PB 604 business finance

1. PB 604 BUSINESS FINANCE
(Financial Analysis)
NAME MATRIX NUMBER
DIANI AMIRA BINTI HAMZAH 07DPM10F1085
VERA VIANNI UNTOP 07DPM10F1083
FRAN SISKAH YOHANES 07DPM10F1065
OW CHEE WEI 07DPM10F1052

2. BACKGROUND OF COMPANY
Headquarters Address: Nestle House, 22-1, 22/F, Menara
Surian, 1, Jln PJU 7/3 Mutiara
Damansara; Petaling Jaya;
Selangor;47810.
Status: Listed in Bursa Malaysia Main Board.
13 December 1989.
Legal Form: Public Limited Company
Operational Status: Operational
Incorporation Date: November 30, 1983
Total Employees: 3,818 and more peoples
Telephone Number: (603)79656000

3. BACKGROUND OF COMPANY
The main activity of Nestle (Malaysia) Berhad is
investment holding, and main activities of the
subsidiaries are marketing and sale in both
locally and for export, those products are ice-
cream, powdered milk and drinks, instant
coffee and other beverages, chocolate
confectionery products, instant noodles,
culinary products, cereals and yogurt.
[ NESTLE (MALAYSIA) BERHAD ]

4. BOARD OF DIRECTORS (BOD)

5. Liquidity Ratio
Liquidity Ratio Year 2011 Year 2010 Year 2009
Current Ratio
=Current Asset/Current
Liability
1.097 x 1.0873 x 1.0843 x
Quick Ratio
=(Current Asset-
Inventory)/Current
Liability
0.5439 x 0.5595 x 0.5771 x
Cash Ratio
=(Cash + Cash
Equivalents)/Current
Liability
0.0574 x 0.0675 x 0.0369 x

6. Liquidity Ratio
• Liquidity Ratio is unsatisfied.
• Quick Ratio is decreased year by year :
0.5771 times in year 2009
0.5595 times in year 2010
0.5439 times in year 2011
• Every RM 1 of current liability generated RM 0.54
current assets in year 2011 compare to RM 0.57
in year 2009 without considering inventory.
• Liquidity Ratio measures how fast the company
gain cash in less than one year.

7. Activity Ratio
Activity Ratio Year 2011 Year 2010 Year 2009
Inventory Turnover
=Cost Of Goods
Sold/Inventory
6.1032 x 7.0480 x 6.9494 x
Average Collection
Period
=Account
Receivable/(Sales/360)
34 days 32 days 36 days
Fixed Assets Turnover
=Sales/Fixed Assets
4.7617 x 4.0473 x 3.9205 x
Total Assets Turnover
=Sales/Total Assets
2.3478 x 2.2637 x 2.1861 x

8. Activity Ratio /
Asset Management Ratio
• Activity Ratio is satisfied.
• Every RM 1 of fixed assets generated RM 4.76 sales
in year 2011 compare to RM 3.92 in year 2009.
• Fixed Assets Turnover is increased year by year:
3.9205 times in year 2009
4.0473 times in 2010
4.7617 times in year 2011.
• Activity ratio measures how well a firm is managing
its assets.

9. Leverage Ratio
Leverage Ratio Year 2011 Year 2010 Year 2009
Debt Ratio
=Total Liability/Total
Asset x100
67.9912% 65.5174% 82.6487%
Debt-Equity Ratio
=Long-Term
Debt/Equity
0.6971 x 0.7246 x 0.7877 x
Times Interest
Earned
=Earning Before
Interest &
Tax/Interest
Expense
72 x 62 x 60 x

10. Leverage Ratio
• Leverage Ratio is satisfied.
• Debt Equity Ratio is slightly decreased year by year :
0.7877 times in year 2009,
0.7246 times in year 2010
0.6971 times in year 2011.
• Every RM 1 of equity will supported by RM 0.70 of
long-term debt compare to RM 0.79 in year 2009.
• Leverage Ratio measures the amount of debt being
used to support production and the ability of the
firm to settle its debt properly.

11. Profitability Ratio
Profitability Ratio Year 2011 Year 2010 Year 2009
Gross Profit Margin
=Gross Profit/Sales
x100
32.8041% 33.3876% 34.2258%
Operating Profit
Margin
=operating
income/sales x100
11.8870% 11.5675% 11.7584%
Net Profit Margin
=Profit after
tax/Sales x100
9.7065% 9.7210% 9.3956%

12. Profitability Ratio
Profitability Ratio Year 2011 Year 2010 Year 2009
Return of Asset
=Net profit After
Tax/TA x100
22.7886% 22.0050% 20.5401%
Return On Equity
=Net Profit After
Tax/Equity x100
71.2014% 63.8146% 62.0250%

13. Profitability Ratio
Profitability Ratio is satisfied. ROA is increased year by
year:
20.5401% in year 2009,
22.0050% in year 2010
22.7886% in year 2011.
Every RM 1 of total assets generated RM 0.23 of net
profit after tax compare to RM 0.20 in year 2009.
Profitability Ratio measures a firm’s return by
considering company profits to sales, assets, and
equity.

14. Conclusion
• Overall ratio is satisfied.
• Asset is managed very well.
• Used debt to support production & settle
its debt properly.
• Gain the positive return.