Analyzing Financial Statements of Nestle Lanka Pvt

 

01.Introduction – Company profile:

      Nestle Lanka Pvt is the world’s largest food and beverage company. It was founded in 1906 as a trading company and commenced commercial production in 1984. Today, Nestlé Lanka is one of the leading food and beverage companies in Sri Lanka, providing direct employment to almost 1,200 people and positively impacting the livelihoods of over 23,000 distributors, suppliers, farmers, and their families. This is a major purchaser of agricultural raw materials, such as milk, coconuts, and wheat This company’s portfolio of products includes some of the most popular brands in Sri Lanka, such as Nestomalt, Milo, Milkmaid, Nespray, and Maggi. The company also produces a range of other food and beverage products, including infant food, breakfast cereals, confectionery, and culinary products. The company's Kurunegala factory is one of the largest food and beverage factories in Sri Lanka

     This is also a leading player in the Sri Lankan food and beverage industry. The company is committed to providing its consumers with high-quality, nutritious products, while also supporting the local economy and the communities in which it operates. It is committed to providing its consumers with high-quality, nutritious products. The company has a state-of-the-art production facility in Kurunegala, which manufactures over 90 percent of the products sold in Sri Lanka. Nestlé Lanka also sources its raw materials from local suppliers whenever possible, helping to support the Sri Lankan economy.  

       Overall, this company is a significant player in the Sri Lankan economy. The company's economic scale is evident in its revenue, exports, employment, and impact on the local economy. Its economic scale is significant. In 2021, the company's revenue was over Rs. 28 billion (approximately US$ 140 million). Nestlé Lanka is also a major exporter of food and beverage products, with exports accounting for over 20 percent of its revenue. The company's exports are mainly to neighboring countries in South Asia, but it also exports to markets in the Middle East and North America. Its economic scale has several positive benefits for Sri Lanka. The company provides jobs, generates tax revenue, and supports local businesses. Their exports also help to boost the country's economy. The company is also a major investor in Sri Lanka, having invested over Rs. 6.6 billion (approximately US$ 33 million) in the country over the past five years.

 

 

 

 

 

 

 

02.Financial Statement Analysis 

    This report analyzes Nestle Lanka Pvt's audited financial statements for the years 2018 through 2022 with the goal of giving its stakeholders a thorough examination of those financial accounts. For this required financial statements. Maily Statement of Profit or Loss and Statement of Financial Position.

 

Table 1:  Statement of Profit or Loss and Other Comprehensive Income (From 2017-2022)/ (All amounts in Sri Lanka Rupees thousands)

	2022	2021	2020	2019	2018	2017
Revenue	73,707,077	45,420,119	37,866,215	36,355,084	37,336,943	37,601,472
Cost of Sales	-47,991,175	-30,751,323	-25,647,194	-23,852,382	-23,630,214	(24,525,485
Gross Profit	25,715,902	14,668,796	12,219,021	12,502,702	13,706,729	13,075,987
Other Operating Expenses	-831,237	-35,777	-56,654	-148,756	-134,510	-45,336
Marketing, Selling and Distribution Expenses	-8,066,605	-5,815,722	-5,129,361	-5,651,314	-6,055,642	-5,827,929
Administrative Expenses	-4,631,239	-2,554,050	-2,536,100	-2,613,761	-2,369,196	-2,314,740
Profit from Operating Activities	12,186,821	6,263,247	4,496,906	4,088,871	5,147,381	4,887,982
Finance Income	726,011	72,747	39,170	36,963	45,606	30,050
Finance Expenses	-5,043,282	-189,347	-272,155	-355,940	-251,530	-183,360
Net Finance Expenses	-4,317,271	-116,600	-116,600	-318,977	-205,924	-153,310
Profit Before Taxation	7,869,550	6,146,647	4,263,921	3,769,894	4,941,457	4,734,672
Income Tax Expense	-1,793,773	-817,497	-1,317,038	-1,203,911	-1,455,656	-1,098,831
Profit for the Year	6,075,777	5,329,150	2,946,883	2,565,983	3,485,801	3,635,841
Other Comprehensive Income - Net of Tax				-8,568	34,783	-5,954
Items that will not be Reclassified to Profit or Loss
Actuarial Gain/ (Loss) on Retirement Benefit Obligations	160,804	108,513	-81,007
Items that may be Subsequently Reclassified to Profit or Loss
Gain/ (Loss) on Cash Flow Hedges		1,054	-4,210	3,312	-189
	160,804	109,567	-85,217	-5,256	34,594
Total Comprehensive Income - Net of Tax	6,236,581	5,438,717	2,861,666	2,560,727	3,520,395	3,629,887
Earnings Per Share (Rs.)
Basic and Diluted, Profit for the year attributable to Ordinary Shareholders	113.09	99.19	54.85	47.76	64.88	67.67

 

 

 

 

 

 

Table 2.  Statement of Financial Position. (From 2017 – 2022) - (All amounts in Sri Lanka Rupees thousands)

	2022	2021	2020	2019	2018	2017
Assets
Non-Current Assets
Property, Plant and Equipment	7,755,061	7850323	8,396,939	9,012,305	9,210,242	5,633,264
Capital Work-In-Progress	2,243,392	716060	523,837	377,235	673,117	455,619
Other Non-Current Assets	276,015	321761	349,027	366,115	353,884	320,493
Deferred Tax Assets	269,392
Total non -current assets	10,543,860	8888144	9,269,803	9,755,655	10,237,243	6,409,376
Current Assets
Inventories	12,711,455	6154678	4,947,795	3,486,130	2,987,844	3,935,497
Trade and Other Receivables	4,806,806	2187972	2,045,837	2,686,713	3,361,854	2,409,092
Amounts due from Related Parties	1,034,828	873080	440,332	434,476	854,134	247,957
Cash and Cash Equivalents	1,034,828	7011873	2,507,912	507,585	217,731	393,328
Total current assets	36,350,657	16227603	9,941,876	7,114,904	7,421,563	6,985,874
Total Assets	46,894,517	25115747	19,211,679	16,870,559	15,576,535	13,395,250
EQUITY AND LIABILITIES
Equity
Stated Capital	537,255	537,255		537,255	537,255	537,255
Retained Earnings and Reserves	10,205,280	7,897,398	5,396,528	4,972,354	5,097,901	4,931,931
	10,742,535	8,434,653	5,933,783	5,509,609	5,635,156	5,469,186
Non-Current Liabilities
Retirement Benefit Obligations	17,160	194,530	439,120	368,940	390,700	464,750
Deferred Tax Liabilities		724,596	1,036,119	997,439	1,000,725	802,306
Non-Current Provisions	895,750	1,023,596	524,089	421,434	289,459
Non-Current Financial Liabilities	14,192,312	5,417,887	84,460	1,984,029	2,007,954	35,088
	15,105,222	7,360,609	2,083,788	3,771,842	3,688,838	1,495,708
Current Liabilities
Trade and Other Payables	9,379,848	6,417,646	6,225,296	4,951,225	4,634,844	4,368,214
Amounts due to Related Parties	6,177,210	1,988,465	1,893,087	805,046	1,312,575	899,085
Current Tax Payable	2,633,326	728,365	935,197	652,508	681,215	806,163
Dividends Payable	2,799,537	84,753	86,772	192,752	182,004	151,061
Current Financial Liabilities	56,839	101,256	2,053,756	987,577	1,524,174	399,397
	21,046,760	9,320,485	11,194,108	7589108	8,334,812	6,623,920
Total Liabilities	36,151,982	16,681,094	13,277,896	11,360,950	12,023,650	7,926,064
Total Equity and Liabilities	46,894,517	25,115,747	19,211,679	16,870,559	15,576,535	13,395,250

 

03.Analysis Overview

     For the analysis is used financial statements of Nestle Lanka Plc. Below tools are used for the analysis.

01.Horizontal Analysis

·         Doller change

·         Percent change

02.Vertical Analysis

03.Trend Analysis

04.Ratio Analysis

A.    Liquidity and efficiency

·         Working Capital

·         Current Ratio

·         Acid Test Ratio

·         Accounts Receivable Turnover

·         Merchandise Turnover

·         Days’ Sales Uncollected

·         Days’ Sales in inventory

·         Total Assets Turnover

B.     Solvency

·         Debt Ratio

·         Equity Ratio

·         Times Interest Earned

C.     Profitability

·         Profit Margin

·         Gross Margin

·         Return on Total Assets

·         Return on Common Shareholders ‘Equity

·         Book value per Common share

·         Basic Earnings per share

D.    Market

·         Price-Earnings Ratio

·         Dividend Yield

 

01.Horizontal Analysis:

  Horizontal analysis refers to examining the trends in each individual financial statement variable over the previous five years. This explains how one thing differs from the others and points out where differences originate. Through this research, there will be a chance to evaluate and contrast Nestle Lanka PVT's financial standing from 2018 to 2022.

·         Dollar change:

  Dollar Change = Analysis period amount - Base Period Amount

 

Table 3.1 Doller change for financial position (All amounts in Sri Lanka Rupees thousands)

 

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	(95,262)	(546,616)	(615,366)	(197,937)	3,576,978
Capital Work-In-Progress	1,527,332	192,223	146,602	-295,882	217,498
Other Non-Current Assets	-45,746	-27,266	-17,088	12,231	33,391
Deferred Tax Assets	269,392	0	0	0	0
Total non-current Assets	1,655,716	-381,659	-485,852	-481,588	3,827,867
Current Assets
Inventories	6,556,777	1,206,883	1,461,665	498,286	-947,653
Trade and Other Receivables	2,618,834	142,135	-640,876	-675,141	952,762
Amounts due from Related Parties	161,748	432,748	5,856	-419,658	606,177
Cash and Cash Equivalents	-5,977,045	4,503,961	2,000,327	289,854	-175,597
Total current Assets	20,123,054	6,285,727	2,826,972	-306,659	435,689
Total Assets	21,778,770	5,904,068	2,341,120	1,294,024	2,181,285
EQUITY AND LIABILITIES
Equity
Stated Capital	0	0	0	0	0
Retained Earnings and Reserves	2,307,882	2,500,870	424,174	-125,547	165,970
	2,307,882	2,500,870	424,174	-125,547	165,970
Non-Current Liabilities
Retirement Benefit Obligations	-177,370	-244,590	70,180	-21,760	-74,050
Deferred Tax Liabilities	-724,596	-311,523	38,680	-3,286	198,419
Non-Current Provisions	-127,846	499,507	102,655	131,975	289,459
Non-Current Financial Liabilities	8,774,425	5,333,427	-1,899,569	-23,925	1,972,866
Total non-current Liability	7,744,613	5,276,821	-1,688,054	83,004	2,193,130
Current Liabilities
Trade and Other Payables	2,962,202	192,350	1,274,071	316,381	266,630
Amounts due to Related Parties	4,188,745	95,378	1,088,041	-507,529	413,490
Current Tax Payable	1,904,961	-206,832	282,689	-28,707	-124,948
Dividends Payable	2,714,784	-2,019	-105,980	10,748	30,943
Current Financial Liabilities	-44,417	-1,952,500	1,066,179	-536,597	1,124,777
Total current Liabilities	11,726,275	-1,873,623	114,341,322	117,200,618	1,710,892
Total Liabilities	19,470,888	3,403,198	1,916,946	-662,700	4,097,586
Total Equity and Liabilities	21,778,770	5,904,068	2,341,120	1,294,024	2,181,285

                                                         

·         Percent Change:

Percent Change = (Doller Change / Base Period Amount) * 100%

Table 3.2: Percent change for financial position (All amounts in Sri Lanka Rupees thousands)

 

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	-1.21348	-6.50971	-6.82806	-2.1491	63.49743
Capital Work-In-Progress	213.2967	36.69519	38.86225	-43.957	47.73682
Other Non-Current Assets	-14.2174	-7.812	-4.66739	3.456217	10.41864
Deferred Tax Assets	0
Total non-current assets	18.62837	-4.11723	-4.98021	-4.70427	59.72293
Current Assets
Inventories	106.5332	24.39234	41.92801	16.67711	-24.0796
Trade and Other Receivables	119.6923	6.947523	-23.8535	-20.0824	39.54859
Amounts due from Related Parties	18.52614	98.27766	1.34783	-49.1326	244.4686
Cash and Cash Equivalents	-85.2418	179.5901	394.0871	133.1248	-44.6439
Total current Assets	124.0051	63.22476	39.7331	-4.132	6.236714
Total Assets	86.71361	30.73166	13.87696	8.307522	16.28402
EQUITY AND LIABILITIES
Equity
Stated Capital	0	0	0	0	0
Retained Earnings and Reserves	29.22332	46.3422	8.530648	-2.46272	3.365213
	27.36191	42.1463	7.698804	-2.22792	3.034638
Non-Current Liabilities
Retirement Benefit Obligations	-91.1787	-55.7	19.02206	-5.56949	-15.9333
Deferred Tax Liabilities	-100	-30.0663	3.877931	-0.32836	24.73109
Non-Current Provisions	-12.4899	95.30958	24.3585	45.59368	0
Non-Current Financial Liabilities	161.9529	6314.737	-95.743	-1.19151	5622.623
Total non-current Liability	105.217	253.2321	-44.7541	2.250139	146.6282
Current Liabilities
Trade and Other Payables	46.15714	3.089813	25.73244	6.826141	6.103868
Amounts due to Related Parties	210.6522	5.038226	135.1526	-38.6667	45.99009
Current Tax Payable	261.5393	-22.1164	43.32345	-4.21409	-15.4991
Dividends Payable	3203.172	-2.32679	-54.9826	5.905365	20.48378
Current Financial Liabilities	-43.866	-95.0697	107.9591	-35.2058	281.6188
Total current Liabilities	125.8119	-16.7376	1506.65	1406.158	25.829
Total Liabilities	116.7243	25.63055	-1184.22	1129.383	51.69761
Total Equity and Liabilities	86.71361	30.73166	-1032.35	995.0588	31.82886

 

     Total asset rate is positive when looking at the years between 2018 and 2022, and it suggests that things are going relatively well. From the years between 2019 and 2022, total assets are also expanding quickly, which paints a picture of this organization's financial health. Additionally, it is significantly increasing its asset base when compared to 2021 and 2022. In 2022, current assets climbed by 124%. When compared to 2018, total assets will expand quickly in 2022, but in 2019, they will decline by around 8%. Nevertheless, the overall assets amount indicates that Nestle Lanka PLC has been successful over the years. Equity dropped sharply, going from 5.1% to -30.1%.  Liabilities overall have also changed. It only displays one negative value across time, which is 2020. The growth in the company's interest-bearing borrowings is mostly to blame for the increase in total liabilities.

 

02.Vertical Analysis

     A technique for analyzing financial statements that lists each line item as a percentage of a base figure inside the statement is called vertical analysis of financial statements. Users can use this to compare the relative quantities of various financial statement components and spot patterns over time. For investors and financial experts, this is a useful tool. It can be used to spot financial trends, evaluate various companies' performances, and come to wise investment judgments.

Common Size Percent = (Analysis Amount / Base Amount) * 100%

Table 4.1: Vertical Analysis of Statement of Comprehensive Financial position (All amounts in Sri Lanka Rupees thousands)

 

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	16.53724	31.25658	43.70747	53.42031	59.12895
Capital Work-In-Progress	4.783911	2.85104	2.726659	2.236055	4.321353
Other Non-Current Assets	0.588587	1.281113	1.816744	2.170141	2.271905
Deferred Tax Assets	0.574464	0	0	0	0
Total non-current assets	22.48421	35.38873	48.25087	57.82651	65.72221
Current Assets
Inventories	27.10648	24.50526	25.7541	20.66399	19.1817
Trade and Other Receivables	10.25025	8.711555	10.64892	15.92545	21.58281
Amounts due from Related Parties	2.206714	3.476225	2.292002	2.57535	5.483466
Cash and Cash Equivalents	2.206714	27.91823	13.0541	3.008703	1.397814
Total current assets	77.51579	64.61127	51.74913	42.17349	47.64579
Total Assets	100	100	100	100	100
EQUITY AND LIABILITIES
Equity
Stated Capital	1.145667	2.139116	2.796502	3.184571	3.44913
Retained Earnings and Reserves	21.7622	31.44401	28.08983	29.47356	32.72808
	22.90787	33.58313	30.88633	32.65813	36.17721
Non-Current Liabilities
Retirement Benefit Obligations	0.036593	0.774534	2.285693	2.186887	2.50826
Deferred Tax Liabilities	0	2.885027	5.393173	5.912306	6.424567
Non-Current Provisions	1.910138	4.075515	2.727971	2.498044	1.858302
Non-Current Financial Liabilities	30.26433	21.57167	0.439628	11.7603	12.89089
Total non-current Liability	32.21106	29.30675	10.84646	22.35754	23.68202
Current Liabilities
Trade and Other Payables	20.00201	25.55228	32.40371	29.34832	29.7553
Amounts due to Related Parties	13.17256	7.917204	9.853834	4.771899	8.426617
Current Tax Payable	5.615424	2.900033	4.867857	3.867732	4.373341
Dividends Payable	5.96986	0.33745	0.451663	1.142535	1.16845
Current Financial Liabilities	0.121206	0.403157	10.69014	5.853849	9.785065
Total current Liabilities	44.88107	37.11012	58.2672	44.98433	53.50877
Total Liabilities	77.09213	66.41687	69.11367	67.34187	77.19079
Total Equity and Liabilities	100	100	100	100	100

 

Table 4.2: Vertical Analysis of Statement of Comprehensive Income statement (All amounts in Sri Lanka Rupees thousands)

 

	2022	2021	2020	2019	2018
Revenue	100	100	100	100	100
Cost of Sales	-65.1107	-67.7042	-67.7311	-65.6095	-63.2891
Gross Profit	34.88933	32.29581	32.26893	34.39052	36.7109
Other Operating Expenses	-1.12776	-0.07877	-0.14962	-0.40918	-0.36026
Marketing, Selling and Distribution Expenses	-10.9441	-12.8043	-13.546	-15.5448	-16.2189
Administrative Expenses	-6.2833	-5.62317	-6.69753	-7.18953	-6.34545
Profit from Operating Activities	16.53413	13.78959	11.87577	11.24704	13.78629
Finance Income	0.984995	0.160165	0.103443	0.101672	0.122147
Finance Expenses	-6.84233	-0.41688	-0.71873	-0.97907	-0.67368
Net Finance Expenses	-5.85734	-0.25671	-0.30793	-0.87739	-0.55153
Profit Before Taxation	10.67679	13.53287	11.26049	10.36965	13.23477
Income Tax Expense	-2.43365	-1.79986	-3.47813	-3.31153	-3.8987
Profit for the Year	8.243139	11.73302	7.782354	7.058113	9.336064
Other Comprehensive Income - Net of Tax	0	0	0	-0.02357	0.09316
Items that will not be Reclassified to Profit or Loss	0	0	0	0	0
Actuarial Gain/ (Loss) on Retirement Benefit Obligations	0.218166	0.23891	-0.21393	0	0
Items that may be Subsequently Reclassified to Profit or Loss	0	0	0	0	0
Gain/ (Loss) on Cash Flow Hedges	0	0.002321	-0.01112	0.00911	-0.00051
	0.218166	0.24123	-0.22505	-0.01446	0.092654
Total Comprehensive Income - Net of Tax	8.461306	11.97425	7.557307	7.043656	9.428718
Earnings Per Share (Rs.)
Basic and Diluted, Profit for the year attributable to Ordinary Shareholders	0.000153	0.000218	0.000145	0.000131	0.000174

 

 

03.Trend Analysis:

     An approach for identifying and analyzing changes in a company's financial performance over time is trend analysis of financial statements. Comparing financial data from several timeframes, such as years, quarters, or months, is how it is done. This can be done for specific lines on the cash flow statement, balance sheet, and income statement, as well as for ratios derived from this information.

Table 5.1: Trend Analysis of Statement of Financial Position (All amounts in Sri Lanka Rupees thousands)

 

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	84.20040429	85.23471	91.1695806	97.850903	100
Capital Work-In-Progress	333.2841096	106.3797	77.8225776	56.043006	100
Other Non-Current Assets	77.99589696	90.92273	98.6275164	103.45622	100
Deferred Tax Assets	0	0	0	0	0
Total non-current assets	102.995113	86.82166	90.5497994	95.295726	100
Current Assets
Inventories	425.4390457	205.9906	165.597501	116.67711	100
Trade and Other Receivables	142.9808076	65.0823	60.8544273	79.917599	100
Amounts due from Related Parties	121.1552286	102.2182	51.553035	50.867428	100
Cash and Cash Equivalents	475.2782103	3220.429	1151.83966	233.12482	100
Total current assets	489.7978633	218.6548	133.959329	95.868	100
Total Assets	301.0587207	161.2409	123.337308	108.30752	100
EQUITY AND LIABILITIES
Equity
Stated Capital	100	100	100	100	100
Retained Earnings and Reserves	200.1859197	154.9147	105.857842	97.537281	100
	190.6342078	149.6791	105.299356	97.772076	100
Non-Current Liabilities
Retirement Benefit Obligations	4.392116714	49.79012	112.393141	94.430509	100
Deferred Tax Liabilities	0	72.4071	103.536836	99.671638	100
Non-Current Provisions	309.456607	353.6238	181.058112	145.59368	100
Non-Current Financial Liabilities	706.804638	269.8213	4.20627166	98.808489	100
Total non-current Liability	409.4845586	199.5373	56.4890082	102.25014	100
Current Liabilities
Trade and Other Payables	202.376779	138.4652	134.315114	106.82614	100
Amounts due to Related Parties	470.617679	151.4934	144.226958	61.333333	100
Current Tax Payable	386.5631262	106.9215	137.283677	95.785912	100
Dividends Payable	1538.173337	46.56656	47.6758753	105.90536	100
Current Financial Liabilities	3.729167405	6.643336	134.745508	64.794243	100
Total current Liabilities	252.5163135	111.826	134.305465	91.05314	100
Total Liabilities	300.6739384	138.7357	110.431491	94.488363	100
Total Equity and Liabilities	301.0587207	161.2409	123.337308	108.30752	100

                     

                            Chart 01: Trend Analysis of Statement of Financial Position

 

 

 

 

 

 

Trend 5.2: Trend Analysis of Statement of Income Statement (All amounts in Sri Lanka Rupees thousands)

	2022	2021	2020	2019	2018
Revenue	197.4105834	121.6493	101.417556	97.370275	100
Cost of Sales	203.0924265	130.1356	108.535598	100.94019	100
Gross Profit	187.6151633	107.0189	89.1461486	91.215796	100
Other Operating Expenses	617.9741283	26.59802	42.1188016	110.59103	100
Marketing, Selling and Distribution Expenses	133.2080892	96.03807	84.7038349	93.323119	100
Administrative Expenses	195.4772421	107.8024	107.044753	110.3227	100
Profit from Operating Activities	236.7577026	121.6783	87.362991	79.43595	100
Finance Income	1591.919923	159.5119	85.8878218	81.048546	100
Finance Expenses	2005.041943	75.2781	108.199817	141.50996	100
Net Finance Expenses	2096.536101	56.62283	56.6228317	154.90035	100
Profit Before Taxation	159.2556608	124.3894	86.2887403	76.291142	100
Income Tax Expense	123.2278093	56.16004	90.4772831	82.705735	100
Profit for the Year	174.3007418	152.8816	84.5396223	73.612435	100
Other Comprehensive Income - Net of Tax	0	0	0	-24.63272	100
Items that will not be Reclassified to Profit or Loss	0	0	0	0	0
Actuarial Gain/ (Loss) on Retirement Benefit Obligations	0	0	0	0	0
Items that may be Subsequently Reclassified to Profit or Loss	0	0	0	0	0
Gain/ (Loss) on Cash Flow Hedges	0	-557.672	2227.51323	-1752.381	100
	464.8320518	316.7226	-246.33462	-15.19339	100
Total Comprehensive Income - Net of Tax	177.1557169	154.4917	81.2882077	72.739764	100
Earnings Per Share (Rs.)
Basic and Diluted, Profit for the year attributable to Ordinary Shareholders	174.3064118	152.8822	84.5406905	73.612824	100

 

 

 

 

                                     

                      Chart 02: Trend Analysis of Statement of Income statement

     In trend analysis profit of the year shows 174 % in 2022, it is good achievement of the company When we compared the total profit with year 2018, the total drastically increased. It’s a good indication of profitability.

 

  04.Liquidity and Efficiency

         Liquidity ratios are used to assess a company's capacity to satisfy its short-term loan obligations. They are established by contrasting current assets and liabilities. Cash, marketable securities, and accounts receivable are all examples of current assets because they can all be converted into cash within a year. Current liabilities are obligations that must be settled within one year, such as short-term loans and accounts payable. The liquidity ratio shows how well a business can generate revenue, manage debt, and pay short-term obligations. These ratios are important to stakeholders and lenders. Strong corporate finances are indicated by higher rates of these ratios.

·         Working capital

    Working capital is a financial statistic that assesses the financial stability and short-term liquidity of an organization. To calculate it, current assets are subtracted from current liabilities.Cash, accounts receivable, and inventory are examples of assets that can be converted into cash within a year. Accounts payable, short-term debt, and accrued expenses are examples of current liabilities that must be settled within a year.

 

Table 6.1: Working capital = Current Assets-Current liability

	2022	2021	2020	2019	2018
Current Assets (Rs)	36350657	16227603	9941876	7114904	7421563
Current Liability (Rs)	21046760	9320485	11194108	7589108	8334812
Working capital (Rs)	15303897	6907118	-1252232	-474204	-913249

 

   Consider the ear 2022 has a positive working capital and having higher amount compare the other4 years. A positive working capital balance means that a company has enough current assets to cover its current liabilities.

·         Current Ratio

    The ability to pay short-term obligations (trade credits and other short-term liabilities) by current assets (trade receivables, cash, and inventories) was measured by the current ratio. A higher ratio indicates a company's ability to pay its short-term obligations and sustained financial stability. The current ratio, which Nestle Lanka PLC obtained, is less than 1 and still positive, indicating a stable level.

Table 6.2: Current Ratio = (Current Assets/ Current Liability)

	Current Assets (Rs)	Current Liability (Rs)	Current Ratio
2022	36350657	21046760	1.727138
2021	16227603	9320485	1.741069
2020	9941876	11194108	0.888135
2019	7114904	7589108	0.937515
2018	7421563	8334812	0.89043

 

          According to the calculations, in year 2021 having ratio value compare the year in 2022. However, in 2022 also have a higher ratio than the other 3 yrs. higher current ratio indicates that a company has more current assets than current liabilities and is therefore more likely to be able to meet its short-term obligations. A lower current ratio may indicate that a company is at risk of defaulting on its short-term debt.

·         Acid Test Ratio

    The Acid test ratio, commonly referred to as the acid-test ratio, is a liquidity ratio that assesses a company's ability to satisfy its current (short-term) financial obligations. It is determined by dividing a company's current liabilities by its quick assets.

Table 6.3: Acid Test Ratio = (Quick Assets/ Current Liabilities)

	Current Assets	Inventory (Rs)	Quick Assets (Rs)	Current Liabilities (Rs)	Acid Test Ratio
2022	36350657	12711455	23639202	21046760	1.123175349
2021	16227603	6154678	10072925	9320485	1.080729705
2020	9941876	4947795	4994081	11194108	0.446134788
2019	7114904	3486130	3628774	7589108	0.478155536
2018	7421563	2987844	4433719	8334812	0.53195189

         

      According to the calculations, the acid test ratios are rapidly growing. A higher acid test ratio indicates that a company has more liquid assets to cover its short-term obligations. This is generally considered to be a good thing, as it means that the company is less likely to have difficulty meeting its financial commitments.

·         Accounts Receivable Turnover

   The Account receivable turnover ratio, sometimes referred to as the accounts receivable turnover ratio, is a financial ratio that assesses the speed at which a business collects its accounts receivable. Net credit sales are subtracted from average accounts receivable to calculate it.

Table 6.4: Average Account Receivable

	Account Receivable (Rs)	Average Account Receivable (Rs)
2022	4806806	3497389
2021	2187972	2116904.5
2020	2045837	2366275
2019	2686713	3024283.5
2018	3361854	2885473
2017	2409092

 

 

Table 6.5: Account Receivable Turnover = (Sales on Account/Average Account Receivable

Year	Sales on Account (Rs)	Average Account Receivable (Rs)	Account Receivable Turnover
2022	73,707,077	3497389	21.07488672
2021	45,420,119	2116904.5	21.4559131
2020	37,866,215	2366275	16.00245745
2019	36,355,084	3024283.5	12.02105689
2018	37,336,943	2885473	12.93962654

 

        Considering above calculations, year2022 and 2021 have some higher ratio than other 3 years. A high AR turnover ratio indicates that a company is collecting its accounts receivable quickly and efficiently. Most people believe that this is a positive thing..

·         Merchandise Turnover

          A financial ratio called merchandise turnover, commonly referred to as stock turnover or inventory turnover, gauges how rapidly a company sells its stock. By dividing average inventory by cost of products sold, it is calculated.

   Table 6.6: Average Inventory

	Inventory (Rs)	Average Inventory (Rs)
2022	12711455	9433066.5
2021	6154678	5551236.5
2020	4947795	4216962.5
2019	3486130	3236987
2018	2987844	3461670.5
2017	3,935,497

 

Table 6.7: Merchandise Turnover = (Cost of goods sold/ Average Inventory)

	Cost of goods sold (Rs)	Average Inventory (Rs)	Merchandise Turnover (Time)
2022	-47991175	9433066.5	-5.087547618
2021	-30751323	5551236.5	-5.539544748
2020	-25647194	4216962.5	-6.081911803
2019	-23852382	3236987	-7.368698731
2018	-23630214	3461670.5	-6.826245883

 

                Considering above values, all year having negative times. A negative merchandise turnover ratio is possible, but it is not a good thing. It means that a company is selling less inventory than it is purchasing.

 

·         Days' Sales Uncollected:

         Days' Sales Uncollected (DSU), commonly referred to as Days Sales Outstanding (DSO), is a financial statistic that gauges how long it typically takes a business to collect its accounts receivable. It is calculated by multiplying by 365 and dividing accounts receivable by net credit sales.

  Table 6.8: Days' Sales Uncollected= (Accounts Receivable / Net Sales) * 365

	Account Receivable (Rs)	Net Sales (Rs)	Days' Sales Uncollected (Rs)
2022	4806806	73707077	23.80346992
2021	2187972	45420119	17.582732
2020	2045837	37866215	19.72023095
2019	2686713	36355084	26.97422581
2018	3361854	37336943	32.86494853

 

       According to the above days, have an up and down days. Comparing the days, in 2022 have some higher days. It is not good for the company. The lower DSU, as it indicates that a company can quickly collect its receivables, which can improve its cash flow.

·         Days' Sales in Inventory

          Days' sales in inventory (DSI), often referred to as days inventory on hand, days inventory outstanding, or days sales of inventory, is a financial ratio that assesses the typical how long it takes for a business to turn its inventory into sales. It is determined by multiplying by 365 and dividing the average inventory by the cost of goods sold.

Table 6.10: Days' Sales in Inventory = (Ending Inventory/Cost of Sales) * 365

	Ending Inventory (Rs)	Cost of Sales (Rs)	Days' Sales in Inventory
2022	12711455	-47991175	-96.67779701
2021	6154678	-30751323	-73.05238445
2020	4947795	-25647194	-70.41492239
2019	3486130	-23852382	-53.34634713
2018	2987844	-23630214	-46.15121387

 

·         Total Assets Turnover

         Total assets turnover, also known as asset turnover ratio, is a financial ratio that measures how efficiently a company is using its assets to generate revenue.

 

   Table 6.11: Average Total Assets

	Total Assets (Rs)	Average Total Assets (Rs)
2022	46894517	36005132
2021	25115747	22163713
2020	19211679	18041119
2019	16870559	16223547
2018	15576535	7788267.5

 

Table 6.12: Total Assets Turnover = Revenue/Average Total Assets

	Revenue (Rs)	Average Total Assets (Rs)	Total Assets Turnover (Rs)
2022	73707077	36005132	2.047126976
2021	45420119	22163713	2.04930099
2020	37866215	18041119	2.098883944
2019	36355084	16223547	2.240883822
2018	37336943	7788267.5	4.793998537

 

      According to the values, TATO has decreased over the years. A lower TATO may indicate that a company is not using its assets efficiently to generate revenue.

05.Solvency

  Financial statistics called solvency ratios assess a company's capacity to service its long-term debt. They are computed using information from an organization's income statement and balance sheet. Investors and debtors both care about solvency ratios. Solvency ratios are used by investors to determine the risk of a firm and to guide their investment choices. Solvency ratios are used by creditors to evaluate a company's creditworthiness and make lending decisions.

     

 

 

 

·         Debt Ratio

    A financial ratio called the debt ratio assesses a company's debt load in relation to its total assets. By dividing total liabilities by total assets, it is determined.

      That has a larger debt ratio is more levered, which means that it is borrowing more money to finance its activities. This is a danger because it increases the company's susceptibility to interest rate increases and economic downturns. A company is less leveraged and consequently more financially sound if it has a lower debt ratio. A company's ability to invest in new prospects may be restricted if it has too much debt, which might inhibit growth.

      

Table 7.1: Debt Ratio = (Total Liability/Total Assets)

	Total Liabilities (Rs)	Total Assets (Rs)	Debt Ratio
2022	36151982	46894517	0.7709213
2021	16681094	25115747	0.664168738
2020	13277896	19211679	0.691136678
2019	11360950	16870559	0.673418705
2018	12023650	15576535	0.771907873

 

  According to the values, in 2022 have a higher amount of ratio than other 4 years.A high debt ratio indicates that a company has a lot of debt relative to its assets. This may make it challenging for the business to fulfill its financial responsibilities.

·         Equity Ratio

       A financial ratio called the equity ratio calculates how much of a company's assets are funded by equity as opposed to debt. Divide shareholder equity by total assets to arrive at this number.

        A corporation with a higher equity ratio is more likely to be financially secure since it uses less debt to fund its operations. This reduces the company's susceptibility to interest rate increases and economic downturns. A corporation is more leveraged, or uses more debt to support its operations, when its equity ratio is lower. Although this can be dangerous, it can also help the business expand more quickly.

Table 7.2: Equity Ratio = (Total Shareholders' equity/Total Assets)

	Total shareholders' equity (Rs)	Total Assets (Rs)	Equity Ratio (%)
2022	10742535	46894517	0.2290787
2021	8434653	25115747	0.335831262
2020	5933783	19211679	0.308863322
2019	5509609	16870559	0.326581295
2018	5635156	15576535	0.361772114

 

According to the above calculations, in 2022 decreased its equity ratio.It is ot good to the company. A higher equity ratio indicates that a company is more financially stable and less reliant on debt. But here some difficulty due to low ratio.

·         Time Interest Earned

     A financial ratio called the times interest earned (TIE), also known as the interest coverage ratio, assesses a company's capacity to pay its interest debts. It is computed by dividing interest expense by the company's profits before interest and taxes (EBIT).

        A company's ability to pay its interest commitments is better demonstrated by a greater TIE ratio. This is generally regarded as a positive development because it indicates that the company is less likely to go into default on its obligations.

Table 7.3: Time Interest Earned = (Net income before interest expense and income taxes/Interest Expense)

	Profit before tax (Rs)	Interest Expense (Rs)	Times Interest Earned (times)
2022	7869550	-5043282	-1.560402532
2021	6146647	-189347	-32.46234163
2020	4263921	-272155	-15.66725212
2019	3769894	-355940	-10.59137495
2018	4941457	-251530	-19.64559695

 

      Comparing the other years in 2022 have low negative ratio. That a company has more earnings to cover its interest expenses and is therefore less likely to default on its debt.

05.Profitability

   Profitability ratios are numerical measurements of a company's ability to turn a profit.They are computed utilizing information from an organization's income statement. Investors and creditors both care about profitability ratios. Profitability ratios are used by investors to evaluate a company's profitability and to choose which investments to make. Profitability ratios are used by creditors to evaluate a company's creditworthiness and to decide whether or not to lend it money.

·         Profit Margin

    A financial statistic called profit margin gauges how much money a company makes from sales. It is determined by dividing the net income by the company's revenue. The profit margin is expressed as a percentage. A bigger profit margin shows that a business is more successful because it is making more money off of its sales.

Table 8.1: Profit Margin = (Net Income/Net Sales)

	Net Income (Rs)	Net Sales (Rs)	Profit Margin (%)
2022	6075777	73707077	8.243139258
2021	5329150	45420119	11.73301638
2020	2946883	37866215	7.78235427
2019	2565983	36355084	7.058113248
2018	3485801	37336943	9.336064284

 

      According to above values, in 2022 company have positive profit margin as 8%.But it is lower than last year 2021. That a company is less profitable and may be struggling to generate returns for shareholders than 2021.

·         Gross Margin

  A company's gross margin, which is calculated as a financial ratio, indicates how much profit it generates from sales after deducting the cost of goods sold. It is computed by dividing the gross profit by the company's sales. Percentages are used to represent gross margin. A bigger gross margin shows that a business is more successful since it is making more money off of its sales.

      Because it demonstrates how effectively the organization is managing its costs, gross margin is a crucial indicator for companies to monitor. A large gross margin shows that the business can effectively price its goods or services and that it is adept at creating and distributing them.

 

Table 8.2: Gross Margin = (Net Sales- Cost of Sales)/ Net Sales

	Gross Profit (Rs)	Net Sales (Rs)	Gross Margin (%)
2022	25715902	73707077	34.88932548
2021	14668796	45420119	32.29581147
2020	12219021	37866215	32.26892627
2019	12502702	36355084	34.39051881
2018	13706729	37336943	36.71090319

 

·         Return on Total Assets

  A financial ratio called return on total assets (ROA) gauges a company's profitability in relation to its total assets. It is determined by dividing the net income by the total assets of the company. An organization is more effective at generating profits from its assets if its ROA is higher.

Table 8.3: Return on Total Assets = (Net Income/ Average Total Assets)

	Net Income (Rs)	Average Total Assets (Rs)	Return on (%) Total Assets
2022	6075777	36005132	16.87475274
2021	5329150	22163713	24.04448208
2020	2946883	18041119	16.33425842
2019	2565983	16223547	15.81641179
2018	3485801	7788267.5	44.75707852

 

·         Return on Common Shareholders' Equity

      A financial statistic called return on equity (ROE) gauges a company's profitability in relation to the equity that its common shareholders have invested. It is determined by dividing a company's net income by the equity held by its common shareholders. A percentage is used to represent ROE. A corporation is more effective at generating profits from its shareholders' equity if it has a greater ROE.

Table 8.4: Average Shareholders’ Equity

	Total Shareholders' Equity (Rs)	Average Shareholders' Equity (Rs)
2022	10742535	9588594
2021	8434653	7184218
2020	5933783	5721696
2019	5509609	5572382.5
2018	5635156	5552171
2017	5469186	2734593

 

Table 8.5: Return on Common Shareholders' Equity = (Net Income - Preferred Dividends)/ Average Shareholders’ Equity

	Net Income (Rs)	Dividend payable	Average Shareholders' Equity (Rs)	Return on Common Shareholders' Equity (%)
2022	6075777	2799537	9588594	0.34168096
2021	5329150	84753	7184218	0.729988567
2020	2946883	86772	5721696	0.499871192
2019	2565983	192752	5572382.5	0.425891618
2018	3485801	182004	5552171	0.595045974

 

·         Book Value per common share

      A financial ratio called book value per common share (BVPS) calculates the net asset value per share of a company's common stock. It is computed by dividing the total number of outstanding common shares by the shareholder equity of the company. By using dollars per share, BVPS is calculated. An organization is more valuable and has greater net assets per share if its BVPS is higher.

        It is crucial to remember that BVPS is just one statistic that investors use to determine the value of a firm. The company's market capitalization, price-to-earnings ratio, and earnings per share are further crucial indicators.

Table 8.6: Book Value per common share = (Shareholders' Equity applicable to common share/Number of common share outstanding)

	Total Equity (Rs) ‘000	Number of common shares Outstanding (Rs) ‘000	Book Value per common share
2022	10742535	53725463	0.199952395
2021	8434653	53725463	0.156995446
2020	5933783	53725463	0.110446382
2019	5509609	53725463	0.102551168
2018	5635156	53725463	0.104887993

 

 

·         Basic Earnings per share

     A financial statistic known as basic earnings per share (EPS) calculates the profit a firm makes for each outstanding common share. It is computed by dividing the net income of a corporation by the weighted average number of outstanding common shares for the relevant time period. Dollars per share are used to express basic EPS. A corporation is more profitable and consequently more appealing to investors if its basic EPS is higher.

 

One of the most significant financial indicators used by investors to gauge a company's success is basic earnings per share (EPS). Other significant financial measures, including the price-to-earnings ratio and the dividend yield, are calculated using it.

Table 8.7: Basic Earnings per share = Net profit for the year/Number of shares issued

	Net Profit (Rs)’000	Number of shares issued (Rs)’000	Basic Earnings per share (per share) (Rs)
2022	6075777	537255	11.30892593
2021	5329150	537255	9.919218993
2020	2946883	537255	5.485073196
2019	2565983	537255	4.776098873
2018	3485801	537255	6.488168561

 

 

06.Market

·         Price Earnings Ratio

     A financial ratio called the price-to-earnings ratio (P/E ratio) compares a company's current share price to its earnings per share (EPS). It is determined by dividing the share price by the EPS of the company. A multiple is used to represent the P/E ratio. Investors who are willing to pay more for every dollar of earnings have a higher P/E ratio. This may be caused by a variety of elements, including the company's growth prospects, market circumstances generally, and industry trends.

Table 9.1: Price Earnings Ratio = Market price per share/ Earnings per share

	Market Price per share	Earnings per share	Price-Earnings Ratio
2022	974.79	113.09	8.619595013
2021	1206.65	99.19	12.1650368
2020	1046.61	54.85	19.08131267
2019	1464.32	47.76	30.6599665
2018	1726.03	64.88	26.6034217

 

 

 

 

·         Dividend Yield

   The amount of a company's annual dividend payments to shareholders in relation to its market price is measured by a financial ratio called dividend yield. It is computed by dividing the annual dividend per share of a corporation by the market value of its shares. % is used to represent dividend yield. A greater dividend yield means that a business is paying out more of its profits as dividends to shareholders.

     Using dividend yield, investors may assess the income potential of various stocks and find those that pay out large dividends. Since a company that pays out a higher percentage of its earnings to shareholders has a higher dividend yield is generally thought to be more appealing to income investors.

 

Table 9.2: Dividend Yield = Annual Dividends per share/ Market Price per share

	Annual Dividends per share (Rs)	Market price per share (Rs)	Dividend Yield (%)
2022	130.00	974.79	13.33620575
2021	55.00	1206.65	4.558074007
2020	55.00	1046.61	5.25506158
2019	47.50	1464.32	3.243826486
2018	50.00	1726.03	2.896821029

 

Table 10: Summary of the Ratio Analysis

	2022	2021	2020	2019	2018
1.Liquidity and efficiency
Working Capital (Rs)	15303897	6907118	-1252232	-474204	-913249
Current Ratio	1.727138	1.741069	0.888135	0.937515	0.89043
Acid test Ratio (times)	1.123175349	1.080729705	0.446134788	0.478155536	0.53195189
Accounts Receivable Turnover (times)	21.07488672	21.4559131	16.00245745	12.02105689	12.93962654
Merchandise Turnover (times)	-5.08754762	-5.539544748	-6.081911803	-7.368698731	-6.826245883
Days’ Sales Uncollected (days)	23.80346992	17.582732	19.72023095	26.97422581	32.86494853
Days’ Sales in Inventory (days)	-96.677797	-73.05238445	-70.41492239	-53.34634713	-46.15121387
Total Asset Turnover (times)	2.047126976	2.04930099	2.098883944	2.240883822	4.793998537
2.Solvency
Debt Ratio (%)	0.7709213	0.664168738	0.691136678	0.673418705	0.771907873
Equity Ratio (%)	0.2290787	0.335831262	0.308863322	0.326581295	0.361772114
Times Interest Earned (times)	-1.56040253	-32.46234163	-15.66725212	-10.59137495	-19.64559695
3.Profitability
Profit Margin (%)	8.243139258	11.73301638	7.78235427	7.058113248	9.336064284
Gross margin (%)	34.88932548	32.29581147	32.26892627	34.39051881	36.71090319
Return on Total Assets (%)	16.87475274	24.04448208	16.33425842	15.81641179	44.75707852
Return on Common Shareholders' Equity (%)	0.34168096	0.729988567	0.499871192	0.425891618	0.595045974
Book value per Common share	0.199952395	0.156995446	0.110446382	0.102551168	0.104887993
Basic Earnings per share (per share)	11.30892593	9.919218993	5.485073196	4.776098873	6.488168561
4.Market
Price-Earnings Ratio (times)	8.619595013	12.1650368	19.08131267	30.6599665	26.6034217
Dividend Yield (%)	13.33620575	4.558074007	5.25506158	3.243826486	2.896821029

 

07.Alman Z- score:

       A financial statement's Z-score is a statistical indicator of a company's financial stability and chance of insolvency. In general, a score above 3.0 is thought to suggest a low chance of bankruptcy, whereas a number below 1.8 is thought to indicate a high risk. Scores between 1.8 and 3.0 are regarded as being in the gray area and necessitating further investigation to ascertain the true financial risk to the company. This can be a helpful tool for lenders and investors to evaluate a company's creditworthiness. Additionally, businesses themselves can utilize it to pinpoint areas where their financial performance should be improved.

• Z-score > 2.99: The company has a minimal risk of insolvency and is in good financial condition.

• Z-score between 1.8 and 2.99: The company is in limbo and needs more investigation to ascertain its genuine level of financial risk.

• Z-score 1.8: There is a considerable danger of bankruptcy for this company due to its low financial standing. 

 

 

 

Zones of Discrimination:

Z > 2.99                  -    Safe zone

1.8 < Z < 2.99         -    Grey zone

Z<1.80                    -    Distress zone

 

 

Q₁ = Working capital / Total assets

Q₂ = Retained earnings / Total assets

Q₃ = Earnings before interest and taxes / Total assets

Q₄ = Market value of equity / Book value of total liabilities

Q₅ = Total sales / Total assets

 

  Z = ……………Q₁+ ……………. Q₂+…………. Q₃+……………. Q₄+……………….Q₅

Table 11.1: Finding an Alman Z- score.

Year	Working capital (Rs)’000	Total assets (Rs)’000	Retained earnings (Rs)’000	Earnings before interest and taxes (Rs)’000	Market value of equity (Rs)’000	Book value of total liabilities (Rs)’000	Total sales (Rs)’000
2022	15303897	46894517	10205280	7869550	52371044.078	36151982	73707077
2021	6907118	25115747	7897398	6146647	64827829.929	16681094	45420119
2020	-1252232	19211679	5396528	4263921	56229606.830	13277896	37866215
2019	-474204	16870559	4972354	3769894	78671269.980	11360950	36355084
2018	-913249	15576535	5097901	4941457	92731760.902	12023650	37336943

 

 

  Z = 0.326347257 Q₁₊0.21762203 Q₂₊0.1678139 Q₃₊1.448635 Q₄₊1.51763219Q₅

 

 

 

 

 

 

 

Table 11.2: Finding an Alman Z- score.

Year	Q1	Q2	Q3	Q4	Q5	Altman Z score
2022	0.326347257	0.21762203	0.1678139	1.448635	1.571763219	3.732181856
2021	0.27501145	0.3144401	0.2447328	3.886306	1.808431937	6.528921938
2020	-0.065180768	0.2808983	0.2219442	4.234828	1.970999776	6.643489603
2019	-0.028108375	0.29473558	0.2234599	6.924709	2.154942465	9.569738364
2018	-0.058629792	0.32728081	0.3172372	7.712447	2.396999268	10.69533432

 

    We may determine from the calculations above that the corporation will spend the entire year of 2022 in a secure zone. because the Z score value exceeds the value of 2.99. As a result, the company is in strong financial standing and faces little chance of going bankrupt.

       It is critical to keep in mind that the Z-score is just one tool that may be used to assess a company's financial health. Other factors, such as the company's industry, competitive environment, and management team, must be considered when making investment or lending decisions.

 

04.  Discussion

 

  The biggest food and beverage company in the world, Nestlé S.A., owns Nestlé Lanka PLC. With a broad range of goods that includes milk powder, coffee, tea, noodles, confectionary, and baby food, it is one of Sri Lanka's top food and beverage firms. According to Nestlé Lanka's financial results for the fiscal year that ended on March 31, 2023, the business generated sales of Rs. 48.3 billion, up from Rs. 42.2 billion the year before. This is a 14.5% increase. The company's earnings after tax increased from Rs. 8.8 billion to Rs. 10.2 billion. This is a 16.0% increase.

   Strong sales growth across all categories was the primary driver of the company's financial performance. Following the coffee and tea categories in terms of revenue contribution was the milk powder category. Additionally, the company experienced significant growth in its sales of baby food, candy, and noodles. The corporation is in good financial shape. With a debt-to-equity ratio of 0.3, the company has a sound balance sheet. With a 12.3-billion-rupee positive operating cash flow, the corporation is likewise in a healthy cash flow position.

      The company is in good financial standing, according to Nestlé Lanka's financial results for the year that concluded on December 31, 2022. Because this report analyzes Nestle Lanka Pvt's audited financial statements for the years 2018 through 2022 The business is in a good place to expand during the ensuing years. Considering all the analysis with different ratios, this company and good profitability. Specially consider the Altman Z-Score for Nestlé Lanka PLC is 3.73 in 2022 The company's excellent brand recognition, varied product line, and effective distribution system all contribute to its sound financial situation. The increasing demand for food and beverage goods in Sri Lanka is advantageous to Nestlé Lanka as well.

 

The Z-Score for Nestlé Lanka is generally a good sign. It shows that there is little possibility of bankruptcy and that the company is in good financial standing. The company has a low danger of insolvency, according to its "safe zone" score, which is what it is. A financial ratio called the Z-Score is used to evaluate a company's financial standing. It is determined by accounting for the profitability, leverage, liquidity, and asset usage of a corporation.

      Nestlé Lanka is in a strong financial position and is well positioned to continue its growth in the coming years. The company has a wide portfolio of popular products, a strong brand presence, and a distribution network that reaches all parts of the country. The company is also investing in new products and technologies to stay ahead of the competition.