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FACULTY OF BUSINESS AND MANAGEMENT SEMESTER 2/ 2021FIN 420 FINANCIAL MANAGEMENTFINANCIAL PERFORMANCE ANALYSIS OF NESLE (MALAYSIA) BERHADPREPARED BY:NO NAME STUDENTID 1. Muhamad Iskandar Kamarudin Bin Mazlan 2020628212 2. Fatin Roziana Binti Azrol 2020646124 3. Farah Izzati Binti Mohammad Khalil 2020...

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FACULTY OF BUSINESS AND MANAGEMENT SEMESTER 2/ 2021

FIN 420 FINANCIAL MANAGEMENT

FINANCIAL PERFORMANCE ANALYSIS OF NESLE (MALAYSIA) BERHAD

PREPARED BY:

NO 1. 2. 3. 4.

NAME Muhamad Iskandar Kamarudin Bin Mazlan Fatin Roziana Binti Azrol Farah Izzati Binti Mohammad Khalil Mohamad Rasheedy Bin Mohd Mohely PERPARED FOR: MUSTAFA KAMAL BIN MAT FACULTY OF BUSINESS MANAGEMENT UITM SHAH ALAM, SELANGOR. 21/6/202

STUDENT ID 2020628212 2020646124 2020696928 2020662216

TABLE OF CONTENT

NO

TITTLE

1.0

Acknowledgement

2.0

Introduction

3.0

Company Background

4.0

Financial Ratio Analysis: 

Liquidity Ratio



Asset Management Ratio



Leverage Ratio



Profitability Ratio

5.0

Compararison and Trend Analysis

6.0

Suggestions

7.0

Conclusion

8.0

Reference

PAGES

1.0 ACKNOWLEDGEMENT

2.0 INTRODUCTION

MISSION

VISSION

3.0 COMPANY INTRODUCTION

NETSLE (MALAYSIA) BERHAD

Nestlé Malaysia is the world’s largest food and beverage manufacturer. Headquartered in Switzerland, Nestlé is present in 191 countries around the world and commited to give quality products to Malaysians since 100 years ago. Nestle was first established in Malaysia in 1912. The first Nestle office in Malaysia was set up in Bishop Street, Penang, which was known as Anglo-Swiss Condensed Milk Company. Then, in year 1939, due to growth and expansion, Nestle Company decided to expanded to Kuala Lumpur in 1939. The first Nestle factory in Malaysia was developed in 1962 in Petaling Jaya. Today, it manufactures its products in its six factories from Petaling Jaya and Shah Al a m a t S el an g o r, Ch e mb o ng at N eg er i Se m bi l an , a n d K uc h i ng at S ar aw a k. Moreover, Nestle Malaysia’s head office is located at Mutiara Damansara. Since 13 December 1989, Nestle Company was publicly listed in the KLSE,which is known as Bursa Malaysia Berhad now, at an issue price of RM5.20 for each share but it increased sharply to RM21.00 each in year 2000. (Nestle. 2015.). Today, Nestle Malaysia Sdn Bhd employs more than 5000 people and manufactures as well as markets more than 300 Halal products in Malaysia.

Nestle becomes the leader in nutrition, health and wellness industry. Nestle employed local autonomous regional employees to manage the company (“Nestle‘s Competitive Strategy). This is because they understand the culture and taste of the local market compared to foreigners. Besides, Nestle produces different products that are suitable for each religion in a country.

They have been nourishing Malaysians through their high quality brands and products like MILO, MAGGI, NESCAFÉ and KITKAT, whilst maintaining their Halal excellence and integrity. This is in line with their promise of delivering GOOD FOOD, GOOD LIFE to all. Nestlé's purpose is enhancing quality of life and contributing to a healthier future. Nestle want to help shape a better and healthier world and also want to inspire people to live healthier lives. This is how the company contribute to society while ensuring the long-term success of our company.

FINANCIAL RATIO ANALYSIS

a) What is liquidity Ratio? Liquidity ratios are a type of financial indicator that is used to assess a debtor's capacity to repay current debt obligations without having to raise additional funds. Liquidity ratios calculate indicators including the current ratio, quick ratio, and operating cash flow ratio to determine a company's capacity to meet debt obligations and its margin of safety.

i)

The formula to calculate Current Ratio is:

Based on our research study for the company that we select is Nestlé Malaysia. Below table show the Liquidity Ratio for 5 Years.

Years 2015

2016

2017

Current Ratio = 1,015,412 1,524,627

Quick Ratio = ( 1,015,412 – 414,262 ) 1,524,627

= 0.67

= 0.39

= 1.030,036 1,576,843

= ( 1,030,036 – 455,337 ) 1,576,843

= 0.65 = 1,073,112 1,622,058

= 0.36 = ( 1,073,112- 467,316 ) 1,622,058

2018

2019

2020

= 0.66 = 1,215,416 1,782,079

= 0.37 = ( 1,215,416 – 530,378 ) 1,782,079

= 0.68

= 0.38

= 1,073,013 1,654,750

= ( 1,073,013 – 551,827 ) 1,654,750

= 0.64

= 0.31

= 1,079,882 1,816,829

= ( 1,079,882 – 597,270 ) 1,816,829

= 0.59

= 0.26

Based on the above table, we can see the current ratio was goes up and down. On 2015 the current ratio is 0.67 and decrease to 0.65 on 2016. But on year 2017 and 2018 the current ration increase which is 0.66 for 2017 and 0.68 for 2018 and unfortunately on 2019 and 2020 the current ratio getting decrease again which 0.64 on 2019 and 0.59 on 2020.

ii)

The formula to calculate Quick Ratio is:

Based on our research study for the company that we select is Nestlé Malaysia. Below table show the Liquidity Ratio for 5 Years.

Years

Current Ratio

2015

= 1,015,412 1,524,627

2016

1,524,627

= 0.39

= 1.030,036

= ( 1,030,036 – 455,337 ) 1,576,843

= 0.65

= 0.36

= 1,073,112

= ( 1,073,112- 467,316 )

1,622,058

2018

= ( 1,015,412 – 414,262 )

= 0.67

1,576,843

2017

Quick Ratio

1,622,058

= 0.66

= 0.37

= 1,215,416

= ( 1,215,416 – 530,378 )

1,782,079

1,782,079

2019

= 0.68

= 0.38

= 1,073,013

= ( 1,073,013 – 551,827 ) 1,654,750

1,654,750

2020

= 0.64

= 0.31

= 1,079,882

= ( 1,079,882 – 597,270 )

1,816,829

= 0.59

1,816,829

= 0.26

Based on the above table, we can see the current ratio was goes up and down. On 2015 the current ratio is 0.67 and decrease to 0.65 on 2016. But on year 2017 and 2018 the current ration increase which is 0.66 for 2017 and 0.68 for 2018 and unfortunately on 2019 and 2020 the current ratio getting decrease again which 0.64 on 2019 and 0.59 on 2020.

b) Assets Management Ratio I.

Inventory Turnover =

revenue / inventory

2016

2017

2018

2019

2020

= 3,066,051= 3,309,386= 3,381,380= 3,444,561= 3,446,678 NESTLE MALAYSIA BERHAD ________ ________ ________ ________ ________ 467,316 530,378 551,827 597,270 455,337 = 6.73

= 7.08

= 6.38

= 6.24

= 5.77

In 2017, Nestle Malaysia Berhad showed the highest number of inventory turnover at 7.08, but in 2019 it decreased slightly to 6.24 and in 2020 it showed an decrease at 5.77

II.

Fixed Asset & Total Asset TurnOver FIXED ASSET TURNOVER (FATO) (RM’000) 201 6

= 5,063,506

TOTAL ASSET TURNOVER (TATO) (RM’000) = 5,063,506

1,464,574

= 3.30

2,494,610

= 2.03

201 7

= 5,260,490

= 5,260,490

1,543,712

201 8

2,616,823

= 3.40

= 2.01

= 5,519,045

= 5,519,045

1,631,866

2019

2020

2,847,282

= 3.55

= 1.94

= 5,518,076

= 5,518,076

1,653,525

2,726,538

=3.33

= 2.02

= 5,412,180

= 5,412,180

1,781,489

2,861,371

=3.03

= 1.89

In 2018, Nestle Malaysia Berhad showed an increase in fixed asset turnover at 3.55 and in 2019 it decrease to 3.33 and in 2020 it showed an decrease and had the lowest number at 3.03. Meanwhile in total asset turnover, it showed an up and down in the ratio at 2.03 in 2016 and it continued to decrease slightly to 2.01 in 2017 until 2019 it showed an increase 2.02 but in 2020 decrease and the lowest 1.89.

III.

Average Collection Period (ACP)

201 6

201 7

201 8

201 9

202 0

NESTLE

544,307 X 360

= 580,847 X 360

= 605,414 X 360

508,097 X 360

472,705 X 360

MALAYSI A

5,063,506

5,260,490

5,519,045

5,518,076

5,412,180

(BERHAD)

= 38.70

= 39.75

= 39.49

= 33.14

= 31.44

In 2017, Nestle Malaysia Berhad recorded the highest daily sales volume (DSO) at 39.75, and in 2019 it declined to 33.14 and in 2020 it continued to decline to 31.44

c) Nisbah Pengurusan Hutang / Debt Management Ratio i)

Debt ratio

2016

2017

2018

2019

2020

1,847,389

1,980,929

2,192,949

2,061,614

2,304,235

2,494,610

2,616,823

2,847,282

2,726,538

2,861,371

= 74.06%

= 75.70%

= 77.02%

= 75.61%

= 80.53%

ii)

Times Interest Earned (TIE) Ratio

2016

2017

2018

2019

2020

798,780

847,491

914,596

911,993

756,000

33,836

37,503

43,123

40,663

35,466

= 23.61 times

= 22.60 times

= 21.21 times

= 22.43 times

= 21.62 times

iii)

Debt Equity Ratio

2016

2017

2018

2019

2020

1,847,389

1,980,929

2,192,949

2,061,614

2,304,235

647,221

635,894

654,333

664,924

557,136

= 2.85 times

= 3.12 times

= 3.35 times

= 3.10 times

= 4.14 times

iv)

Equity Ratio

2016

2017

2018

2019

2020

647,221

635,894

654,333

664,924

557,136

2,494,610

2,616,823

2,847,282

2,726,538

2,861,371

= 25.94%

= 24.30%

= 22.98%

= 24.39%

= 19.47%

2019

2020

d) Nisbah Keuntungan / Profitability Ratio : i) Operating Profit Margin Ratio

2016

2017

2018

798,780

847,491

914,596

911,993

756,000

5,063,506

5,260,490

5,519,045

5,518,076

5,412,180

= 15.78%

= 16.11%

= 16.57%

= 16.53%

= 13.97%

ii)

Net Profit Margin

2016

2017

2018

2019

2020

(32,696)

(36,060)

(39,501)

(37,001)

(31,928)

5,063,506

5,260,490

5,519,045

5,518,076

5,412,180

= - 0.65%

= - 0.69%

= - 0.72%

= - 0.67%

= - 0.59%

iii)

Return of Asset

2016

2017

2018

2019

2020

(32,696)

(36,060)

(39,501)

(37,001)

(31,928)

2,494,610

2,616,823

2,847,282

2,726,538

2,861,371

= - 1.31%

= - 1.38%

= - 1.39%

= - 1.36%

= - 1.12%

iv)

Gross Profit Margin

2016

2017

2018

2019

2020

1,997,455

1,951,104

2,137,665

2,073,515

1,965,502

5,063,506

5,260,490

5,519,045

5,518,076

5,412,180

= 39.45%

= 37.09%

= 38.73%

= 37.58%

= 36.32%

v) Return on Equity

2016

2017

2018

2019

2020

(32,696)

(36,060)

(39,501)

(37,001)

(31,928)

647,221

635,894

654,333

664,924

557,136

= - 5.05%

= - 5.67%

= - 6.04%

= - 5.56%

= - 5.73%

5.0 COMPARATIVE AND TREND ANALYSIS

6.0 SUGGESTIONS

7.0 CONCLUSION 8.0 REFERENCE...