Supriya finance final

DECLARATION
I hereby declare that the Project Report entitled “A STUDY ON RATIO
ANALYSIS BETWEEN NESTLE INDIA AND ENGRO FOODS LIMITED” is a record
of independent project work submitted by me to ICFAI University, Tripura, for developing
the real time experience as well as award the degree of Master of Business Administration
and has been carried out during the period of my study at ICFAI University, Tripura, Under
the guidance of Sir Malay Kr. Nayak, Department of MBA.
PLACE: Agartala (Supriya Gope)

ACKNOWLEDGEMENTS
Praise and thanks to “GOD” Almighty, the one testing us all at all times and making
decisions about what we don’t know and can’t know.
The report being submitted today is a result of collective effort. There are innumerous
helping hands behind who have guided us on our way. Writing this report appeared to be a
great experience to us. It added a lot to our knowledge. This report is one of our
memorable experiences in student life.
Though words are inadequate in offering thanks to our teacher but we owe our profound
gratitude to Sir Malay Kr. Nayak for stimulating our creative abilities by assigning this
project to us and for her able guidance and useful suggestions, which helped us in
completing the project in time. Whatever we have learnt from her and this project report has
put indelible impression on our minds and it is our conviction that this learning experience
will always be a source of help in our practical life and professional career.
Finally, yet importantly, we would like to express our heartfelt thanks to our beloved parents,
for cooperation, help, kindness and blessings, our family and friends for their help and
wishes for the successful completion of the work.

Table of Content
1. Executive summary…………………………………………………………... 1
2. Introduction ……………………………………………………….…………..2
3. NESTLE………………………………………………………….…………....3
3.1NESTLE India………………………………………………………..3
3.2Vision…………………………………………………………………….4
3.3Mission…………………………………………………………….……..4
3.4Goals and Objectives…………………………………………….…….…5
3.5SWOT……………………………………………………………..……...9
4. ENGRO FOODS……………………………………………………………..10
4.1Vision……………………………………………………………………10
4.2Mission…………………………………………………………….…….10
4.3Core values………………………………………………………………10
4.4SWOT……………………………………………………………………12
5.Financial Statements of NESTLE …...……………………………………....….. 14
5.1Balance Sheet……………………………………………………………14
5.2Income Statement……………………………………………………….16
6.Financial Statements of ENGRO…………………………….…………….……..17
6.1Balance sheet……………………………………………………………17
6.2Income Statement……………………………………………………….19
7.Data Table…………………………………………………………………….…..20
7.1 The calculations…………………………………………………….……21
8.Balance sheet Analysis …………………………………………………………....23
9. Income Statement Analysis ……………………………………………………….24
10. Ratios of NESTLE………………………………………………………….….….24
11. Ratios of ENGRO………………………………………………………….….…..27
12.5 Capital Market Analysis Ratio …………………………………………29
15.Conclusion………………………………………………………………………..32
16. Recommendations……………………………………………….…….…………33
17. References………………………………………………………….…….………34

2. Introduction
This is the project about financial statement analysis of two companies of the same
industry. In this regard the companies which were chosen to be analyzed are NESTLÉ
INDIA and ENGRO FOODS LIMITED. Both the companies are of food industry and
are dealing in food business for many years. The companies are well reputed in the
market and deal in a very wide range of food products.
As NESTLÉ, a very, well-known brand started its’ business life with only one product
and that was condensed milk for infants. And now it has captured everyone’s mind for its
tempting products; as chocolates, coffee, bottled water, powdered milk, flavored milk,
tea whitener and many more. The company has strong marketing strategies to come up
with in a competitive market. It has targeted all of its customers no matter they are of
what age. The company is standing in the market with share price of 4,844. How it
standing in the market with such price? How it satisfies its shareholder’s? Why don’t
investor’s invest in other companies?
The answer to all above question is clear after going through its financial reports. The
profit that the company earns and the balance it has kept between its assets and liabilities
is also easily understandable after going through its financial statements. The company
is running its business so well. And that is why it never loses its value.
ENGRO FOODS is also a very, well-reputed company which produces a wide range
of healthy food products. Is product line contains products such as milk, tea whitener,
cream, ice cream, juices, flavored milk and many others. ENGRO FOODS is the 1st
company which is using Bactofuge technology.
The company has not been in this business for as long as NESTLÉ is, but the way it has
grown up is appreciable. It has come up with innovative features in its products.
Through its financial statements it is analyzed that how efficiently it has increased its
share price from Rs. 17 to Rs. 25. It provides many incentives to it stockholder’s is also
growing its market share. The company has capability to pay it liabilities on time and to
keep its assets managed.
ENGRO FOODS not only provide incentives to its stockholder’s but also to its
employees. It offers its employees much outdoor training so that they can work in a
healthy environment and don’t get tired of their hectic routine. That is why it has many
loyal employees to work with.

3. NESTLÉ
Good Food, Good Life
Nestlé, theCompany which is renowned for its vast collection of foodproducts. The
Companywas formed in 1905 by the merger of the Anglo-Swiss Milk Company, established
in 1866 by brothers George Page and Charles Page, and Farine Lactée.Nestlé was found in
1866 by Henri Nestlé. The company grew significantly during the First World War and
again following the Second World War, expanding its offerings beyond its early condensed
milk and infant formula products. The company has made a number of corporate
acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971,
Rowntree Mackintosh in 1988 and Gerber in 2007.
As Nestlé started with a condensed milk and later it climbed so fast at the ladder of
success that it is now a leading brand in food products with so many sub-brands.Currently
Nestlé is dealing with bottled water, breakfast cereals, coffee, confectionery, dairy products,
ice cream, pet foods, other beverages, shelf stable, chilled, Ice cream, Infant nutrition,
performance nutrition, healthcare nutrition, frozen foods, refrigerated products, food services
and professional products and snacks.29 of Nestlé's brands have annual sales of over 1 billion
Swiss francs (about $ 1.1 billion). Nestlé has around 450 factories, operates in 86 countries,
and employs around 328,000 people. It is one of the main shareholders of L'Oréal, the world's
largest cosmetics company.
3.1 NESTLÉ in India
Nestlé has been serving Indiai consumers since 1988, when parentcompany, the
Switzerland-based Nestlé SA, first acquired a share in Milk PakLtd. Today Nestlé is fully
integrated in Indiai life, and is recognized asthe producer of safe, nutritious and tasty food,
and leaders in developing anduplifting the communities in which they operate.Nestlé India
ensures that their products are made available toconsumers wherever in the country they
might be. Convenience is at theheart of the Nestlé philosophy, and there aim is to bring
products to people'sdoorsteps.
The following project is about Nestlé India and the necessary details about Nestlé
India are as follow:
Ticker: NESTLÉ
Country: INDIA
Exchanges: KAR
Major Industry: Food & Beverages
Sub Industry: Diversified Food

2011 Sales: 64,824,364,000 (Year Ending Jan 2012)
Employees: 2,422
Currency: India Rupees
Market Capture: 210,875,565,600
Fiscal Year Ends: December
Shares Outstanding: 45,349,584
Share Type: Ordinary
Closely Held Shares: 35,545,078
3.2 Vision
“Nestlé’s global vision is to be the recognized leading Nutrition, Health and
Wellness Company. Nestlé India subscribes fully to this vision of being the number one
Nutrition, Health, and Wellness Company in India. In particular, we envision to;
Lead a dynamic, passionate and professional workforce – proud of our heritage and
positive about the future.
Meet the nutrition needs of consumers of all ages – from infancy to old age, from
nutrition to pleasure, through an innovative portfolio of branded food and
beverage products of the highest quality.
Deliver shareholder value through profitable long-term growth, while continuing to
play a significant and responsible role in the Social, Economic, and Environmental
sectors of India.”
3.3 Mission
“Nestlé is dedicated to providing the best foods to people throughout their day,
throughout their lives, throughout the world. With our uniqueexperience of anticipating
consumers’ needs and creating solutions, Nestlécontributes to your well-being and enhances
your quality of life.”
3.4 Goals and Objectives
The goals and objectives of Nestlé India are simple and well designed with the core
strategies to meet the demand of the consumers and to fulfill the needs of the customers.
Following are the main goals and;
1. To be, the best and quality providing brand among other brands in India.

2. Tofulfillcustomers’needs and requirements.
3. To capture it’s desired market share.
4. To dwellinto the life of people and consumers.
5. To boost upits sales.
6. To create value for customer.
7. To keep the loyalty of customer with Nestlé.
8. To be the top nutrition company ofIndia.
9. To be the leading FMCG company around the world as well as inIndia.
10. It aims to be the socially responsible and helping company in bad times.
11. Nestlé aims to be proactive innovation and renovation culture, which is the key to
Nestlé’s success in the marketplace.
12. Nestlé aims to have fully integrated systems with suppliers & retailers so that every
single market can be tapped & focused.
3.5 SWOT Analysis
3.5.1 Strengths
Strength of Nestlé is the presence of its factories or operations in almost every
country in the world employing around 283000 people. The sales values have touched CHF
109.9 billion, with a net profit of CHF 18.0 billion. Nestle has recorded a financial growth
even in times of recession by promoting the sales of smaller and cheaper versions of products
in developing economies.
3.5.2 Weaknesses
Nestlé do not have direct market outlets and this can be one of the weaknesses as it
can cause difference in profit made. There another weakness is not having enough raw
material production units; they depend on either local raw material producers or through
other trade channels.
3.5.3 Opportunities
Nestlé’s weakness of not having a direct outlet can be converted as an opportunity by
introduction of new direct outlets. The acquisition of Cadburys for an example is an
opportunity since they are one of the main competitors for Nestlé. Setting up theirpersonal
farms and raw material production units is an opportunity as it would reduce the cost for
Nestlé.By acquisitions Nestlé can enter the new market, which is easy through already
existing companies. Nestlé has great opportunities in a society which is becoming more and
more health conscious.

3.5.4 Threats
Their weakness of not having enough raw material production units (which cause
them to depend on other producers) and their dependency on other producers can threaten to
reduce thequality of products they offer. The contamination of food products is a major
threat to Nestlé in the market. Intense competition in its market segments also possesses a
major challenge to Nestlé as its competitors are also trying to increasing their product ranges
which might make inroads into Nestlé's profit.
Another threat to Nestle can be the maturity of the markets which they are entering n.
For example, in France, DANONE has already established itself as a market leader in case
of yogurt before Nestle launched its LC-1 division in France and could not compete against
the well-establishedDANONE. The consumers frequently tend to change their preference of
brands, so change in consumer trends is a threat to Nestlé.

4. ENGRO FOODS
The Local Flavor with a global Vision
Engro Foods (Pvt.) Limited (EFL) has been established in 2005 as part of a
diversification process at the Engro Group. The plant located at Sukkhur on 23 acre land, has
the raw milk reception capability of 300,000 liters per day and UHT milk capacity of
200,000 liters per day. The plant has been established at a cost of Rs. 1 billion which
provides direct employment to 750 people.
Engro Foods has entered the Food business through milk processing and sale with the
company’s vision to pursue growth opportunities based on country fundamentals and own
strength. It also positions the company to leverage its corporate social responsibility
initiatives and work closely with rural communities to promote integrated farming and
livestock development. This effort is expected to play a pivotal role in poverty alleviation
and improving livelihoods of the poor in the milk collection areas.
4.1 Vision
“To be the Premier Indiai Enterprise with a global reach, passionately pursuing
value creation for all stake holders”.
4.2 Mission
“To help farmers maximize their farm produce by providing quality plantnutrients and
technical services upon which they can depend. To create wealth by building new businesses
based on company and country strengths inPetrochemicals, Information Technology,
Infrastructure and other Agriculturalsectors. In pursuing the mission we shall at all-time be
guided in our conductand decision making by our Core Values.”
4.3 Core Values
1. To possess leadership among other companies.
2. To introduce innovative products.
3. To capture diversified marked and international focus.
4. To maintain quality and work for continuous improvement.
5. Candid and open communications.
6. External & Community Involvement
7. To focus on individual growth and development.
8. Enthusiastic pursuit of profit.
9. To keep satisfied ethics and integrity.
10. To promote safety, health and pure environment.
11. To create opportunities of enjoyment and fun.
12. To promote teamwork and partnership.

4.4 SWOT Analysis
4.4.1 Strengths
Engro Foods is a well-established brand name; customers automatically have a brand
association.
They can easily afford research and development costs in order to introduce
new products.
They have strong supply chain (good PR with farmers provides world class supply
chain management).
The increasing sale figures form years to years showing customer satisfaction upon
Engro Foods Limited products.
Engro Foods involve in consumer and product research before and after launching
a product.
Engro Foods is having strong relationship with global research partners like AC
Nielsen, JWT Asiatic.
Company is not relying on third parties for sale and distribution and has its own sale
and distributing network.
Engro Foods Limited only has the third-generation UHT milk plant in the country.
Engro Foods Limited plant is the only plant in India that uses Bactofuge
technology to virtually eliminate bacteria and ensure premium quality and hygiene.
4.4.2 Weaknesses
One major weakness of Engro Foods in dairy products, which is that 85% of its milk
collection centers are in Punjab, while processing unit is in Sindh.
Higher transportation cost.
Dependency on TETRA PAK for the entire packing of its dairy products.
Paying higher cost of packing of products results in higher overall products cost.
The product range of Engro Foods narrows as compared to its competitors.
4.4.3 Opportunities
India is the fourth largest milk producing country. So, it’s an opportunity for
company to grow in this sector.
Engro Foods can increase awareness though different media, by showing ads thoseare
according to cultural requirements of India.
By increasing the milk related products company can go globally.
Engro can launch products like dry milk, cereal and Yogurts etc.
Growing dissatisfaction with milkmen’s milk and increasing awareness about
healthand hygiene issues have led to increased processed milk consumption.

2.2 COMMON SIZE BALANCE SHEET
2016 Pr. 2015 Pr. 2014 Pr. 2013 Pr. 2012 Pr.
EQUITY AND
(mill) (%) (mill) (%) (mill) (%) (mill) (%) (mill) (%)LIABILITIES
SHAREHOLDERS
’ FUNDS
Share capital 964.2 1.4 964.2 1.6 964.2 1.7 964.2 1.5 964.2 1.9
Reserves and surplus 29,172.8 42.9 27,214.2 44.7 27,407.9 47.1 22,723.3 36.0 17,019.9 33.0
30,137.0 44.3 28,178.4 46.3 28,372.1 48.8 23,687.5 37.5 17,984.1 34.8
NON - CURRENT
LIABILITIES
Long-term
331.5 0.5 167.9 0.3 154.6 0.3 11,894.8 18.8 10,499.5 20.3
borrowings
Deferred tax
1,542.1 2.3 1,729.3 2.8 2,227.2 3.8 2,154.7 3.4 1,620.8 3.1
liabilities (net)
Long-term
19,722.1 29.0 15,971.7 26.2 13,886.6 23.9 11,933.9 18.9 10,147.5 19.7
provisions
21,595.7 31.7 17,868.9 29.4 16,268.4 28.0 25,983.4 41.2 22,267.8 43.1
CURRENT LIAB.
Short-term
0.0 9.4 0.0 41.1 0.1 0.1 0.0 2.4 0.0
borrowings
Trade payables 0.0 0.0 7,263.0 12.5 6,330.4 10.0 5,394.0 10.4
Payable to micro
enterprises and small 48.8 0.1 37.5 0.1 0.0 0.0 0.0
enterprises
Other payables 7,942.8 11.7 7,456.6 12.3 0.0 0.0 0.0
Other current
5,128.4 7.5 4,659.3 7.7 4,095.7 7.0 5,002.5 7.9 5,580.3 10.8
liabilities
Short-term
3,207.0 4.7 2,653.2 4.4 2,130.6 3.7 2,138.8 3.4 410.6 0.8
provisions
16,327.0 24.0 14,816.0 24.3 13,554.5 23.3 13,471.8 21.3 11,387.3 22.1
68,059.7 100 60,863.3 100 58,195.0 100 63,142.7 100 51,639.2 100
ASSETS
NON - CURRENT
ASSETS
Fixed assets
Tangible assets 27,294.6 40.1 28,978.5 47.6 31,766.4 54.6 33,693.1 53.4 32,042.7 62.1
Capital WIP 1,881.7 2.8 2,307.9 3.8 2,447.8 4.2 2,947.1 4.7 3,440.8 6.7
29,176.3 42.9 31,286.4 51.4 34,214.2 58.8 36,640.2 58.0 35,483.5 68.7
Non-current Invest’s 4,743.1 7.0 3,417.8 5.6 3,044.6 5.2 2,241.2 3.5 -
Long-term loans and
1,350.4 2.0 1,304.3 2.1 1,299.5 2.2 1,239.4 2.0 1,254.5 2.4
advances
35,269.8 51.8 36,008.5 59.2 38,558.3 66.3 40,125.5 63.5 36,738.0 71.2

2.3 RATIO ANALYSIS
Table 2.3.1: Ratio Analysis for 2012-2016
Nestle :-
Current Ratio
2016 2015 2014 2013 2012 Average
Current
Liabilities
(millions) 16,327.00 14,816.00 13,554.50 13,471.80 11,387.30 13,911.32
Current
Assets
(millions) 32,789.90 24,854.80 19,636.70 23,017.20 14,901.20 23,039.96
Current
Ratio 2.01 1.68 1.45 1.71 1.31 1.63
Engro Foods:-
S.No Year
CURRENT
ASSETS
CURRENT
LIABILITIES
CURRENT
RATIO
1 2006‐07 1,612,642,497 638,958,266 2.52
2 2007‐08 2,280,704,176 1,181,003,846 1.93
3 2008‐09 3,500,193,294 1,312,272,610 2.67
4 2009‐10 5,975,961,025 2,020,744,952 2.96
5 2007‐08 3,499,805,230 206,460,567 2.91
Average 2.598
Interpretation of current ratio:
Nestle-
We can interpret that its current assets are more than its current liabilities—that is, the
company can pay off its current debts 1.63 times over but it is very less than norms i.e. 2:1.
Therefore, the company is to maintain liquidity by putting more on current assets.
Engro foods-
We can interpret that its current assets are 2.59 times of its current liabilities—that is, the
company can pay off its current debts comfortably and here it is more than norms 2:1.
So, we can say that both the companies are more or less having good liquidity position but
the position of nestle company is not so good. The Management of Nestle is to put more on
Current assets.

QUICK RATIO:-
Nestle:-
Quick Ratio
2016 2015 2014 2013 2012 Average
Current
Liabilities
(millions) 16,327.00 14,816.00 13,554.50 13,471.80 11,387.30 13,911.32
Quick
Assets
(millions) 23,358.10 16,646.70 11,195.70 15,657.90 7,445.40 14,860.76
Quick
Ratio 1.43 1.12 0.83 1.16 0.65 1.07
Engro Foods:-
S.NO Year QUICK ASSETS
CURRENT
LIABILITIES
QUICK
RATIO
1 2006‐07 1,171,683,584 638,958,266 1.83
2 2007‐08 1,708,741,955 1,181,003,846 1.45
3 2008‐09 2,578,479,879 1,312,272,610 1.96
4 2009‐10 4,032,625,321 2,020,744,952 1.99
5 2009‐10 4,032,625,321 2,020,744,952 1.99
Average 1.832
Interpretation of Quick ratio:
Nestle-
We can interpret that Nestle Company had 1.07 times of very liquid assets to pay the
liabilities after assessing data of 5 years.
Engro Foods-
We can interpret that Engro Company had 1.83 times of very liquid assets to pay the
Henceforth, after evaluation we can say that these companies can pay off short term financial
liabilities in right way if need.
It has been observed that though Nestle is having Low CR but in terms of QR it is in
Cushioning position.

INVENTORYTURNOVER RATIO:-
Nestle:-
Inventory Turnover Ratio
2016 2015 2014 2013 2012 Average
Sales
(millions) 91,592.80 81,232.70 98,062.70 90,619.00 83,022.60 88,905.96
Inventory
(millions) 9,431.80 8,208.10 8,441.00 7,359.30 7,455.80 8,179.20
Inventory
Turnover
(times) 9.71 9.9 11.62 12.31 11.14 10.93
Engro Foods:-
S.NO Year
COST OF
GOODS SOLD
AVG
INVENTORY
I.T.RATIO
1 2006‐07 2,228,549,828 374,102,223 5.96
2 2007‐08 3,499,805,230 506,460,567 6.91
3 2008‐09 5,324,665,192 746,837,818 7.13
4 2009‐10 9,782,463,974 1,432,524,559 6.83
5 2008‐09 7,451,032,998 1,568,304,581 4.75
Average 6.316
Interpretation of Inventory Turnover ratio:
Nestle-
We can interpret that there would be 10 inventory turns per year on an average. That is
the company would take 1 and half months approx to sell and replace all inventories.
Engro Foods-
We can interpret that there would be 6.32 inventory turns per year on an average. That is
the company would take 1 or 2 months approx to sell and replace all inventories.

FIXED ASSET TURNOVER RATIO:-
Nestle:-
Fixed Asset Turnover Ratio
2016 2015 2014 2013 2012 Average
Sales
(millions)
91,592.80 81,232.70 98,062.70 90,619.00 83,022.60 88,905.96
Net
Assets
(millions)
68,059.70 60,863.30 58,195.00 63,142.70 51,639.20 60,379.98
Assets
Turnover
(times)
1.35 1.33 1.69 1.44 1.61 1.47
Engro Foods:-
S.NO Year Sales NET ASSETS F.A.T.RATIO
1 2006‐07 2,685,436,096 948,631,374 2.83
2 2007‐08 4,458,295,779 1,043,547,559 4.27
3 2008‐09 7,451,032,998 1,568,304,581 4.75
4 2009‐10 13,499,867,499 1,888,508,475 7.15
5 2007‐08 4,458,29 5,779 2,280,704,176 1.95
Average 4.19
Interpretation of Fixed Asset Turnover ratio:
Nestle-
We can interpret that 1.47 times of sales is generated for every investment in fixed asset on
an average in Nestle after calculating data of 5 years.
Engro Foods-
an average in Engro Foods after calculating data of 5 years.
Henceforth, after evaluation we can say that these companies are managing their fixed assets
effectively as a higher ratio result implies that management is using its fixed assets more
effectively and efficiently by comparing its historical ratios.

DEBT-EQUITY RATIO:-
Nestle:-
Debt-Equity Ratio
2016 2015 2014 2013 2012 Average
Total
Debt
(millions) 21,595.70 17,868.90 16,268.40 25,983.40 22,267.80 20,796.84
Total
Equity
(millions) 30,018.70 27,896.20 28,291.00 23,588.10 17,915.60 25,541.92
Debt-
Equity
Ratio 0.72 0.64 0.58 1.1 1.24 0.81
Engro Foods:-
Interpretation of DEBT-EQUITYTurnover ratio:
Nestle-
We can interpret that the company’s total liabilities are only 0.81times on an average to its
shareholder equity and can be concluded that a good leverage the company is using after
assessing the data of 5 years.
Engro Foods-
We can interpret that the company’s total liabilities are only 0.56times on an average to its
shareholder equity and can be concluded that a good leverage the company is using after
assessing the data of 5 years.
Therefore, these companies are having risk free position as higher leverage ratios tend to
indicate a company or stock with higher risk to shareholders and here these companies are
having less Debt/Equity ratio.
S.No Year TOTAL DEBT NET WORTH D.E. RATIO
1 2006‐07 233,058,880 1,806,848,671 0.13
2 2007‐08 378,672,427 2,012,852,920 0.19
3 2008‐09 1,407,083,880 2,436,657,677 0.58
4 2009‐10 3,162,620,560 3,331,014,470 0.95
3 2008‐09 2,407,083,880 2,436,657,677 0.98786297
Average 0.567572593

CURRENT ASSET TURNOVER RATIO:-
Nestle:-
S.NO Year SALES
CURRENT
ASSETS
C.A.T .
RATIO
1 2006‐07 2,685,436 ,096 1,612,642,497 1.67
2 2007‐08 4,458,29 5,779 2,280,704,176 1.95
3 2008‐09 7,451,03 2,998 3,500,193,294 2.12
4 2009‐10 13,499,867,499 5,975,961,025 2.26
5 2008‐09 5,324,665,192 746,837,818 7.13
Average 3.026
Engro Foods:-
S.NO Year SALES
CURRENT
ASSETS
C.A.T .
RATIO
1 2006‐07 169,121,827 638,958,266 0.26
2 2007‐08 205,212,363 1,181,003,846 0.17
3 2008‐09 256,000,280 1,312,272,610 0.2
4 2009‐10 511,453,739 2,020,744,952 0.25
5 2009‐10 3,162,620,560 3,331,014,470 0.95
Average 0.366
Interpretation of Current Asset Turnover ratio:
Nestle-
We can interpret that Year 5 witnessed an increase of firm’s current asset turnover ratio from
1.67 to 7.13 comparing to year 1. This indicates an increase in firm’s ability of generating
sales through its current assets.
Engro Foods-
We can interpret that Year 5 witnessed an increase of firm’s current asset turnover ratio from
0.26 to 0.95 comparing to year 1 but slightly decline in the middle. This indicates an increase
in firm’s ability of generating sales through its current assets.
Thus, we can say that these companies’ Current asset turnover reflects better current asset
turn over during the fiscal year. This indicator shows how much money was generated by
these companies by using current assets. Positive is an increasing trend of the current asset
turnover over the analyzed period.

CURRENT ASSET TURNOVER RATIO:-
Nestle:-
Fixed Asset To Current Asset Ratio
2016 2015 2014 2013 2012 Average
Fixed
Assets
(millions)
68,059.70 60,863.30 58,195.00 63,142.70 51,639.20 60,379.98
Current
Assets
(millions) 32,789.90 24,854.80 19,636.70 23,017.20 14,901.20 23,039.96
Fixed Asset
To Current
Asset Ratio 2.07563 2.448754365 2.963583494 2.743283 3.465439 2.739338
Engro Foods:-
S.NO Year
FIXED
ASSETS
CURRENT
ASSETS
FIXED
ASSETTO
CURRENT
ASSET
RATIO
1 2006‐07 948,631,374 638,958,266 1.484653
2 2007‐08 1,043,547,559 1,181,003,846 0.883611
3 2008‐09 1,568,304,581 1,312,272,610 1.195106
4 2009‐10 1,888,508,475 2,020,744,952 0.934561
5 2007‐08 2,280,704,176 3,331,014,470 0.684688
Average 1.036524
Interpretation of Fixed Asset Turnover ratio:
Nestle-
Engro Foods-
an average in Engro Foods after calculating data of 5 years.
Henceforth, after evaluation we can say that these companies are managing their fixed assets
effectively as a higher ratio result implies that management is using its fixed assets more
effectively and efficiently by comparing its historical ratios.

Findings:-
 Nestle-
We can interpret that its current assets are more than its current liabilities—that is, the
company can pay off its current debts 1.63 times over.
 Engro foods-
We can interpret that its current assets are 2.59 times more than its current liabilities—
that is, the company can pay off its current debts 2.59 times over.
So, we can say that both the companies are having good liquidity position
We can interpret that Nestle Company had 1.07 times of very liquid assets to pay the
 Nestle-
Liabilities after assessing data of 5 years.
 Engro Foods-
We can interpret that Engro Company had 1.83 times of very liquid assets to pay the
Henceforth, after evaluation we can say that these companies can pay off short term
financial liabilities in right way if need.
 Nestle-
We can interpret that there would be 10 inventory turns per year on an average. That is
the company would take 1 and half months approx to sell and replace all inventories.
 Engro Foods-
We can interpret that there would be 6.32 inventory turns per year on an average. That is
the company would take 1 or 2 months approx to sell and replace all inventories.
We can interpret that 1.47 times of sales is generated for every investment in fixed asset
on
 Nestle-
 Engro Foods-
We can interpret that 4.19 times of sales is generated for every investment in fixed asset
on an average in Engro Foods after calculating data of 5 years.
Henceforth, after evaluation we can say that these companies are managing their fixed
assets effectively as a higher ratio result implies that management is using its fixed assets
more effectively and efficiently by comparing its historical ratios.
 Nestle-
We can interpret that the company’s total liabilities are only 0.81times on an average to
its shareholder equity and can be concluded that a good leverage the company is using
after assessing the data of 5 years.
 Engro Foods-
We can interpret that the company’s total liabilities are only 0.56times on an average to
its shareholder equity and can be concluded that a good leverage the company is using
after assessing the data of 5 years.Therefore, these companies are having risk free
position as higher leverage ratios tend to indicate a company or stock with higher risk to
shareholders and here these companies are having less Debt/Equity ratio.
 Nestle-
We can interpret that Year 5 witnessed an increase of firm’s current asset turnover ratio
from 1.67 to 7.13 comparing to year 1. This indicates an increase in firm’s ability of
generating sales through its current assets.
 Engro Foods-

 We can interpret that Year 5 witnessed an increase of firm’s current asset turnover ratio
from 0.26 to 0.95 comparing to year 1 but slightly decline in the middle. This indicates an
increase
 in firm’s ability of generating sales through its current assets.
 Thus, we can say that these companies’ Current asset turnover reflects better current
asset turn over during the fiscal year. This indicator shows how much money was
generated by these companies by using current assets. Positive is an increasing trend of
the current asset turnover over the analyzed period.

15. Conclusion
After all the findings, it is concluded that financial ratios are the basic and
most important part of any business. It describes the firm’s financial position. As the
data indicates that NESTLE is an international brand and has expanded its business on
the large geographical area and also offers the large range of products, but on the
other side ENGRO food offers the limited range of the products and most of them are
dairy products.
From the financial statements it is clear that the financial position of the
NESTLE is far better than ENGRO as it is more preferred by the customers and also
an internationally distributed. It also has less risk. It gives more return because it
gains more profit than ENGRO.On the other hand ENGRO deals with the limited
products in a limited geographical area but on the basis of financial ratios ENGRO
has a better financial position and also has an opportunity to expand its business. Both
the companies have some opportunities and threads and they need to work on it.

17. References
1. NESTLE annual report 2011
2. ENGRO FOODS annual report 2011
3. www.nestle.pk
4. www.engrofoods.com

ENGRO FOODS LIMITED
BALANCE SHEET AS AT 31st
MARCH 2007
Schedule
Particulars No. As at 31.03.2007 As at 31.03.2006
SOURCES OF FUNDS
Rupees Rupees Rupees Rupees
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
Reserves & Surplus 2 1,692,973,671
1,806,848,671
1,632,042,302
1,745,917,302
Loan Funds
Secured Loans 3 73,665,914 44,945,252
Unsecured Loans 4 159,392,966
233,058,880
103,853,138
148,798,390
Deferred Tax liability 5 130,927,315 145,000,360
Total 2,170,834,866 2,039,716,052
APPLICATION OF FUNDS
6Fixed Assets
Gross Block 1,672,298,054 1,583,508,897
Less: Depreciation 723,666,680 591,622,548
Net Block 948,631,374 991,886,349
Capital Work-in-Progress 12,892,109
961,523,483
9,514,644
1,001,400,993
Investments 7 235,627,152 208,778,082
Current Assets,Loans &
Advances
Inventories 8 440,958,913 307,245,534
Sundry Debtors 9 649,706,121 471,673,642
Cash & Bank Balances 10 169,121,827 152,292,556
Loans, Advances & Deposits 11 342,929,588 251,402,682
Other Current Assets 12 9,926,048 7,622,683
Less: Current Liabilities &
1,612,642,497 1,190,237,097
13Provisions
Liabilities 345,042,817 162,283,498
Provisions 293,915,449 198,416,622
Net Current Assets
638,958,266
973,684,231
360,700,120
829,536,977
Misc. Expenditure 14 -- --
Total 2,170,834,866 2,039,716,052

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2007
Schedule Year Ended on 31.03.07 Year Ended on 31.03.06
Particulars No. Rupees Rupees
INCOME
2,368,057,275 1,759,017,304Sales
Other Income 15 63,043,449 41,581,593
Increase / (Decrease) in stocks 16 71,015,819 11,120,770
Total 2,502,116,543 1,811,719,667
Expenditure
17 1,382,962,610 831,843,012Raw Material Consumed
Payments & Benefits to Employees 18 170,091,901 157,730,759
Mfg., Selling Admn., & Other
19 494,265,237 561,985,559
Expenses
20 181,230,080 123,834,416Taxes & Licenses
Interest 21 1,448,427 1,754,335
Depreciation 136,307,132 123,052,249
Total 2,366,305,387 1,800,200,330
Profit Before Taxation 135,811,156 11,519,337
Add: Excess provision of Income Tax -- 4,954,943
Less: Tax Provision for earlier years 14,073,045 30,473,038
Provision for Income Tax 59,500,000 33,000,000
Provision for Wealth Tax 3,440,615 --
Add: Excess provision for Dividend
43,023Tax Written Back 49,721
Profit After Taxation 86,900,563 13,897,597
Profit brought forward 512,460,202
518,882,390
Year from Previous
599,360,765 532,779,987Profit available for appropriation
Less: Transfer to General Reserve 6,517,542 1,050,000
Proposed Dividend 22,775,000 17,081,250
Dividend Tax 3,194,194 2,188,535
Balance carried to Balance Sheet 566,874,029 512,460,202
Basic Earnings per equity share 7.63 1.22
BALANCE SHEET AS AT 31 MARCH 2009
Schedule
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
2,436,657,677
1,898,977,921
2,012,852,921
Loan Funds
Secured Loans 3 1,074,874,049 189,001,189
Unsecured Loans 4 332,209,831
1,407,083,880
216,407,580
405,408,769
Deferred Tax liability 5 136,092,961 120,012,315
Total 3,979,834,518 2,538,274,005
APPLICATION OF FUNDS 6

Fixed Assets
Gross Block 2,577,786,073 1,907,116,068
Less: Depreciation 1,009,481,492 863.568,510
Net Block 1,568,304,581 1,043,547,558
1,629,972,178
48,149,118
1,091,696,676
Investments 7 161,941,656 320,140,656
Advances
Inventories 8 921,713,415 571,962,221
Sundry Debtors 9 1,459,544,977 856,520,556
Loans, Advances & Deposits 11 859,824,054 634,750,549
3,500,193,294 2,280,481,128
13Provisions
Liabilities 735,304,583 673,895,907
Provisions 576,968,027 480,148,548
Net Current Assets
1,312,272,610
2,187,920,684
1,154,044,455
1,126,436,673
Total 3,979,834,518 2,538,274,005

Particulars
INCOME
Sales
Other Income
Increase / (Decrease) in stocks
Total
Expenditure
Purchase Of Finished Goods Raw
Material Consumed Payments &
Benefits to Employees Mfg., Selling
Admn., & Other Expenses
Taxes & Licenses
Interest
Depreciation
Total
Profit Before Taxation
Add: Excess provision of Income Tax
Less :Tax Provision for -Current Tax
Including Deferred tax, Earlier
Tax, Wealth tax, Fringe
benefits tax
Profit After Taxation
Profit brought forward
Year from Previous
Profit available for appropriation
Less: Transfer to General Reserve
Proposed Dividend Dividend Tax
Balance carried to Balance Sheet
No. Rupees Rupees
5,958,016,404 3,636,709,293
15 97,738,804 72,509,746
16 181,845,189 41,637,449
6,237,600,397 3,750,856,488
1,190,212 4,353,496
17 3,937,812,454 2,229,601,146
18 265,997,094 207,269,383
19 1,093,657,443 760,841,717
20 26,007,989 14,881,894
21 30,924,293 13,435,515
170,026,464 147,009,114
5,525,615,949 3,377,392,265
711,984,448 373,464,223
-- 10,915,000
241,549,873 145,913,493
470,434,575 238,465,730
749,031,694 566,874,029
1,219,466,269 805,339,759
47,043,458 23,846,573
39,856,250 28,468,750
6,773,570 3,992,742
1,125,792,991 749,031,694

BALANCE SHEET AS AT 31 MARCH 2010
Schedule
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
2,436,657,677
3,217,139,470
3,331,014,470
Loan Funds
Secured Loans 3 1,074,874,049 2,266,545,502
Unsecured Loans 4 332,209,831 896,075,058
1,407,083,880 3,162,620,560
Deferred Tax liability 5 136,092,961 169,506055
Total 3,979,834,518 6,663,141,085
APPLICATION OF FUNDS
6Fixed Assets
Gross Block 2,577,786,073 3,105,843,108
Less: Depreciation 1,009,481,492 1,217,334,633
Net Block 1,568,304,581 1,888,508,475
1,629,972,178
657,409,912
2,545,918,387
Investments 7 161,941,656 162,006,625
Advances
Inventories 8 921,713,415 1,943,335,704
Sundry Debtors 9 1,459,544,977 2,264,682,019
Loans, Advances & Deposits 11 859,824,054
1,248,478,477
3,500,193,294 5,975,961,025
13Provisions
Liabilities 735,304,583 1,027,373,819
Provisions 576,968,027 99,371,133
Net Current Assets
1,312,272,610
2,187,920,684
2,020,744,952
3,955,216,073
Total 3,979,834,518 6,663,141,085

Particulars
INCOME
Sales
Other Income
Increase / (Decrease) in stocks
Total
Expenditure
Purchase Of Finished Goods Raw
Material Consumed Payments &
Benefits to Employees Mfg., Selling
Admn., & Other Expenses
Taxes & Licenses
Interest
Depreciation
Total
Profit Before Taxation
Add: Excess provision of Income Tax
Less :Tax Provision for -Current Tax
Including Deferred tax, Earlier
Tax, Wealth tax, Fringe
benefits tax
Profit After Taxation
Profit brought forward
Year from Previous
Profit available for appropriation
No. Rupees Rupees
5,958,016,404 10,833,256,904
15 97,738,804 256,100,643
16 181,845,189 582,065,982
6,237,600,397 11,671,423,529
1,190,212 6,378,425
17 3,937,812,454 7,794,794,675
18 265,997,094 408,078,078
19 1,093,657,443 1,579,591,221
20 26,007,989 49,538,561
21 30,924,293 129,308,874
170,026,464 244,452,070
5,525,615,949 10,212,042,104
711,984,448 1,459,381,425
--
241,549,873 523,262,294
470,434,575 943,631,511
749,031,694 1,125,792,991
1,219,466,269 2,069,424,502
Less: Transfer to General Reserve 47,043,458 94,363,151
Proposed Dividend 39,856,250 39,856,250
Dividend Tax 6,773,570 6,773,570
Balance carried to Balance Sheet 1,125,792,991 1,928,431,531
Basic Earnings per equity share 41.31 82.87

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