Introduction:
Nestle is a Swiss multinational company with numerous branches in various countries that provide multiple food items to its customers. The main focus of the company is on livestock products in addition with water and breakfast cereal products. Like Nestle, the financial position of any multinational company (MNC) matters a lot due to huge budgetary matters and administrative landmarks. The financial position also determines the company’s stock exchange value and the probability of investors investing with risk-free trust and hope. The performance can evaluate the current economic condition of the company in terms of finance and comparison with market competitors.
Analysis & Implication:
The financial report issued by the Nestle Company shows multiple indicators and their implications on all stakeholders for better decision-making in this regard. The information poses the quick rate as 0.60, which means the current liabilities cannot be payable by the company as compared to its competitor (Nestle, 2021). The mid-term liabilities are not included in the said list. At the same time, the outstanding payment collection has become a hectic burden for the company. This expansion leads to a vast burden on the administrative viewpoint in the company.
However, considering his competitor, i.e., Kraft, the asset turnover ratio of Nestle is high. The company achieved efficiency in all types of business that it operates and holds. In this respect, Nestle is towards improvement domain on the grounds of financial management as the expansion of inventory did not occur this year at a large scale, which did not increase the cost of sales for the company. The profit margin and return of assets are low for Nestle as compare to Kraft concerning this period. It shows that the ultimate expansion of Nestle is higher.
Furthermore, the earning percentage increases per share, and it is estimated that the main reason is Nestlé’s share buyback program. The stock price of Nestlé’s Competitor, i.e., Kraft, has been continuously decreasing for the last five years due to the merger of Kraft and Heinz (Considine, 2021). While, stocks of Nestle are relatively stable, even though the company has faced a mildly bearish payout, and it was not for the long term. And the socks are suspected of growing this year. So the stock price and predicted stability indicated by experts show that buying of company’s shares is worthwhile in the long run (Nestle, 2020).
Furthermore, The Company’s current ratio is 1.34, which indicates that the financial strength on a short-term basis is quite good. The company can take short-term financial decisions if needed. So, it can sustain its growth by paying back short-term liabilities. The financial risks are there due to various factors, such as the inflation in the Indian region regarding milk (Saloni Goel, 2021). Hence, the overall company’s performance and portfolio are efficient in managing and financial point of view and securing the prices of raw materials.
Future Trends / Recommendations:
The previous performance of Nestle and the current scenario, as shown above, depicts the performance and efficiency of the said company, which is highly remarkable. The EBITDA rate is 11.9%, while the cast debt ratio is 0.22 that indicates a good market value. The long-term liabilities area is weak concerning payments strategies and needs to be improved as much as possible within a given framework of time. While considering all the above indicators, it is a proven fact that the value of Nestle shares is high. So, keeping in view the beneficial aspects, it is highly recommended for the investors to make investment decisions to invest their maximum capacity with Nestle without any fear of loss and deterioration.
References
https://www.nestle.com/sites/default/files/2021-02/2020-full-year-cash-flow-statement.xlsx
https://www.nestle.com/sites/default/files/2021-02/2020-statement-of-changes-in-equity.xlsx
Saloni Goel. (2021, March). Can Nestle’s rural push turn around its fortunes? Here’s what analysts say. @Bsindia. https://www.business-standard.com/article/markets/can-nestle-s-rural-push-turn-around-its-fortunes-here-s-what-analysts-say-121030100563_1.html
Considine, G. (2021). The Kraft Heinz Recovery Story Is Not Convincing (NASDAQ:KHC). SeekingAlpha; SeekingAlpha. https://seekingalpha.com/article/4414450-kraft-heinz-recovery-story-is-not-convincing
