Submission#1- Arvind Singh (Emp No. 31923080)
Nestle India Limited
1. Summarized Balance Sheet Equation:
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Balance Sheet as on 31.12.17:
Assets (73625.9 million) = Liabilities (39420 million) + O.E. (34205.9 million)
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Balance Sheet as on 31.12.16:
Assets (68104.6 million) = Liabilities (35281.3 million) + O.E. (32823.3 million)
Comment: Investments (under current and non-current assets) and cash & cash
equivalents (current assets) have gone up as on 31.12.17 and thus Assets have gone up
as on 31.12.17. Other Equity has gone up by 1382.6 million as on 31.12.17. Provisions
(under Non-current and current liabilities) and have gone up and trade payables have
gone up as on 31.12.17.
2. Three Biggest Items of Balance Sheet:
Items
Other Equity
Property,
Plant
Equipment
Provisions
Rs (in million)
33241.7
& 26161.8
22915.9
Proportion
97.18% of Owner’s Equity
35.53% of total Assets
58.13% of Liabilities
Other Equity forms very high percentage of Owner’s Equity. This rise is on account of rise
in retained earnings and probably on account of obtaining additional equity financing by
selling stocks which can be correlated with high cash & cash equivalents which has
significantly risen from 2016 onwards. The high proportion of tangible assets (PPE35.53%) and Inventories (12.26%) compliment the fact that it’s a capital intensive
company. Provisions form very high % of liabilities and same may result in reduction of
company’s equity. The provision is mainly on account of employee benefits (pension,
other incentives & welfare benefits) and contingencies.
3. Missing & Interesting Items in Balance Sheet:
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Missing Item: Depreciation of assets has not been shown
-
Interesting Item: Trade Payables (9846.4 million) are very high as compared to trade
receivables (889.7 million) which indicates that company takes most of the material
on credit but it extends comparatively much lesser credit on it’s sales which is a good
strategy to use outsiders fund for making business (using outsider’s money as working
capital). This advantage reflects beautifully in balance sheet as borrowings are very
less (Current Borrowings are Nil while long-term borrowings are 351.4 million only).