Financial Position Of Nestle

Introduction:

Nestle is a Swiss multinational company with numerous branches in various countries that provide multiple food items to its customers. The company’s main focus is on livestock products, in addition to 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 for all stakeholders’ better decision-making in this regard. The information poses the quick rate as 0.60, which means the company’s current liabilities cannot be payable as compared to its competitor (Nestle, 2021). The mid-term liabilities are not included in the said list. At the same time, the collection of outstanding payments has become a hectic burden for the company. This expansion leads to a vast burden on the company’s administrative viewpoint.

However, considering its competitor, Kraft, Nestle’s asset turnover ratio is high. The company achieved efficiency in all types of business that it operates and holds. In this respect, Nestle is moving towards the improvement domain on the grounds of financial management, as the expansion of inventory did not occur this year on a large scale, which did not increase the cost of sales for the company. Nestle’s profit margin and return on assets are low compared to Kraft’s during 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). Meanwhile, Nestle’s stocks 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 a 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 make 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 a 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, depict 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, which indicates a good market value. The long-term liabilities area is weak concerning payment 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 that investors 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