Calculate the following ratios for both 2014 and 2015 for Nestles.

Using these ratios (and any other data from the financials that you consider pertinent), discuss what has happened to the financial condition of Nestles from 2014 to 2015. When calculating your ratios, please show your work.

Net profit margin

Operating Profit Margin (using trading operating profit)

Acid Test

Inventory Turnover

Debt ratio

Return on assets

Income Statement as 31 December 2015
In millions of CHF			Notes	2015	2014
Sales			3	88785	91612
Other revenue				298	253
Cost of goods sold				(44730)	(47553)
Distribution expenses				(7899)	(8217)
Marketing and administration expenses				(20744)	(19651)
Research and development costs				(1678)	(1628)
Other trading income			4	78	110
Other trading expenses			4	(728)	(907)
Trading operating profit			3	13382	14019
Other operating income			4	126	154
Other operating expenses			4	(1100)	(3268)
Operating profit				12408	10905
Financial income			5	101	135
Financial expense			5	(725)	(772)
Profit before taxes, associates and joint ventures				11784	10268
Taxes			14	(3305)	(3367)
Income from associates and joint ventures			15	988	8003
Profit for the year				9467	14904
of which attributable to non-controlling interests				401	448
of which attributable to shareholders of the parent (Net profit)				9066	14456
As percentages of sales
Trading operating profit				15.1%	15.3%
Profit for the year attributable to shareholders of the parent (Net profi t)				10.2%	15.8%
Earnings per share (in CHF)
Basic earnings per share			16	2.90	4.54
Diluted earnings per share			16	2.89	4.52

Consolidated statement of comprehensive income for the year ended 31 December 2015
	Notes	2015	2014
Profit for the year recognised in the income statement		9467	14904
Currency retranslations
Recognised in translation reserve		(4061)	2660
Reclassified from translation reserve to income statement		102	1003
Fair value adjustments on available-for-sale financial instruments
Recognised in fair value reserve		(134)	191
Reclassified from fair value reserve to income statement		(75)	(4)
Fair value adjustments on cash flow hedges
Recognised in hedging reserve		(5)	31
Reclassified from hedging reserve		83	(87)
Taxes	14	237	5
Share of other comprehensive income of associates and joint ventures	15
Recognised in the reserves		165	83
Reclassified from the reserves to income statement			(436)
Items that are or may be reclassified subsequently to the income statement		(3688)	3446
Remeasurement of defined benefit plans	10	(370)	(1745)
Taxes	14	8	352
Share of other comprehensive income of associates and joint ventures	15	112	(153)
Items that will never be reclassified to the income statement		(250)	(1546)
Other comprehensive income for the year	18	(3938)	1900
Total comprehensive income for the year		5529	16804
of which attributable to non-controlling interests		317	556
of which attributable to shareholders of the parent		5212	16248

Consolidated balance sheet as at 31 December 2015 before appropriations
In millions of CHF	Notes	2015	2014
Assets
Current assets
Cash and cash equivalents	13/17	4884	7448
Short-term investments	13	921	1433
Inventories	6	8153	9172
Trade and other receivables	7/13	12252	13459
Prepayments and accrued income		583	565
Derivative assets	13	337	400
Current income tax assets		874	908
Assets held for sale	2	1430	576
Total current assets		29434	33961
Non-current assets
Property, plant and equipment	8	26576	28421
Goodwill	9	32772	34557
Intangible assets	9	19236	19800
Investments in associates and joint ventures	15	8675	8649
Financial assets	13	5419	5493
Employee benefits assets	10	109	383
Current income tax assets		128	128
Deferred tax assets	14	1643	2058
Total non-current assets		94558	99489
Total assets		123992	133450

Consolidated cash flow Statement
In millions of CHF		Notes		2015		2014
Liabilities and equity
Current liabilities
Financial debt		13	9	629	8	810
Trade and other payables		13	17	038	17	437
Accruals and deferred income			3	673	3	759
Provisions		12		564		695
Derivative liabilities		13	1	021		757
Current income tax liabilities			1	124	1	264
Liabilities directly associated with assets held for sale		2		272		173
Total current liabilities			33	321	32	895
Non-current liabilities
Financial debt		13	11	601	12	396
Employee benefits liabilities		10	7	691	8	081
Provisions		12	2	601	3	161
Deferred tax liabilities		14	3	063	3	191
Other payables		13	1	729	1	842
Total non-current liabilities			26	685	28	671
Total liabilities			60	006	61	566
Equity		18
Share capital				319		322
Treasury shares			(7	489)	(3	918)
Translation reserve			(21	129)	(17	255)
Retained earnings and other reserves			90	637	90	981
Total equity attributable to shareholders of the parent			62	338	70	130
Non-controlling interests			1	648	1	754
Total equity			63	986	71	884
Total liabilities and equity			123	992	133	450

In millions of CHF			Notes			2015		2014
Operating activities
Operating profit				17	12	408	10	905
Depreciation and amortisation					3	178	3	058
Impairment						576	2	067
Net result on disposal of businesses						422		509
Other non-cash items of income and expense						172		689
Cash flow before changes in operating assets and liabilities					16	756	17	228
Decrease/(increase) in working capital				17		741		(114)
Variation of other operating assets and liabilities				17		(248)		85
Cash generated from operations					17	249	17	199
Net cash flows from treasury activities				17		(93)		(356)
Taxes paid					(3	310)	(2	859)
Dividends and interest from associates and joint ventures				15		456		716
Operating cash flow					14	302	14	700
Investing activities
Capital expenditure				8	(3	872)	(3	914)
Expenditure on intangible assets				9		(422)		(509)
Acquisition of businesses				2		(530)	(1	986)
Disposal of businesses				2		213		321
Investments (net of divestments) in associates and joint ventures (a)				15		(44)	3	958
Infl ows/(outflows) from treasury investments						521		(844)
Other investing activities						(19)		(98)
Investing cash flow					(4	153)	(3	072)
Financing activities
Dividend paid to shareholders of the parent				18	(6	950)	(6	863)
Dividends paid to non-controlling interests						(424)		(356)
Acquisition (net of disposal) of non-controlling interests								(49)
Purchase (net of sale) of treasury shares (b)					(6	377)	(1	617)
Infl ows from bonds and other non-current financial debt					1	381	2	202
Outflows from bonds and other non-current financial debt						(508)	(1	969)
Infl ows/(outflows) from current financial debt						643	(1	985)
Financing cash flow					(12	235)	(10	637)
Currency retranslations						(478)		42
Increase/(decrease) in cash and cash equivalents					(2	564)	1	033
Cash and cash equivalents at beginning of year					7	448	6	415
Cash and cash equivalents at end of year					4	884	7	448
(a)In 2014, mainly relates to the partial disposal of LOral shares. The Group sold part of its shares (see Note 15) in exchange for the remaining 50% stake in Galderma for an equity value of CHF 3201 CHF 4141 million. (b)Mostly relates to the Share Buy-Back Programme launched in 2014.	to LOral for a price of million (see Note 2)			CHF 7342 million and cash of

Inofosllimni CHF Share capital Treasury shares Translation reserve Retained earnings and other reserves Total equity attributable to shareholders of the parent Non-controlling interests Total equity
Equity as at 31 December 2013	322	(2	196)	(20	811)	85260	62	575	1	564	64	139
Profit for the year						14456	14	456		448	14	904
Other comprehensive income for the year				3	556	(1764)	1	792		108	1	900
Total comprehensive income for the year				3	556	12692	16	248		556	16	804
Dividend paid to shareholders of the parent						(6863)	(6	863)			(6	863)
Dividends paid to non-controlling interests										(356)		(356)
Movement of treasury shares		(1	943)			204	(1	739)			(1	739)
Equity compensation plans			221			(48)		173				173
Changes in non-controlling interests						(297)		(297)		(10)		(307)
Total transactions with owners		(1	722)			(7004)	(8	726)		(366)	(9	092)
Other movements						33		33				33
Equity as at 31 December 2014	322	(3	918)	(17	255)	90981	70	130	1	754	71	884
Profit for the year						9066	9	066		401	9	467
Other comprehensive income for the year				(3	874)	20	(3	854)		(84)	(3	938)
Total comprehensive income for the year				(3	874)	9086	5	212		317	5	529
Dividend paid to shareholders of the parent						(6950)	(6	950)			(6	950)
Dividends paid to non-controlling interests										(424)		(424)
Movement of treasury shares		(6	322)			39	(6	283)			(6	283)
Equity compensation plans			239			(56)		183				183
Changes in non-controlling interests						(21)		(21)		1		(20)
Reduction in share capital (a)	(3)	2	512			(2509)
Total transactions with owners	(3)	(3	571)			(9497)	(13	071)		(423)	(13	494)
Other movements						67		67				67
Equity as at 31 December 2015	319	(7	489)	(21	129)	90637	62	338	1	648	63	986
(a) Reduction in share capital, see Note 18.1.