Question
The consolidated financial statements of Nestl are as follows: Nestle Group Consolidated Balance Sheet At December 31 (Adapted, in millions of Swiss Francs, CHF) 2016
The consolidated financial statements of Nestl are as follows:
Nestle Group Consolidated Balance Sheet | At December 31 | |
(Adapted, in millions of Swiss Francs, CHF) | 2016 | 2015 |
Cash and cash equivalents | 7,990 | 4,884 |
Short-term investments | 1,306 | 921 |
Inventories | 8,401 | 8,153 |
Trade and other receivables | 12,411 | 12,252 |
Prepayments and accrued income | 573 | 583 |
other current assets | 1,361 | 2,641 |
Total current assets | 32,042 | 29,434 |
Property, plant and equipment | 27,554 | 26,576 |
Intangible assets and goodwill | 53,404 | 52,008 |
Financial assets and other investments | 16,428 | 14,094 |
All other non-current assets | 2,473 | 1,880 |
Total non-current assets | 99,859 | 94,558 |
Total assets | 131,901 | 123,992 |
Short-term borrowings | 12,118 | 9,629 |
Trade and other payables | 18,629 | 17,038 |
Accruals and deferred income | 3,855 | 3,673 |
Provisions | 620 | 564 |
All other current liabilities | 2,295 | 2,417 |
Total current liabilities | 37,517 | 33,321 |
Long-term borrowings | 11,091 | 11,601 |
Provisions and other payables | 5,027 | 4,330 |
All other non-current liabilities | 12,285 | 10,754 |
Total non-current liabilities | 28,403 | 26,685 |
Total liabilities | 65,920 | 60,006 |
Share capital | 311 | 319 |
Treasury shares | (990) | (7,489) |
Retained earnings | 82,870 | 88,014 |
Other equity items | (16,210) | (16,858) |
Total equity | 65,981 | 63,986 |
Total liabilities and equity | 131,901 | 123,992 |
Nestle Group Consolidated Income Statement | At December 31 | |
(Adapted, in millions of Swiss Francs, CHF) | 2016 | 2015 |
Sales | 89,469 | 88,785 |
Other revenue | 317 | 298 |
Cost of goods sold | (44,199) | (44,730) |
Distribution expenses | (8,059) | (7,899) |
Marketing and administration expenses | (21,485) | (20,744) |
Research and development costs | (1,736) | (1,678) |
Other trading and operating income | 453 | 204 |
Other trading and operating expenses | (1,597) | (1,828) |
Operating profit | 13,163 | 12,408 |
Financial income | 121 | 101 |
Financial expense | (758) | (725) |
Taxes | (4,413) | (3,305) |
Income from associates and joint ventures | 770 | 988 |
Profit for the year | 8,883 | 9,467 |
(a)What is Nestls main source of cash? Is this good news or bad news to Nestls managers, shareholders, and creditors? What is Nestls main use of cash? Good news or bad news?
(b)Calculate Nestls free cash flow and cash realization ratio for 2016 and 2015.
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