Danone Financial Statement Analysis

2642 words 11 pages
DANONE Case
- Financial analysis of Danone group
PENG Bo (e113110) GE Chuxiao(e113051) JIANG Yihong(e113066)

Fiancial Statement Analysis – Danone Case

Agenda
• Introduction
• Capital structure

• Profitability
• Return • Liquidity • Solvency • Conclusions & Recommendations
Fiancial Statement Analysis – Danone Case

Introduction of DANONE Group

History

Initiate in 1966, DANONE evolved from the original glass manufacturer to the international leader in fresh diary products.

Mission

“bringing health through food to as many people as possible”

Divisions

the Fresh Dairy Products Division the Waters Division the Baby Nutrition Division the Medical Nutrition Division

Global Approach

The group now represent in all regions in world.
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This is a good sign which indicates a constant and stable ability of the group to efficiently convert the investors' stake to profit.
Fiancial Statement Analysis – Danone Case

Return analysis

Positive leverage effect
Once a firm has debt, the final return for the shareholders consists in two parts: the return on operation and the leverage effect. In DANONE's case, we observe a positive leverage effect which is good to the firm. In order to further investigate, we break down the leverage effect as a product of two parts: D/E ratio and the differential between ROCE and cost of debt. With a decreasing and moderate D/E level and from the chart above, we can see that the positive leverage effect mainly came from the high differential between operation return and the cost of debt. Such situation was largely attributed to the low effective interest rate realized by the group. This trend is good, it is a right way to develop a healthy leverage effect. The group should keep its D/E level to maintain its low cost of debt to achieve a good leverage effect from the differential aspect.
Fiancial Statement Analysis – Danone Case

Return analysis

Difference

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