Financial statement

Question:-

APPENDIX B Specimen Financial Statements: Nestl SA Consolidated income statement for the year ended 31 December 2016 In millions of CHF Notas 2016 89 469 2015 88 785 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 317 144 199) (8 059) (21 485) (1 736) 99 298 (44 730) 17 899) 120 744) (1 679) 78 (728) 13 382 (713) 13 693 Other operating income Other operating expenses Operating profit 354 (884) 13 163 126 (1 100) 12 408 5 Financial income Financial expense Profit before taxes, associates and joint ventures 121 (758) 12 526 101 (725) 11 784 EL 13 14 Taxes 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) (4 4131 770 8 883 13 305 988 9 467 401 352 9531 9066 As percentages of sales Trading operating profit Profit for the year attributable to shareholders of the parent (Net profit) 15 3% 9.5% 15.1% 10.2% Earnings per share (in CHF) Basic earnings per share Diluted earnings per share 5 2.76 2.75 2.90 2.89 15 B-1 B-2 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated statement of comprehensive income for the year ended 31 December 2016 In millions of CHF Notes 2015 2016 8 883 Profit for the year recognised in the income statement 9 467 17 1 033 16 12 Currency retranslations, net of taxes Fair value adjustments on available-for-sale financial instruments, net of taxes Fair value adjustments 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 17 (3 771) (144) 62 165 (3 688) 147 (154) 894 Romeasurement of defined benefit plans, net of taxes Share of other comprehensive income of associates and joint ventures Items that will never be reclassified to the income statement 107 14717 (143) 110) (153) (362) 112 (250) Other comprehensive income for the year 17 741 (3 938 9624 Total comprehensive income for the year of which attributable to non-controlling interests of which attributable to shareholders of the parent 343 9281 5 529 317 5 212 Specimen Financial Statements: Nestl SA B-3 Consolidated balance sheet as at 31 December 2016 before appropriations In millions of CHF Notes 2016 2015 Assets 12/16 12 772 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 7990 1 306 8401 12 411 573 550 786 25 32 042 4 884 921 8 153 12 252 583 337 874 1430 29 434 12 8 9 9 14 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 12 27 554 33 007 20 397 10 709 5 719 310 114 2049 99 859 26 576 32 772 19 236 8 675 5419 109 128 1 643 94 558 10 13 Total assets 131 901 123 992 B-4 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated balance sheet as at 31 December 2016 In millions of CHF Notes 2016 2015 Liabilities and equity 12 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 12 118 18 629 3855 620 1 068 1221 6 37 517 9 629 17 038 3 673 564 1021 12 1 124 272 33 321 12 10 Non-current liabilities Financial debt Employee benefits liabilities Provisions Deferred tax liabilities Other payables Total non-current liabilities 11 11 091 8420 2840 3 865 2387 28 403 11 601 7 691 2 601 3063 1729 26 685 13 12 Total liabilities 65 920 60 006 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 311 (990) (18 799) 1 198 82 870 54 590 1 391 65 981 319 17489 (19 851) 1 345 88 014 62 338 1 648 63 986 Total liabilities and equity 131 901 123 992 Specimen Financial Statements: Nestl SA B-5 Consolidated cash flow statement for the year ended 31 December 2016 In millions of CHF Note 2016 2015 17 Operating activities Operating profit Depreciation and amortisation Impairment Net result on disposal of businesses Other non cash items of income and expense Cash flow before changes in operating assets and liabilities 13 163 3 132 640 12 408 3 178 576 422 172 16 756 35 16 970 18 Decrease increase) in working capital Variation of other operating assets and liabilities Cash generated from operations 15 1 801 54 18 825 741 (248) 17 249 18 Net cash flows from treasury activities Taxes paid Dividends and interest from associates and joint ventures Operating cash flow (327) 13 435) 519 15 582 (93 (3 310) 456 14 14 302 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 2 2 (4 010) (682) (585) 271 (748) (335) (34) (6123) 13 872) (422) (530) 213 (44) 521 (19) (4 153) 14 17 (6 950) 1424) 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 (6 937) (432) (1 208) 760 1 695 (1 430) 1 368 (6 377) 1 381 (508) 643 (12 235) 16 184) (478) Currency retranslations Increase/(decrease) in cash and cash equivalents (169) 3 106 (2564) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year a) in 2015, mostly relates to the Share Buy Back Programme launched in 2014 4 884 7 990 7 448 4 884 B-6 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated statement of changes in equity for the year ended 31 December 2016 In millions of CHF Treasury shares Other reserves Translation reserve Share capital Retained earnings Total equity attributable to shareholders of the parent Non-controlling interests Total Aunba 322 70 130 1 754 71 884 Equity as at 31 December 2014 as originally published Reclassification following the changes in presentation Equity restated as at 31 December 2014 (3 918) (17 255) 953 (3 918) (16 302) 1418 1.418 90 981 2371) 88 610 322 70 130 1 754 71 884 Profit for the year Other comprehensive income for the year Total comprehensive income for the year (3549) (3 549) (55) (55) 9 066 (250) 8816 9 066 (3 854) 5 212 401 (84) 317 9 467 (3 938) 5529 (424) (6 950) (6 283) 16 322) 239 Dividends Movement of treasury shares Equity compensation plans Changes in non-controlling interests Reduction in share capital Total transactions with owners 183 (7 374) (6 283) 183 (20) (6 950) 39 (56) (21) (2 509) (9 497) II 121) 1 31 131 2 512 13 571) (13 071) (423) (13 494) Other movements (18) 85 67 67 Equity rostated as at 31 December 2015 319 (7 489) (19 851) 1 345 88 014 62 338 1 648 63 986 8 883 Profit for the year Other comprehensive income for the year Total comprehensive income for the year (148) 8531 (154) 8377 1 052 1 052 8531 750 9 281 352 191 343 741 (148) 9 624 (132) 11 11111 803 207 Dividends Movement of treasury shares Equity compensation plans Changes in non-controlling interests Reduction in share capital Total transactions with owners 17 369) 776 180 (6 937) 776 180 (991) 16 937) (27) (27) 1991) (5 481) (13 463) (168) (1 159) 11111 5489 6499 18) (6 972) (300) (7 572) Other movements 158) (57) (57) 82 870 64 590 1 391 65 981 Equity as at 31 December 2016 311 (990) (18 799) 1 198 fal Reduction in share capita, son Noce 17.1. 16) Movaranteroporsed under retained earnings include the impact of the scoustions during the period (100 Note 25) as well as a put option for the acquisition of non-controlling interests INSTRUCTOR: GUL RUKH NIAZI COURSE: FINANCIAL MANAGEMENT FINAL PROJECT: . The project provides students the opportunity to apply what they have learnt in this course to a context that is of most interest to them. Students are also encouraged to enrich their projects by reaching out the analyzed firms The project should be worked on in groups. Students are expected to form groups involving three members by the end of second week. Students, who do not join a group by the given deadline, will be arbitrarily allocated to a group. Each group is required to choose a company from manufacturing sector to for analysis purpose. Each group is required to get the company approved from the instructor before commencing the project. Each group is required to submit a project report. Although the group has complete discretion over the contents and format of the project, a good project is expected to be efficiently written, well-structured and clear and is not longer than 15 pages. The project should apply the materials covered in this course to the topic and firm being investigated. Moreover, the project report should contain implications and recommendations for managerial practice. . . INSTRUCTIONS: Students will be allowed to select any listed company and do the complete firm evaluation. Forecast selected firm's income statement and balance sheets (for ten years). Use the following assumptions: i. Sales grow, the ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales and inventories to sales will be the forecasted as per growth. ii. Forecast the parts of the income statement and balance sheet that are necessary for calculating free cash flow. iii. Calculate free cash flow for each projected year. Also calculate the growth rates of free cash flow each year to ensure that there is constant growth (that is, the same as the constant growth rate in sales) by the end of the forecast period. iv. Calculate operating profitability (OP = NOPAT/Sales), do you think that the company will have a positive Market Value Added (MVA = Market value of company - Book value of company = Value of operations - Operating capital)? LAHORE BUSINESS SCHOOL V. Calculate the value of operations and MVA. (Hint: First calculate the horizon value at the end of the forecast period, which is equal to the value of operations at the end of the forecast period.). vi. Calculate Market Value of Firm = VOP (Value of operations) + VONOP (Value of non-operations). vii. Calculate market value of equity (MVE). viii. Calculate the price per share of common equity. Guidelines for final report: Make a group of 3-5 members. Choose a service firm and explain the accounting process adopted by your selected organization. Get approval from the course instructor before working on project. Project report must contain following sections: (maximum 15 pages) Format: Times New Roman, Font Sizel2, line spacing 1.5, all justified header footer 0.5 each Headings Bold Font Size 14. APPENDIX B Specimen Financial Statements: Nestl SA Consolidated income statement for the year ended 31 December 2016 In millions of CHF Notas 2016 89 469 2015 88 785 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 317 144 199) (8 059) (21 485) (1 736) 99 298 (44 730) 17 899) 120 744) (1 679) 78 (728) 13 382 (713) 13 693 Other operating income Other operating expenses Operating profit 354 (884) 13 163 126 (1 100) 12 408 5 Financial income Financial expense Profit before taxes, associates and joint ventures 121 (758) 12 526 101 (725) 11 784 EL 13 14 Taxes 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) (4 4131 770 8 883 13 305 988 9 467 401 352 9531 9066 As percentages of sales Trading operating profit Profit for the year attributable to shareholders of the parent (Net profit) 15 3% 9.5% 15.1% 10.2% Earnings per share (in CHF) Basic earnings per share Diluted earnings per share 5 2.76 2.75 2.90 2.89 15 B-1 B-2 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated statement of comprehensive income for the year ended 31 December 2016 In millions of CHF Notes 2015 2016 8 883 Profit for the year recognised in the income statement 9 467 17 1 033 16 12 Currency retranslations, net of taxes Fair value adjustments on available-for-sale financial instruments, net of taxes Fair value adjustments 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 17 (3 771) (144) 62 165 (3 688) 147 (154) 894 Romeasurement of defined benefit plans, net of taxes Share of other comprehensive income of associates and joint ventures Items that will never be reclassified to the income statement 107 14717 (143) 110) (153) (362) 112 (250) Other comprehensive income for the year 17 741 (3 938 9624 Total comprehensive income for the year of which attributable to non-controlling interests of which attributable to shareholders of the parent 343 9281 5 529 317 5 212 Specimen Financial Statements: Nestl SA B-3 Consolidated balance sheet as at 31 December 2016 before appropriations In millions of CHF Notes 2016 2015 Assets 12/16 12 772 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 7990 1 306 8401 12 411 573 550 786 25 32 042 4 884 921 8 153 12 252 583 337 874 1430 29 434 12 8 9 9 14 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 12 27 554 33 007 20 397 10 709 5 719 310 114 2049 99 859 26 576 32 772 19 236 8 675 5419 109 128 1 643 94 558 10 13 Total assets 131 901 123 992 B-4 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated balance sheet as at 31 December 2016 In millions of CHF Notes 2016 2015 Liabilities and equity 12 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 12 118 18 629 3855 620 1 068 1221 6 37 517 9 629 17 038 3 673 564 1021 12 1 124 272 33 321 12 10 Non-current liabilities Financial debt Employee benefits liabilities Provisions Deferred tax liabilities Other payables Total non-current liabilities 11 11 091 8420 2840 3 865 2387 28 403 11 601 7 691 2 601 3063 1729 26 685 13 12 Total liabilities 65 920 60 006 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 311 (990) (18 799) 1 198 82 870 54 590 1 391 65 981 319 17489 (19 851) 1 345 88 014 62 338 1 648 63 986 Total liabilities and equity 131 901 123 992 Specimen Financial Statements: Nestl SA B-5 Consolidated cash flow statement for the year ended 31 December 2016 In millions of CHF Note 2016 2015 17 Operating activities Operating profit Depreciation and amortisation Impairment Net result on disposal of businesses Other non cash items of income and expense Cash flow before changes in operating assets and liabilities 13 163 3 132 640 12 408 3 178 576 422 172 16 756 35 16 970 18 Decrease increase) in working capital Variation of other operating assets and liabilities Cash generated from operations 15 1 801 54 18 825 741 (248) 17 249 18 Net cash flows from treasury activities Taxes paid Dividends and interest from associates and joint ventures Operating cash flow (327) 13 435) 519 15 582 (93 (3 310) 456 14 14 302 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 2 2 (4 010) (682) (585) 271 (748) (335) (34) (6123) 13 872) (422) (530) 213 (44) 521 (19) (4 153) 14 17 (6 950) 1424) 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 (6 937) (432) (1 208) 760 1 695 (1 430) 1 368 (6 377) 1 381 (508) 643 (12 235) 16 184) (478) Currency retranslations Increase/(decrease) in cash and cash equivalents (169) 3 106 (2564) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year a) in 2015, mostly relates to the Share Buy Back Programme launched in 2014 4 884 7 990 7 448 4 884 B-6 APPENDIX B Specimen Financial Statements: Nestl SA Consolidated statement of changes in equity for the year ended 31 December 2016 In millions of CHF Treasury shares Other reserves Translation reserve Share capital Retained earnings Total equity attributable to shareholders of the parent Non-controlling interests Total Aunba 322 70 130 1 754 71 884 Equity as at 31 December 2014 as originally published Reclassification following the changes in presentation Equity restated as at 31 December 2014 (3 918) (17 255) 953 (3 918) (16 302) 1418 1.418 90 981 2371) 88 610 322 70 130 1 754 71 884 Profit for the year Other comprehensive income for the year Total comprehensive income for the year (3549) (3 549) (55) (55) 9 066 (250) 8816 9 066 (3 854) 5 212 401 (84) 317 9 467 (3 938) 5529 (424) (6 950) (6 283) 16 322) 239 Dividends Movement of treasury shares Equity compensation plans Changes in non-controlling interests Reduction in share capital Total transactions with owners 183 (7 374) (6 283) 183 (20) (6 950) 39 (56) (21) (2 509) (9 497) II 121) 1 31 131 2 512 13 571) (13 071) (423) (13 494) Other movements (18) 85 67 67 Equity rostated as at 31 December 2015 319 (7 489) (19 851) 1 345 88 014 62 338 1 648 63 986 8 883 Profit for the year Other comprehensive income for the year Total comprehensive income for the year (148) 8531 (154) 8377 1 052 1 052 8531 750 9 281 352 191 343 741 (148) 9 624 (132) 11 11111 803 207 Dividends Movement of treasury shares Equity compensation plans Changes in non-controlling interests Reduction in share capital Total transactions with owners 17 369) 776 180 (6 937) 776 180 (991) 16 937) (27) (27) 1991) (5 481) (13 463) (168) (1 159) 11111 5489 6499 18) (6 972) (300) (7 572) Other movements 158) (57) (57) 82 870 64 590 1 391 65 981 Equity as at 31 December 2016 311 (990) (18 799) 1 198 fal Reduction in share capita, son Noce 17.1. 16) Movaranteroporsed under retained earnings include the impact of the scoustions during the period (100 Note 25) as well as a put option for the acquisition of non-controlling interests INSTRUCTOR: GUL RUKH NIAZI COURSE: FINANCIAL MANAGEMENT FINAL PROJECT: . The project provides students the opportunity to apply what they have learnt in this course to a context that is of most interest to them. Students are also encouraged to enrich their projects by reaching out the analyzed firms The project should be worked on in groups. Students are expected to form groups involving three members by the end of second week. Students, who do not join a group by the given deadline, will be arbitrarily allocated to a group. Each group is required to choose a company from manufacturing sector to for analysis purpose. Each group is required to get the company approved from the instructor before commencing the project. Each group is required to submit a project report. Although the group has complete discretion over the contents and format of the project, a good project is expected to be efficiently written, well-structured and clear and is not longer than 15 pages. The project should apply the materials covered in this course to the topic and firm being investigated. Moreover, the project report should contain implications and recommendations for managerial practice. . . INSTRUCTIONS: Students will be allowed to select any listed company and do the complete firm evaluation. Forecast selected firm's income statement and balance sheets (for ten years). Use the following assumptions: i. Sales grow, the ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales and inventories to sales will be the forecasted as per growth. ii. Forecast the parts of the income statement and balance sheet that are necessary for calculating free cash flow. iii. Calculate free cash flow for each projected year. Also calculate the growth rates of free cash flow each year to ensure that there is constant growth (that is, the same as the constant growth rate in sales) by the end of the forecast period. iv. Calculate operating profitability (OP = NOPAT/Sales), do you think that the company will have a positive Market Value Added (MVA = Market value of company - Book value of company = Value of operations - Operating capital)? LAHORE BUSINESS SCHOOL V. Calculate the value of operations and MVA. (Hint: First calculate the horizon value at the end of the forecast period, which is equal to the value of operations at the end of the forecast period.). vi. Calculate Market Value of Firm = VOP (Value of operations) + VONOP (Value of non-operations). vii. Calculate market value of equity (MVE). viii. Calculate the price per share of common equity. Guidelines for final report: Make a group of 3-5 members. Choose a service firm and explain the accounting process adopted by your selected organization. Get approval from the course instructor before working on project. Project report must contain following sections: (maximum 15 pages) Format: Times New Roman, Font Sizel2, line spacing 1.5, all justified header footer 0.5 each Headings Bold Font Size 14