1- List at least three working capital accounts that represent sources of cash for the firm and the changes that the financial manager would have to make in those accounts to improve the cash account for the next closing period of the firm. Explain 2-What does decrease in short-term notes mean in Nestle's financial statement and how does it affect the cash balance at the end of the period? Explain 3-From Nestle's statement of cash flows, discuss what may have caused the biggest change in the company's cash flow position for 20x9 compared to the prior year. Explain

Consolidated income statement for the year ended December 31, 2019 In millions of CHE Notes 2019 92 568 2018 91 439 Sales Other revenue Cost of goods sold Distribution expenses Marketing and administration expenses Research and development costs Other trading income Other trading expenses Trading operating profit 297 (46 647) (8 496) (19 790) (1 672) 163 (2 749) 13 674 311 (46 070) (8 469) (20 003) (1 687) 37 (1 769) 13 789 4 3 Other operating income Other operating expenses Operating profit 4 3717 (1 313) 16 078 2 535 (2572) 13 752 5 Financial income Financial expense Profit before taxes, associates and joint ventures 200 (1 216) 15 062 247 (1 008) 12 991 Taxes 13 14 Income from associates and joint ventures Profit for the year of which attributable to non-controlling interests of which attributable to shareholders of the parent (Net profit) (3 159) 1 001 12 904 295 12 609 (3 439) 916 10 468 333 10 135 As percentages of sales Trading operating profit Profit for the year attributable to shareholders of the parent (Net profit) 14.8% 15.1% 11.1% 13.6% Earnings per share (in CHF) Basic earnings per share Diluted earnings per share 4.30 3.36 15 15 4.30 3.36 Consolidated statement of comprehensive income for the year ended December 31, 2019 In millions of CHE Notes Profit for the year recognized in the income statement 2019 12 904 2018 10 468 17 (1 050) 17 (1004) (39) 46 14/17 (66) 49 (1 067) (21) (1018) Currency retranslations, net of taxes Fair value changes and recycling on debt instruments, net of taxes Fair value changes and recycling on cash flow hedges, net of taxes Share of other comprehensive income of associates and joint ventures Items that are or may be reclassified subsequently to the income statement Remeasurement of defined benefit plans, net of taxes Fair value changes on equity instruments, net of taxes Share of other comprehensive income of associates and joint ventures Items that will never be reclassified to the income statement 10/17 17 (320) (4) 337 13 600 4 117 721 14/17 Other comprehensive income for the year 17 (1 054) (297) Total comprehensive income for the year of which attributable to non-controlling interests of which attributable to shareholders of the parent 11 850 317 11 533 10 171 218 9953 Consolidated balance sheet as at December 31, 2019 before appropriations In millions of CHF Notes 2019 2018 Assets 12/16 12 6 7/12 Current assets Cash and cash equivalents Short-term investments Inventories Trade and other receivables Prepayments and accrued income Derivative assets Current income tax assets Assets held for sale Total current assets 7 469 2794 9 343 11 766 498 254 768 2771 35 663 4 500 5 801 9 125 11 167 530 183 869 8 828 41 003 12 2. 8 9 9 Non-current assets Property, plant and equipment Goodwill Intangible assets Investments in associates and joint ventures Financial assets Employee benefits assets Current income tax assets Deferred tax assets Total non-current assets 14 12 28 762 28 896 17 824 11 505 2611 510 55 2114 92 277 29 956 31 702 18 634 10 792 2 567 487 58 1 816 96 012 10 13 Total assets 127 940 137 015 In millions of CHF Notes 2019 2018 Liabilities and equity 12 7/12 Current liabilities Financial debt Trade and other payables Accruals and deferred income Provisions Derivative liabilities Current income tax liabilities Liabilities directly associated with assets held for sale Total current liabilities 11 12 14032 18 803 4492 802 420 2 673 393 41 615 14 694 17 800 4075 780 448 2731 2 502 43 030 2 12 10 Non-current liabilities Financial debt Employee benefits liabilities Provisions Deferred tax liabilities Other payables Total non-current liabilities 11 23 132 6151 1 162 2589 429 33 463 25700 5919 1033 2 540 390 35 582 13 12 Total liabilities 75 078 78 612 17 Equity Share capital Treasury shares Translation reserve Other reserves Retained earnings Total equity attributable to shareholders of the parent Non-controlling interests Total equity 298 (9 752) (21 526) (45) 83 060 52 035 827 52 862 306 (6 948) (20 432) (183) 84 620 57 363 1 040 58 403 Total liabilities and equity 127 940 137 015 Consolidated cash flow statement for the year ended December 31, 2019 In millions of CHF Notes 2019 2018 16 16 Operating activities Operating profit Depreciation and amortization Impairment Net result on disposal of businesses Other non-cash items of income and expense Cash flow before changes in operating assets and liabilities 16 078 3 713 2 336 (3 416) (28) 18 683 13 752 3924 1248 (686) 137 18 375 4 16 Decreasel(increase) in working capital Variation of other operating assets and liabilities Cash generated from operations 16 16 349 (94) 18 938 472 (37) 18 810 Interest paid Interest and dividend received Taxes paid Dividends and interest from associates and joint ventures Operating cash flow (1028) 162 (2 854) 632 15 850 (684) 192 (3 623) 703 15 398 14 B 9 Investing activities Capital expenditure Expenditure on intangible assets Acquisition of businesses Disposal of businesses Investments (net of divestments) in associates and joint ventures Inflows/outflows) from treasury investments Other investing activities Investing cash flow NN (3 695) (516) (125) 9959 (540) 2978 295 8 356 (3 869) (601) (9 512) 4310 728 (5 159) (163) (14 266) 14 17 2 Financing activities Dividend paid to shareholders of the parent Dividends paid to non-controlling interests Acquisition (net of disposal) of non-controlling interests Purchase (net of sale) of treasury shares) Inflows from bonds and other non-current financial debt Outflows from bonds and other non-current financial debt Inflows (outflows) from current financial debt Financing cash flow (7230) (463) (16) (9773) 57 (3287) (444) (21 156) (7124) (319) (528) (6 854) 9900 (2 712) 3520 (4 117) 12 12 12 Currency retranslations Increasel(decrease) in cash and cash equivalents (221) 2829 (313) (3298) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year lal Mostly relates to the share buyback program bunched in 2017 4640 7469 7938 4640 16 16. Cash flow statement 16.1 Operating profit In millions of CHF Profit for the year Income from associates and joint ventures Taxes Financial income Financial expense 2019 12 904 (1 001) 3 159 (200) 1216 16 078 2018 10 468 (916) 3439 (247) 1008 13 752 16.2 Non-cash Items of income and expense In millions of CHF Depreciation of property, plant and equipment Impairment of property, plant and equipment Impairment of goodwill Amortization of intangible assets Impairment of intangible assets Net result on disposal of businesses Net result on disposal of assets Non-cash items in financial assets and liabilities Equity compensation plans Other 2019 3 488 783 779 225 774 (3 416) 2 (150) 124 (4) 2605 2018 3604 500 592 320 156 (686) 53 (42) 140 (14) 4623 16.3 Decreasel(increase) in working capital In millions of CHF Inventories Trade and other receivables Prepayments and accrued income Trade and other payables Accruals and deferred income 2019 (712) (1028) (47) 1 661 475 349 2018 (450) (547) 132 1043 294 472 16.4 Variation of other operating assets and liabilities In millions of CHF Variation of employee benefits assets and liabilities Variation of provisions Other 2019 (100) (42) 48 (94) 2018 (430) 127 266 (37) 16.5 Reconciliation of free cash flow and net financial debt In millions of CHF Operating cash flow Capital expenditure Expenditure on intangible assets Other investing activities Free cash flow 2019 15 850 (3 695) (516) 295 11 934 2018 15 398 (3 869) (601) (163) 10 765 Acquisition of businesses Financial liabilities and short-term investments acquired in business combinations Disposal of businesses Financial liabilities and short-term investments transferred on disposal of businesses Acquisition (net of disposal) of non-controlling interests Investments (net of divestments) in associates and joint ventures Dividend paid to shareholders of the parent Dividends paid to non-controlling interests Purchase (net of sale) of treasury shares Increase in lease liabilities Currency retranslations and exchange differences Other movements (Increase)/decrease of net financial debt (125) (134) 9959 25 (16) (540) (7230) (463) (9 773) (1 006) 513 48 3 192 (9 512) (67) 4310 5 (528) 728 (7124) (319) (6 854) (762) 389 8 (8 961) (30 330) (27 138) (21 369 (30 330) Net financial debt at beginning of year Net financial debt at end of year of which Current financial debt Non-current financial debt Cash and cash equivalents Short-term investments Derivatives (a) Related to Net debt and included in Derivative assets and Derivative liabilities balances of the Consolidated balance sheet. (14032) (23 132) 7 469 2794 (237) (14 694) (25 700) 4500 5801 (237) 16.6 Cash and cash equivalents at end of year Cash and cash equivalents include cash at bank and in hand and other short-term highly liquid investments with maturities of three months or less from the initial recognition. In millions of CHF 2019 2 884 1935 2650 7469 Cash at bank and in hand Time deposits Commercial paper Cash and cash equivalents as per balance sheet Cash and cash equivalents classified as held for sale 17.3 Treasury shares Number of shares in millions of units 2018 2552 1408 540 4 500 140 2019 2018 Purpose of holding Share buyback program Long-Term Incentive Plans 88.9 7.1 96.0 78.7 9.8 88.5 At December 31, 2019, the treasury shares held by the Group represent 3.2% of the share capital (2018: 2.9%). Their market value amounts to CHF 10054 million (2018: CHF 7064 million). 17.4 Number of shares outstanding Number of shares in millions of units Shares issued 3063.0 Treasury shares (88.5) (97.7) 0.2 3.0 87.0 (96.0) Outstanding shares 2974.5 (97.7) 0.2 3.0 (87.0) 2976.0 2 880.0 At January 1, 2019 Purchase of treasury shares Treasury shares delivered in respect of options exercised Treasury shares delivered in respect of equity compensation plans Treasury shares cancelled At December 31, 2019 At January 1, 2018 Purchase of treasury shares Treasury shares delivered in respect of options exercised Treasury shares delivered in respect of equity compensation plans Treasury shares cancelled At December 31, 2018 3 1122 (54.6) (86.3) 1.2 3 057.6 (86.3) 1.2 20 2.0 (49.2) 3063.0 49.2 (88.5) 2974.5