Nestle Profit

NestlÐ"©Ð²Ð‚™s Profitability

In observing NestlÐ"©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 NestlÐ"©.” “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.” NestlÐ"© 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 вЂ" Expenses $1.5 billion = Net income $97.0 = 9.8%

Net sales $98.5

Dec. 05 CHF Sales $91.1 billion вЂ" Expenses $425 million= Net income $90.7 = 10.0%

Net Sales $91.1

Gross margin ratio = Net sales вЂ" Cost of goods sold measures gross margin in each sales dollar. Net sales

Dec.06 CHF Net sales $98.5 billions вЂ" ($40.7) billions = 57.8 = 5.87%

98.5

Dec.05 CHF Net sales $91.1 billions вЂ" ($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 вЂ" Preferred dividends measures profitability of owner investment. Average common stockholders’ equity

Dec.06 CHF Net income $97.0 billions = 97.0 вЂ" 4.0 = 93.0 93.0 = 1.9%

(50991 + 47498)/2 = 49244.5

Dec.05 CHF Net income $90.7 billions = 90.7 вЂ" 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