Financial Analysis for Nestle

1857 WordsDec 7, 20118 Pages
Income Statement Nestlé S.A. | Consolidated income statement | for the year ended 31 December 2008-2010 | In million of CHF | | 2010 | 2009 | 2008 | | | | | | | Sales | | | 109,722 | 107,618 | 109,908 | Cost of goods sold | | 45,849 | 45,208 | 47,339 | Gross profit | | 63,873 | 62,410 | 62,569 | Selling, general, and admin.expense | 45,798 | 45,140 | 44,916 | Research and development costs | 1,881 | 2,021 | 1,977 | EBIT Earnings Before Interest, Taxes, restructuring and impairment | 16,194 | 15,699 | 15,676 | Other income | | 24,741 | 509 | 9,426 | Other expenses | | 2,115 | 1,238 | 2,124 | Profit before interest and taxes | 38,820 | 14,970 | 22,978 | Interest income | | 94 | 179 |…show more content…
This can be explained by intensive differentiated strategy to build brand image and gain recognition in the market. Net interest expenses of Nestle kept changing during this period, however it was lower than Kraft Foods. In addition, Tax expense of Nestle didn 't change significantly during 2008-2010. Kraft Foods 's taxes as a percentage of sales were lower than Nestle because their pretax profit was lower. Net income of Nestle increased dramatically from 9.70% to 31.20% in 2010, this influenced by the profit on disposal of Alcon (another business of Nestle which was closed the sale in August 2010). This profit was added to other income in income statement. In conclusion, Nestlé’s net income was higher than those of Kraft Foods, generally because it was better in controlling cost of goods sold. In addition, although Kraft Foods spent less on SG&A expense, the company can earn much on other income in 2010 and this contributed a great portion to net income in 2010. Higher net income can imply higher value of its shareholders. Financial Ratio Analysis Liquidity Analysis Internal Liquidity | | | | Nestlé | Kraft Foods | Internal liquidity risk | | | 2010 | 2009 | 2008 | 2010 | 1. Current ratio | = | CA/CL | 1.29 | 1.10 | 0.98 | 1.04 | | | | | | | | | 2. Quick ratio | =

More about Financial Analysis for Nestle

Open Document