Financial Analysis of Nestle & Engro Foods

Abstract

Financial performance and status is very important for any company. This gives a firm general direction in assessing its strengths and weaknesses as compared to other peers in the industry. Information obtained from financial ratio analysis is important not only for a firm's manager but also for stakeholders in making infonned decisions. This study is a financial ratio analysis of Nestle and Engro Foods. Data is obtained from the company's financial statements over a period of 4 years. The study indicated that both Nestle and Engro have a strong position in terms of their profitability, which they have earned over the past four years due to their managerial performance and good reputation in the food and beverage industry. Both Nestle and Engro Corporation specialize in the manufacture of a wide range of food, beverage and dairy products, among other things. Both companies are well-known for their strong strategy and product innovation in the market. Both have evolved dynamically with the time and consumer demand, preference and taste. Ratio analysis requires comparison over a number of years of useful interrelated figures to determine a pattern. There is no standard ratio that can act as a bank for the purpose of analyzing a company's financial statement. As a matter of fact, ratios according to their nature of business and intent have been selected and implemented by different businesses. For instance, BanJcs usually try to evaluate financial performance past 3 years of a through ratio analysis so that they will be able to analyze the performance of operations of the company. Banks therefore close the relevant ratio which can satisfy the interest of the banks. taking account of their objectives. The ratio used will represent, in line with this claim, the essence of the business being handled and the classification that best satisfies the company. iv