Nestle Profit
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NestlД©Ð²Ð‚™s Profitability
In observing NestlД©Ð²Ð‚™s Februarys 2007 press release, we would definitely invest in this company. According to Peter Brabeck-Letmathe Chairman and COE, “2006 was another record year for NestlД©.” “We are seeing the benefits of the Group’s transformation into a nutrition, health and wellness company, with stronger innovation and branding, as well as improved efficiency.” NestlД© has sought to diversify their portfolio with the acquisitions of Uncle Toby’s, Jenny Craig and Novartis Medical Nutrition giving them a strong competitive position in the market place through research and development. Below are the Financial Profitability Statement Ratios for 2006, 2005.
Profit margin ratio = Net income measures net income in each sales dollar.
Net sales
Dec. 06 CHF Sales $98.5 billion — Expenses $1.5 billion = Net income $97.0 = 9.8%
Net sales $98.5
Dec. 05 CHF Sales $91.1 billion — Expenses $425 million= Net income $90.7 = 10.0%
Net Sales $91.1
Gross margin ratio = Net sales — Cost of goods sold measures gross margin in each sales dollar.
Net sales
Dec.06 CHF Net sales $98.5 billions — ($40.7) billions = 57.8 = 5.87%
98.5
Dec.05 CHF Net sales $91.1 billions — ($37.9) billions = 53.2 = 5.84%
91.1
Return on total assets = Net income measures overall profitability of assets.
Average total assets
Dec.06 CHF Net income $97.0 billions = 97.0 = 1.96%
(35305 + 66500)/2 = 50902.5
Dec.05 CHF Net income $90.7 billions = 90.7 = 1.8%
(41765+60953)/2 = 51359
Return on common stockholders’ equity = Net income — Preferred dividends measures profitability of owner investment. Average common stockholders’ equity
Dec.06 CHF Net income $97.0 billions = 97.0 — 4.0 = 93.0 93.0 = 1.9%
(50991 + 47498)/2 = 49244.5
Dec.05 CHF Net income $90.7 billions = 90.7 — 3.1 = 87.6 87.6 = 2.0%
(47498 + 39236)/2 = 43367
Book value per common share = Shareholders’ equity applicable to common shares is liquidation at reported amounts. Number of common shares outstanding