This case spans all 12 chapters and is based on the consolidated financial statements of Nestl. As

This case spans all 12 chapters and is based on the consolidated financial statements of Nestlé.

As you work with Nestlé throughout this course, you will develop the confidence and ability to use the financial statements of other companies as well.

Refer to Nestlé’s financial statements in Appendix A. If you wish, you can obtain the full annual report from www.nestle.com/investors. You may find the information overwhelming for now, but try to spot the key principles that we have discussed in this chapter. It will get progressively easier as you gain familiarity with the elements of the financial statements.

Requirements 1. Describe the class(es) of stocks or shares that Nestlé has authorized. How many shares of each class(es) have been issued? How many are outstanding as of December 31, 2016?

2. Refer to the Consolidated Cash Flow Statement and Note 17 - Equity. How many shares of treasury stock did the company purchase during the year ended December 31, 2015? How much did it pay for it in total? How much per share?

3. Examine Nestlé’s consolidated statement of shareholders’ equity. Analyze the two biggest changes that occurred in the company’s Retained Earnings account during the year ended December 31, 2016. Can you link the changes to any of its other financial statements?

4. Create the T-account for Nestlé’s Retained Earnings and show the beginning and ending balances, as well as all related activity for the year ended December 31, 2016. Journalize the transactions relating to profit, dividends, and the cancellation of treasury shares.

5. Compute Nestlé’s return on equity for 2016 and 2015 (note that the 2014 ending equity was CHF 70,130 million). Has Nestlé’s ROE improved or deteriorated?