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The Body Shop Plc 2001:

Historical Financial Statements ( in GBP millions)

Fiscal Year Ended February 28

1999 2000 2001


(GBP) (GBP) (GBP)
Income Statement

Turnover 303.7 330.1 374.1


Cost of sales 127.7 130.9 149.0
Gross profit 176.0 199.2 225.1

Operating expenses:
excluding exceptional costs 151.4 166.2 195.7
exceptional costs1 4.5 0.0 11.2
Restructuring costs2 16.6 2.7 1.0
Net interest expense 0.1 1.5 4.4
Profit before tax 3.4 28.8 12.8
Tax expense 8.0 10.4 3.5
Profit (loss) after tax (4.6) 18.4 9.3

Ordinary dividends 10.9 10.9 10.9


Profit (loss) retained (15.5) 7.5 (1.6)

Fiscal Year Ended February 28

1999 2000 2001


Balance Sheet (GBP) (GBP) (GBP)

Assets
Cash 34.0 19.2 13.7
Accounts receivable 27.8 30.3 30.3
Inventories 38.6 44.7 51.3
Other current assets 12.5 15.6 17.5
Net fixed assets 87.8 104.7 110.6
Other assets3 0.0 6.0 6.7
Total assets 200.7 220.5 230.1

Liabilities and equity


Accounts payable 13.0 20.5 10.7
Taxes payable 11.3 11.7 7.1
Accruals 10.8 15.6 11.5
Overdrafts 0.0 0.3 0.7
Other current liabilities 21.6 13.3 16.9
Long-term liabilities 28.0 36.7 61.2
Other liabilities4 1.7 1.0 0.4
Shareholders' equity 114.3 121.4 121.6
Total liabilities and equity 200.7 220.5 230.1
Q1 Compute the following ratios from 1999 through 2001

Raito 1999 2000 2001

Current Ratio = 1.99 1.79 2.41


Total Asset Turnover = 1.5 1.5 1.6
Day's Sales in Inventory = 46.4 49.4 50.1
Cash Conversion Cycle = 42.6 25.8 53.4
Total Long Term Debt/Assets = 14.8% 17.1% 26.8%
Total Debt / Total Assets = 43.0% 44.9% 47.2%
Equity Multiplier = 1.76 1.82 1.89 1600.00
1400.00
TIE = 1514 110.8 44.4772727273 1200.00
1000.00
Net Profit Margin = -2% 6% 2% 800.00
600.00
ROE = -4.7% 14.3% 7.8% 400.00
200.00
BEP = 75.4% 75.4% 85.0% 0.00
Inventory Turnover 7.87 7.38 7.29
-200.00 = r = ry =
to o ve o cl
R a
rn e nt Cy
n t Tu v n
rre s et In io
u i n e rs D
C s s v
Q2 Perform the Trend analysis for the Common Sized Income Statement and Balan ta l A ale
S C on
Te rm
To
y's sh g l
a Ca Lo n o ta
D l T
ta
Q3 Perform a percentage change analysis To
Col u

Q1 Compute the following ratios from 1999 through 2001:


For this question, you need to compute the 12 ratios and analyze the
financial health of the firm based on the results. By analyzing the
results, optionally, you may need to perform trend or percentage
analysis on the ratios that are worth to be addressed. Using graphic
tools will help you to capture some patterns that are not obvious
otherwise and facilitate a stronger analysis.

Q2 Perform the Trend analysis for the Common Sized Income


Statement and Balance Sheet
For this question, you need to first perform the common sized
analysis for both balance sheet and income statement. Then, based on
the common-sized balance sheet and income statement, you perform
a trend analysis. Analyze the financial health of the firm by
interpreting the ratios that need to be highlighted.

Q3 Perform a percentage change analysis


For this question, you need to perform a percentage analysis based on
1999 2000 2001
Days Sales Outstanding 33.41126 33.50348 29.56295
Days Payable Outstanding 37.1574 57.16196 26.21141

Chart Title
1600.00
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
-200.00 = r = ry = = =
s
= r = IE = n = = = er
to ve o cl
e et
s
et l ie T g i OE B EP n ov
a o t y s s r R r
R rn en C s s tp a u
nt Tu I nv on b t/A a l A ul t M ryT
rr e t s i t M f o
Cu se in er D e / To i ty Pr
o nt
l As
ome Statement and Balance Sheet
l es o nv rm bt u e t I nve
ta Sa C Te e Eq N
To
y 's a sh n g
a lD
C o t
Da lL To
o ta
T
Col umn H Col umn I Col umn J

The TIE has decreased largely because of a sharp increase in the net i .
Common Sized Financial Statement
1999 2000 2001
(GBP) (GBP) (GBP)
Income Statement Income Statement

Turnover 303.7 330.1 374.1 Turnover


Cost of sales 127.7 130.9 149.0 Cost of sales
Gross profit 176.0 199.2 225.1 Gross profit

Operating expen Operating expenses:


excluding exce 151.4 166.2 195.7 excluding exceptional costs
exceptional costs1 4.5 0.0 11.2 exceptional costs1
Restructuring costs2 16.6 2.7 1.0 Restructuring costs2
Net interest exp 0.1 1.5 4.4 Net interest expense
Profit before ta 3.4 28.8 12.8 Profit before tax
Tax expense 8.0 10.4 3.5 Tax expense
Profit (loss) afte (4.6) 18.4 9.3 Profit (loss) after tax

Ordinary divide 10.9 10.9 10.9 Ordinary dividends


Profit (loss) ret (15.5) 7.5 (1.6) Profit (loss) retained

1999 2000 2001


Balance Sheet (GBP) (GBP) (GBP) Balance Sheet

Assets Assets
Cash 34.0 19.2 13.7 Cash
Accounts receiv 27.8 30.3 30.3 Accounts receivable
Inventories 38.6 44.7 51.3 Inventories
Other current as 12.5 15.6 17.5 Other current assets
Net fixed assets 87.8 104.7 110.6 Net fixed assets
Other assets3 0.0 6.0 6.7 Other assets3
Total assets 200.7 220.5 230.1 Total assets

Liabilities and equity Liabilities and equity


Accounts payab 13.0 20.5 10.7 Accounts payable
Taxes payable 11.3 11.7 7.1 Taxes payable
Accruals 10.8 15.6 11.5 Accruals
Overdrafts 0.0 0.3 0.7 Overdrafts
Other current lia 21.6 13.3 16.9 Other current liabilities
Long-term liabil 28.0 36.7 61.2 Long-term liabilities
Other liabilities4 1.7 1.0 0.4 Other liabilities4
Shareholders' eq 114.3 121.4 121.6 Shareholders' equity
Total liabilities 200.7 220.5 230.1 Total liabilities and equity

3.0%

2.0%

1.0%

0.0%
1 2 3

-1.0%

-2.0%

-3.0%

-4.0%

-5.0%

-6.0%

PROFITS
ncial Statement
1999 2000 2001
(GBP) (GBP) (GBP)
Income Statement Common S
120.0%
100.0% 100.0% 100.0%
100.0%
42.0% 40.0% 40.0% 80.0%
58.0% 60.0% 60.0% 60.0%
40.0%
20.0%
50.0% 50.0% 52.0% 0.0%
t r t : 1 e se
1.0% 0.0% 3.0% -20.0% e n ove ro f s e s sts ns
e m rn p n co e en
tat Tu s s p e
a l e xp exp
5.0% 1.0% 0.0% S o x
e Gr g e to n re st Tax ss
m t n p te ( lo
0.0% 0.0% 1.0% co a ce n t
In e r ex et i of
1.0% 9.0% 3.0% Op N Pr
1999 (GBP) 2000 (GBP) 2001 (GB
3.0% 3.0% 1.0%
-2.0% 6.0% 2.0%

4.0% 3.0% 3.0% Balance Sheet Common Siz


-5.0% 2.0% 0.0%
0.8
0.7
0.6
0.5
0.4
0.3
1999 2000 2001 0.2
0.1
(GBP) (GBP) (GBP) 0
t s e s 3 le ls e
e e et b l et ts a b cru a i l i t
Sh As s i va a s s s s e y
e e t a p a Ac i a b b
a nc re c re n e r ts l ia
a l
n ts cu r Oth o u n
e nt e r l e
B u r c rr h t
11.0% 6.0% 4.0% co h e Ac cu Ot b i l i
Ac Ot r
9.0% 9.0% 8.0% he lia
Ot tal
13.0% 14.0% 14.0% To
4.0% 5.0% 5.0% 1999 2000 2001
29.0% 32.0% 30.0%
0.0% 2.0% 2.0%
66.0% 67.0% 62.0% Cash
12.0%

10.0%
4.0% 6.0% 3.0%
4.0% 4.0% 2.0% 8.0%
4.0% 5.0% 3.0%
6.0%
0.0% 0.0% 0.0%
7.0% 4.0% 5.0% 4.0%

2.0%

0.0%
1 2
8.0%

6.0%

4.0%

9.0% 11.0% 16.0% 2.0%


1.0% 0.0% 0.0%
0.0%
38.0% 37.0% 33.0% 1 2

66.0% 67.0% 62.0%


There is a signifcant drop in cash which c

Descriptions
Profts for the company has increased signifcantly from 1999 to 2000 but has dropped down back to zero.
This could be because of the increase in interest expense and other exceptonal costs.
me Statement Common Sized

t r t : 1 e e
e n ove ro f s e s sts ns ns ed
rn s p en co pe pe a in
Tu ros p l ex x ex et
ex o n a s t a s )r
G g e T s
tn pt te r lo
e ra xce t i n ft(
Op e N e Pr
o

999 (GBP) 2000 (GBP) 2001 (GBP)

alance Sheet Common Sized

t s e s 3 e s s 4 ty
e e s et a b l s et ets a b l u a l i te te s u i
s v
A ei t a as s s y cr i l i q
c n r p a Ac i a b b i l d e
e s a n
r re e
ts u r Oth nt t l li a
un e r c cou rre n h e r te s
h Ac cu Ot b i l i
Ot h er lia
Ot tal
To

1999 2000 2001

Cash

1 2 3
1 2 3

signifcant drop in cash which could be caused by the increase in ventory size and net fxed assets over years.

ack to zero.
BASE YEAR

1999 2000 2001 2000 2001


(GBP) (GBP) (GBP) % Change%Change
Income Statement

Turnover 303.7 330.1 374.1 109% 123% A signifcant change in the turnover rato indicates
Cost of sa 127.7 130.9 149.0 103% 117% A growing COGS can also be related with the growt
Gross prof 176.0 199.2 225.1 113% 128% A growth in sales indicates better gross proft over

Operating
excluding 151.4 166.2 195.7 110% 129%
exceptional costs
4.51 0.0 11.2 0% 249%
Restructuring costs
16.6 2 2.7 1.0 16% 6%
Net intere 0.1 1.5 4.4 1500% 4400% A high increase in interest expense could mean the
Profit bef 3.4 28.8 12.8 847% 376% An increase in interest expense could cause the pro
Tax expen 8.0 10.4 3.5 130% 44%
Profit (los (4.6) 18.4 9.3 -400% -202%

Ordinary 10.9 10.9 10.9 100% 100%


Profit (los (15.5) 7.5 (1.6) -48% 10%

1999 2000 2001


Balance S (GBP) (GBP) (GBP)

Assets
Cash 34.0 19.2 13.7 56% 40%
Accounts 27.8 30.3 30.3 109% 109%
Inventorie 38.6 44.7 51.3 116% 133% An increase in inventory could signify the company
Other curr 12.5 15.6 17.5 125% 140%
Net fixed 87.8 104.7 110.6 119% 126%
Other assets 0.0
3
6.0 6.7 100% 100%
Total asse 200.7 220.5 230.1 110% 115%

Liabilities and equity


Accounts 13.0 20.5 10.7 158% 82%
Taxes pay 11.3 11.7 7.1 104% 63%
Accruals 10.8 15.6 11.5 144% 106%
Overdraft 0.0 0.3 0.7
Other curre 21.6 13.3 16.9 62% 78%
Long-term 28.0 36.7 61.2 131% 219% There has been an increase in long term debt mean
Other liabilities41.7 1.0 0.4 59% 24%
Shareholde 114.3 121.4 121.6 106% 106%
Total liabi 200.7 220.5 230.1 110% 115%
in the turnover rato indicates that the frm has been efficient in managing their sales over years.
also be related with the growth in the sales.
icates better gross proft over years.

terest expense could mean the principle debt for the company has increased.
st expense could cause the profts before after interest to decrease.

tory could signify the company is pushing itself towards making more sales.

ncrease in long term debt meaning the company is looking for investment opportunites and growth.