Assignment on Accountancy & Finance Module

ACCOUNTANCY &
FINANCE MODULE

TABLE OF CONTENTS
Table of Contents
INTRODUCTION...........................................................................................................................1
a. Background of the company ...................................................................................................1
b. Ratio analysis ..........................................................................................................................3
c. Reflecting the performance of an entity...................................................................................4
d. PESTLE analysis.....................................................................................................................7
e. Recommendations and conclusions ......................................................................................10
CONCLUSION .............................................................................................................................10
REFERENCES .............................................................................................................................11
Appendix........................................................................................................................................12

INTRODUCTION
Accountancy refers to the practice of entering, classifying, reporting the business
transactions for communicating the accurate results to the users that involves external and the
internal parties. It facilitates the feedback to the management in relation to the financial results
and the status of an enterprise. On other side, finance is been defined as managing the money and
involving the major activities such as borrowing, budgeting, lending, investing, forecasting,
saving the financial resources of the company in an efficient way. In other finance mainly deals
with money management and counted the process of procuring and utilising the funds for
generating larger returns. The present study is based on Nestle, a Swiss multinational firm that
deals in food and drinks processing corporation that is headquartered in Vaud, Switzerland.
Furthermore, the study includes the overview of the corporation and the financial analysis in
order to assess the financial performance. Moreover, it also includes the strategic analysis by
way of Pestle and appropriate recommendations are also been highlighted in the report.
a. Background of the company
Nestle is counted as the largest and the leading company that operates its business across
the world in respect of its revenues (Zolfani, Yazdani and Zavadskas, 2018). It is the Swiss
company that had been established in the year 1866, founded by Henri Nestle. It mainly deals in
foray that is food and the drinks, providing a wide range of the services that includes medical
food, coffee, baby food, dairy products, snacks, pet food, ice-cream, tea etc. The company
functions under a food processing industry having a large number of the employees that is
approximately 308000 during the year 2018 with revenue amounting to CHF 91.43 billion in
2018. Nestle formed in the year 1905 by merger of an Anglo-Swiss enterprise that has been set
up in 1866 by the brothers Charles page and George.
The corporation grows grows significantly by expanding its business beyond its
condensed milk and the instant products formula. The firm has been seen as facing several
controversies, criticisms in relation to its marketing of the baby formula as the alternative to the
breastfeeding in the developing countries. Nestle is stated as the biggest food corporate
worldwide having a market capitalization of approx CHF 231 billion that is greater than US$ 247
billion till 2015. It has a primary listing on SIX Swiss Exchange and is constituent of Swiss
Market Index and also had a secondary listing on the Euronext. Nestle is having over 2000
brands with large range of the products across the number of the markets including coffee,
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beverages, breakfast, milkshakes, infant foods, healthcare nutrition, refrigerated food and the pet
food.
Nestle is reflected as the most renowned company in a world and it had developed
reputation within its food and the beverage sector by offering product with highest quality that
are been used by the consumers on a routine basis around the world. It sells its products in more
than 189 countries rather than sticking to few markets by capturing sizeable market in more of
the developing countries than the developed countries in order to earn most of the revenue.
In accordance to the Forbes Global, nestle is been indicated as the world's top valuable
corporate with regards to the highest revenue, market value, assets and the profits. The product
portfolio of Nestle is extensive as it renovated more than 8000 products considering facilitation
of the nutritional value to the consumers. It had created a well versed relationships with the other
brands such as Coca-Cola, Loreal, Colgate Palmolive etc. and comprises of popular brands
under it like Nestle, Gerber, Maggi, Milo and Kit-kat. The company owns an extensive and the
diversified distribution network in both urban and the rural regions. Nestle adopted for the local
method of distribution and the decentralized approaches for running its business effectively and
efficiently within the respective countries (Overview of Nestle, 2018). It has maintained stronger
relationships with retailers, distributors, suppliers and the vendors so that demand of the
customers could be met timely and efficiently.
Although Nestle faced many challenges that includes social criticism as it had become
the target of the media attention. There was a claim against the company relating to privatizing
the water, lawsuit for the chocolate making by using the slave and child labour and the
misleading labelling weakened the market reputation of the company. Nestle also failed in
clearing the laboratory test happened in India at the time of its Maggie controversy. This causes a
huge loss to the firm as 80% of its market share declines.
Nestle also gained many opportunities in relation to venturing the small start-ups in order
to grow the food items within its brand name. It had also collaborated with other popular brands
for promoting its brand name all over the world which in turn resulted as the great opportunity
for an enterprise. Company also had a remarkable opportunity for boosting its online and the e-
commerce websites as very few firms are been offering an online services for making their
shopping experience more pleasant and comfortable. Creating a strategic alliance with the other
giants that are dealing in food and the beverages is been seen as the great opportunity for Nestle
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