Financial and Business Risk Executive Summary 2022

Running head: FINANCIAL ANALYSIS AND BUSINESS RISK
FINANCIAL ANALYSIS AND BUSINESS RISK
Name of the Student
Name of the University
Author’s Note:

FINANCIAL ANALYSIS AND BUSINESS RISK1
Executive Summary
The aim of the report is to calculate the required financial ratio of Nestle, one of the world’s
largest food and beverage providing Company and to conduct an overview of different financial
ratios such as Profitability, Liquidity, efficiency and coverage ratio of the respective organization
for the last two the financial year 2017 & 2018. The study also discusses the importance and
drawbacks of the selected ratios. Moreover, the report focuses on a comprehensive analysis of
the brand through the SWOT approach and Porter’s five forces approach. In addition, the report
covers the area related to the given study specifying the different types of business risks and how
it can be identified including the methods to mitigate those risks.

FINANCIAL ANALYSIS AND BUSINESS RISK2
Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................5
Answer 1(a).................................................................................................................................5
Profitability ratio......................................................................................................................5
Liquidity ratio..........................................................................................................................7
Activity ratio............................................................................................................................8
Coverage ratio........................................................................................................................10
Importance of selected ratios.................................................................................................11
Barriers of selected ratios......................................................................................................13
Answer 1(b)...............................................................................................................................14
SWOT Analysis of Nestle.....................................................................................................14
Porter’s Five Forces Analysis................................................................................................17
Answer 2(a)...............................................................................................................................18
Techniques used in identifying risks.....................................................................................18
Types of business risk............................................................................................................19
Answer 2(b)...............................................................................................................................20
Methods to moderate risks.....................................................................................................20
Conclusion.....................................................................................................................................22

FINANCIAL ANALYSIS AND BUSINESS RISK3
References......................................................................................................................................23
Bibliography..................................................................................................................................25
Appendix........................................................................................................................................27

FINANCIAL ANALYSIS AND BUSINESS RISK4
Introduction
Nestle, incorporated in 1866, is one of the world’s largest food and beverage providing
brand whose headquarter is situated in Switzerland. In this report, different financial ratios such
as Profitability, Liquidity, efficiency and coverage ratio of the above-mentioned Company is
calculated for the last two financial year 2017 & 2018 taking the amounts from the annual report
of the Company. Ratios are crucial to make an idea about how an entity is performing are what
area need to be checked regarding improving its performance level. The importance and
drawbacks of the selected ratios have also been studied in the report and how they affect the
performance of the Company at a financial level. Moreover, the report focuses on a broad
analysis of the Nestle brand through SWOT approach and Porter’s five forces approach on the
basis of information availed from financial statement and reports of the Company. In addition,
the report deals with the area related to the given case study specifying the different types of
business risks and how the German Company can identify their main risk. Lastly, concerning
those identified risk different methods used by the organization to mitigate such risks are
evaluated in the report.

FINANCIAL ANALYSIS AND BUSINESS RISK5
Discussion
Answer 1(a)
Profitability ratio
This ratio basically analyzes the profit of a company by considering how an entity is
making its profit in terms of sales, cost of operating, assets of the Company and others (Xu
2019). It presents whether the business is performing well by earning income after the deduction
of relevant costs and other expenses and ultimately ensures the growth of business.