of share holder

Equitable treatment of share holder

Duties and responsibilities of board of directors

Disclosure and transparency

Board of directors

The board of directors currently comprises a non executive chairman, Chief

executive/Managing director with one executive and four non executive directors

The directors meet four times a year to review the company performance

Board of directors meetings

During the year the board of directors had the following meeting

Date of Meeting Time Place

February 07, 2008 10:00AM Corporate Office Lahore

March 24, 2008 09:00AM Corporate Office Lahore

April 18, 2008 09:30AM Corporate Office Lahore

August 07, 2008 10:00AM Corporate Office Lahore

October 28, 2008 10:00AM Corporate Office Lahore


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Role and responsibilities of chairman and chief executive

The role of the chairman and the chief executive are segregated and they have distinct

responsibilities the chairman of the board has responsibilities and covers vested in him

by law and the articles of associations of the company as well as duties assigned to him

by the board. The managing director is the CEO of the

company and is responsible for day to day operations and conduct business with the

power vested in him by law the managing director recommend the policy and

strategic directions and annual business plans for board of directors approval and

responsible for exercising the over all control and supervision for sound

management and conduct of the business of the company.

Audit committee

The audit committee comprises three members including chairman of the committee. All

members are no executive directors the audit committee held four meetings in

2008. The CFO, internal auditors as well as external auditors were invited to the

meetings.

Remuneration committee

The company has not established this committee as it does not deem it necessary to do

so. All issue of remuneration are fully disclosed and decided at the meeting of the

directors.

Strategic planning

The company strategic direction was reviewed at the meeting of directors a process has

been put into the place where by long term market business strategies and annual

operation plan established by management are regularly review by the directors in line

with the companies overall business objective.


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Key Financial Data

2008 2007 Trading Results

Sales 34184 28235 Goss Profit 8952 7950 Operating Profit 4105 3511 Profit Before tax 2227 2550 Profit After Tax 1553 1805

Balance Sheet

Share Holders Funds 4389 4112 Reserves 3935 3658 Operating Fixed Assets 9177 8913 Net Current assets/Liabilities 432 -325 Long Term Liabilities 7043 5788

Investor Information For Two years

Gross Profit Ratio 26% 28% Operating Profit Ratio 12% 12% Profit before tax Ratio 7% 9% Profit After Tax Ratio 5% 6% Inventory Turnover Ratio 10.3:1 9.4:1 Total Assets Turnover Ratio 2.1:1 2:1 Price Earning Ratio 38.9 45.2 Return on Capital employed 20% 26% Market Value Per Share 1334 1800 Debt Equity ratio 63:37 62:38 Current Ratio 1.1:1 0.9:1 Interest Cover Ratio 5:1 5.4:1

Business Review

Human Resources

Nutrition, Health & Wellness

Marketing and Sales

Nestle Quality Management System

Production

Milk Collection & Agri Services

Finance and Control

Corporate Social Responsibly


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Product & Brands

Dairy

Nestle Child Dairy

Infant Dietetic

Beverages

Confectionary

Culinary

Water

Nestle Professional

Financial Statements

1. Auditors Report to the Members

2. Balance Sheet

3. Profit and Loss Account

4. Cash flow Statement

5. Statement of changes of equity

6. Statement of Recognized Income and Expenses

7. Notes to the Financial Statements


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Ratios Analysis Of Nestle Pakistan Ltd

ASSESSMENT OF THE

SUPPLIERS’ FINANCIAL RISKS

BASIC MODEL

Z-Score Altman: A simple and quick formula to

identify the risk of bankruptcy of a company:

Abbreviations:WC = Working Capital

TA = Total Assets

RE = Retained Earnings

EBIT = Earnings before interest and taxes VE

= Value of Equity

TL = Total Liabilities

S = Net Sales

ANALYSIS OF FINANCIAL RATIOS (I)

In the event that:

Score (Z):Z > 2, 99: Good shape1, 81 < Z < 2, 99: Warning signs Z < 1, 81: Bankruptcy

Z-Score < 1, 81 (Warning signs) the following 6 Financial Ratios should be

analyzed in order to identify where the potential risks are:

Liquidity:

Quick ratio (acid test ratio) THE

INSTITUTE OF MANAGEMENT &

SCIENCES

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Solvency:

Current ratio

Debt quality

Financial leverage

Profitability:

ROE

ROA

LIQUIDITY RATIOS

1. CURRENT RATIO

The ability to meet short term obligations. “Generally, a high Current Ratio

indicates the company has enough liquid assets to continue normal operations.”

This is the most commonly used measure of short-term solvency.

Current Ratio = Current Asset Current Liabilities

2008 5,684,078,000 / 5,306,571,000 107%

2007 5,623,823,000 / 5,978,522,000 94%

It is an indicator of a Company’s ability to meet short-term debt obligations. If the

current assets are more than twice the current liabilities, the company is

generally considered to have good short-term financial strength.

If the current liabilities exceed current assets, the company may have

problems meeting its short-term liabilities.


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2. ACID TEST RATIO

A stringent test that indicates whether a firm has enough short-term assets to

cover its immediate liabilities without selling inventory. The acid-test ratio is far

more strenuous than the working capital ratio, primarily because the working

capital ratio allows for the inclusion of inventory assets.

Acid Test Ratio = Quick Assets Current Liabilities

2008 3195505000 / 5306571000 60.22%

2007 3230517000 / 5978522000 54%

It’s an indicator of a Company’s ability to meet its obligations without selling

inventories.

It’s viewed as a sign of company’s financial strength or weakness (higher

number means stronger, lower number means weaker).

3. INVENTORY TURNOVER RATIO

Inventory turnover ratio is one of the Accounting Liquidity ratios, a financial ratio. This

ratio measures the number of times, on average; the inventory is sold during the period.

Its purpose is to measure the liquidity of the inventory. A popular variant of the

Inventory turnover ratio is to convert it into average days to sell the inventory in terms

of days. Remember that the Inventory turnover ratio is figured as "turnover times" and

the average days to sell the inventory is in "days".


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Inventory Turnover Ratio = Cost Of Goods Sold Average Inventory

2008 25231532000 / 2440939500 10.34

2007 20285142000 / 2393306000 8.48

4. AVERAGE AGE OF INVENTORY

365 / INVENTORY TURNOVER

2008 365 / 10.34 35.29

2007 365 / 8.48 81.47

5. AVERAGE COLLECTION PERIOD

Receivable Turnover = Net Credit Sales Average Net Receivables

2008 34183847000 / 400433000 85 Days

2007 28235393000 / 344053000 82 Days

Average Collection Period = 365 Days Receivable Turnover

2008 365 / 85 4.29

2007 365 / 82 4.45


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6. OPERATING CYCLE

Average time period between buying inventory and receiving cash proceeds from its

eventual sale. It is determined by adding the number of day’s inventory is held and the

collection period for accounts receivable.

Operating Cycle = Avg Collection Period + Average Age Of Inventory

2008 85 + 35.29 120.29

2007 82 + 81.47 163.47

PROFITABILITY RATIOS

A class of financial metrics that are used to assess a business's ability to generate

earnings as compared to its expenses and other relevant costs incurred during a

specific period of time. For most of these ratios, having a higher value relative to a

competitor's ratio or the same ratio from a previous period is indicative that the

company is doing well.

1. Profit Margin

A ratio of profitability calculated as net income divided by revenues, or net profits

divided by sales. It measures how much out of every dollar of sales a company

actually keeps in earnings.

Profit margin is very useful when comparing companies in similar industries. A higher

profit margin indicates a more profitable company that has better control over its costs

compared to its competitors. Profit margin is displayed as a percentage.


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Profit Margin = Net Income Net Sales

2008 1552894000 / 34183847000 4.54

2007 1805212000 / 28235393000 6.39

2. ASSET TURNOVER RATIO

An overall measure of how effectively assets are used during a period; computed

by dividing net sales by average total assets

Asset Turnover Ratio = Net sales Average Total Assets

2008 34183847000 / 16266375000 2.10

2007 28235393000 / 15848574000 1.78

3. RETURN ON ASSETS

It gives an idea of how effectively the company is converting the invested money into net income.

It determines the company’s capacity to pay all the financial resources (internal & external).

Return On Assets = Net Income Average Total Assets

2008 1552894000 / 16266375000 9.54%

2007 1805212000 / 15848574000 11.39%


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It gives an idea of how effectively the company is converting the invested

money into net income.

It determines the company’s capacity to pay all the financial resources (internal & external).

4. DEBT RATIO

Debt Ratio = Total Liabilities Total Assets

2008 12295329000 / 16684176000 73.69%

2007 11736869000 / 15848574000 74.05%

It shows the percentage of long term debt in the total debt. it is more

positive for the Company to be indebted on the long term.

5. NET WORKING CAPITAL!

Net Working Capital = Current Assets _Current Liabilities

2008 5684078000 - 5306571000 377507000

2007 5623823000 - 5978522000 (354699000)

6. GROSS PROFIT MARGIN!

The excess of sales over the variable costs, which is always expressed as a

percentage of sales. It shows the accuracy of pricing policies, in terms of the

direct costs involved in producing/providing the products/services and is

calculated by dividing the gross profit by sales.

Gross Profit Margin = Gross Profit

Sale


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2008 8952315000 / 34183847000 26.18%

2007 7950251000 / 28235393000 28.16%

7. NET PROFIT MARGIN!

Net Profit Margin equals the Total Net Income divided by Revenue,

expressed as a percentage. The percentage represents the amount of each

rupee of Revenue that results in Total Net Income.

Net Profit Margin = Net Profit Sale

2008 1552894000 / 341838470000 4.54%

2007 1805212000 / 28235393000 6.39%

ACTIVITY RATIOS

Used in standard costing to express the actual work produced as a percentage of the

budgeted work for the same period when both are expressed in standard hours.

1. ACCOUNTS RECEIVABLE TURNOVER

Net Credit Sales

Average Accounts Receivable

2008 2842640 / 671409.5 = 4.23

2003 2632060 / 591537.5 = 4.44

MARKET VALUE

The most probable price that a property should bring in a competitive and open

market under all conditions requisite to a fair sale, the buyer and seller each acting

prudently and knowledgeably, and assuming the price is not affected by undue

stimulus.


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1. PRICE / EARNING RATIO

Price / Earning Ratio = Market Price Per Share

Earning Per Share

2008 96.77 / 34.24 2.82

2007 90.66 / 39.81 2.27

2. DIVIDEND PAYOUT

Dividend per share/Earning per share

2008 26.49 / 34.24 0.77

2007 5 / 39.81 0.12


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SUMMARY OF RATIO ANALYSIS

The analysis of these above ratios should enable us to compare the financial

health of Nestle Pakistan Limited:

Data of last two years.

Liquidity Ratio

Profitability Ratio

Activity Ratio

Market Value

The over all analysis of the NESTLE PAKISTAN shows good financial position of company and financial position is stable & above average.

All the main types of ratios which help in finding out the pure financial condition of any industry are good as compared to the previous years

All ratios as indicated above shows a better condition.

In short we can say overall financial position of Nestle Pakistan is better.


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RATIO ANALYSIS

RATIOS 2008 2007 AVG

CURRENT RATIO 107 94 100.5

QUICK RATIO 60.22 54 57.11

INVENTORY T/O 10.34 8.48 9.41

AVG. COLLECTION .P 4.29 4.45 4.37

TOTAL ASSETS T/O 2.1 2.78 2.44

DEBT RATIO 73.69 74.05 73.87

AVG AGE OF INVENTORY 35.29 81.47 58.38

NET PROFIT RATIO 4.54 6.39 5.465

RETURN ON T. ASSET 9.54 10.39 9.965

EARNING PER SHARE 2.82 2.27 2.545

OPERATING CYCLE 120.29 163.47 141.88

ACCOUNT RECEIVABLE T/O 85 82 83.5

GROSS PROFIT MARGIN 26.18 26.16 26.17

DIVIDEND PAYOUT 0.77 0.12 0.445


CROSS OVERANAYSIS ALL

Stronger Stronger

Ok Ok

Above Avg Above Avg

Stronger Stronger

Good Good

Normal Normal

Good Normal

Above Avg Above Avg

Good Good

Good Good

Average Average

Good Good

Above Avg Above Avg

Ok Ok

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GLOSSARY

Total Assets = Current Assets (1) + Long-term Assets (2). Total

Liabilities = Current Liabilities (3) + Long-term Liabilities (4). Equity

Value = Total Assets - Total Liabilities.

Working Capital = Current Assets - Current Liabilities.

(1) Current Assets: Value of all assets that are reasonably expected to be

converted into cash within 1 year in the normal course of business. It

includes cash, accounts receivable, inventory, marketable securities,

prepaid expenses and other liquid assets that can be readily converted to

cash.

(2) Long-term assets: Value of a company's property, equipment and other

capital assets, minus depreciation. It includes manufacturing equipment, real

estate and furniture.

(3) Current Liabilities: A company's debts or obligations those are due

within 1 year. It includes short term debt, accounts payable (suppliers),

accrued liabilities and other debts.

(4) Long-term liabilities: A company's debts or obligations for leases,

bond repayments and other items due in more than 1 year.

EBIT (Earnings before Interests and Taxes) = Revenue - Operating

Expenses.

Net Earnings = EBIT - Operational Interests - Taxes - Depreciation.

Retained Earnings = Net Earnings - Dividends. It’s the percentage of net

earnings not paid out as dividends but retained by the company to be

reinvested in its core business or to pay debt.


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Nestle