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

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

Corporation. 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 (available on www.pearsonglobaleditions.com/Harrison). 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.

Refer to Nestlé’s consolidated financial statements in Appendix A.

1. Did trade payables for Nestlé increase or decrease in 2011? What was the amount? What might have caused this change? Refer to note 12.

2. Examine Note 13—Taxation in the Notes to the Consolidated Financial Statements. What was Nestlé’s income tax expense in 2016?

3. Did Nestlé borrow more or pay off more long-term debt during 2016? How can you tell?

4. Examine Note 11—Provisions and Contingencies Liabilities in the Notes to Consolidated Financial Statements. Describe some of Nestlé’s contingent liabilities as of March 31, 2011.

5. How would you rate Nestlé’s overall debt position—risky, safe, or average? Compute the ratio(s) at December 31, 2016, that would help you answer this question. Ratios aside, what qualitative factors would you consider in assessing the riskiness of Nestlé’s overall debt?

6. Refer to Note 11—Provisions and Contingencies. What kind of provisions does Nestlé

have? Why does it need them? What do you understand by the term “provision,” and how is it different from “contingent liabilities?”