Financial: Profit & Loss

Vertical analysis over sales

31/01/2007
8.196.265
-3.589.276
4.606.989

100
43,79
56,21

31/07/2007
4.123.894
-1.826.112
2.297.782

100
44,28
55,72

31/01/2008
9.434.670
-4.085.959
5.348.711

100
43,31
56,69

31/07/2008
4.560.906
-1.987.173
2.573.733

Operating expenses
Other income expenses
Operating expenses - EBITDA

-2.800.243
-17.060
1.789.686

34,16
0,21
21,84

-1.526.777
10.645
781.650

37,02
0,26
18,95

-3.226.369
26.501
2.148.843

34,2
0,28
22,78

-1.751.711
-113
821.909

38,41

Amortisation and depreciation

Operating income - EBIT

-433.427
1.356.259

5,29
16,55

-239.331
542.319

5,8
13,15

-496.663
1.652.180

5,26
17,51

-274.838
547.071

6,03
11,99

Financial revenue
Income from equity method
EBI

-14.035
-2.786
1.339.438

0,17
0,03
16,34

-1.884
-1.776
538.659

0,05
0,04
13,06

964
-7.508
1.645.636

0,01
0,08
17,44

-7.233
0
539.838

0,16
11,84

Income tax
Net income

-329.502
1.009.936

4,02
12,32

-143.822
394.837

3,49
9,57

-387.872
1.257.764

4,11
13,33

-129.600
410.238

2,84
8,99

8.396

0,1

2.090

0,05

7.495

0,08

4.036

0,09

1.001.540

12,22

392.747

9,52

1.250.269

13,25

406.202

8,91

Sales
Cost of sales
Gross margin

Net income attributable to the

minority shareholders
Net income attributable to the
controlling company

100
43,57
56,43

18,02

Horizontal analysis based in 31/1/2007

Sales
Cost of sales
Gross margin

31/01/2007
31/07/2007
31/01/2008
31/07/2008
8.196.265 100
4.123.894 50
9.434.670 115
4.560.906 56
-3.589.276 100 -1.826.112 51 -4.085.959 114 -1.987.173 55
4.606.989 100
2.297.782 50
5.348.711 116
2.573.733 56

Operating expenses
Other income expenses
Operating expenses - EBITDA

-2.800.243 100
-17.060 100
1.789.686 100

-1.526.777 55
10.645 62
781.650 44

-3.226.369 115
26.501 155
2.148.843 120

-1.751.711 63
-113 1
821.909 46

Amortisation and depreciation

Operating income - EBIT

-433.427 100
1.356.259 100

-239.331 55
542.319 40

-496.663 115
1.652.180 122

-274.838 63
547.071 40

Financial revenue
Income from equity method
EBI

-14.035 100
-2.786 100
1.339.438 100

-1.884 13
-1.776 64
538.659 40

964
7
-7.508 270
1.645.636 123

-7.233 52
0 0
539.838 40

Income tax
Net income

-329.502 100
1.009.936 100

-143.822 44
394.837 39

-387.872 118
1.257.764 125

-129.600 39
410.238 41

Net income attributable to the minority shareholders

Net income attributable to the controlling company

8.396 100
1.001.540 100

2.090 25
392.747 39

7.495 89
1.250.269 125

4.036 48
406.202 41

Inditex is a well balanced company, as it can be seen with the income statement
basically because their net income is always positive and quite high taking into account
that these numbers are in millions of euros.
As it can be seen in the first two tables, there is a problem in sales during the first six
months of the year, because in 2007 and 2008 the sales are approximately half of the
sales in the other six months of the year, making net income be decreased as a
consequence of it. Even this weakness, the firm increased their sales and net income
regarding the same dates each year (31/1 and 31/7). Basically we can say that firms
profits are based on sales. Income is also divided into two subgroups which the
controlling company have their income basing it on sales, whereas in the case of
minority shareholders there is a decrease in profits from the 31/1/2007 to 31/1/2008,
and also differently from the other subgroup, minority ones suffer a huge increase
between from 31/7/2007 to 31/7/2008.
Another important thing is that sales and expenses move in the same direction and
percentages are also quite similar, so we would suggest trying to decrease basically
operating expenses by trying to eliminate some aspects that are not essential in this
crisis years.

Graphics

31/1/2008

31/1/2007
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Cost of sales

Cost of sales
100%

43,79

39,87
4,02
12,32
1

Op exp.+Other income
exp.+Fin. Rev.+Income from
eq.meth.

80%

Income Tax

40%

60%

20%

Net Income

43,31

0%

39,87
4,11
13,33
1

Op exp.+Other income
exp.+Fin. Rev.+Income from
eq.meth.
Income Tax

Net Income

31/7/2008

31/7/2007
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Cost of sales
44,28

80%
Op exp.+Other income
exp.+Fin. Rev.+Income from
eq.meth.

43,17

Cost of sales
100%

Income Tax

43,57

60%
40%

Op exp.+Other income
exp.+Fin. Rev.+Income from
eq.meth.

44,6

Income Tax

2,84
8,99

Net Income

20%
3,49
9,57

Net Income

0%

There is a decrease in net income over sales, contradictory because in 7/2008 there are
more sales, but less net income in percentage over sales, because in total sales it is
bigger.
Growth & ratios
Sales growth ratio (31/1) = 1,15
Sales growth ratio (31/7) = 1,11
Growth in Net value added (31/1) = 1,18
Growth in Net value added (31/7) = 1,03
Growth in Gross profit (31/1) = 1,16
Growth in Gross profit (31/7) = 1,12
Growth in EBIT (31/1) = 1,22
Growth in EBIT (31/7) = 1,01
Growth in EBITDA (31/1) = 1,2
Growth in EBITDA (31/7) = 1,05
Growth in EBI (31/1) = 1,23
Growth in EBI (31/7) = 1
Growth in Net profit (31/1) = 1,25
Growth in Net profit (31/7) = 1,04
Growth in Net profit minority shareholders (31/1) = 0,89
Growth in Net profit minority shareholders (31/7) = 1,93
Growth in Net profit controlling company (31/1) = 1,25
Growth in Net profit controlling company (31/7) = 1,03

Customers/expenses (31/1/2007) = 0,13

Costumers/expenses (31/1/2008) = 0,14
Costumers/expenses (31/7/2008) = 0,23

Regarding these ratios, it is clear that the company has to focus more on the first 6
months of the year because these are the months where the growth of the company is
not as high as in the case of the following months.
Value added Statement
31/01/2007
8.196.265

31/07/2007
4.123.894

31/01/2008
9.434.670

31/07/2008
4.560.906

-3.589.276
2.800.243

-1.826.777
-1.526.777

-4.085.959
-3.226.369

-1.987.173
-1.751.711

Gross Value Added

- Dep. & Amort.

1.806.746
-433.427

771.005
-239.331

2.122.342
-496.663

822.022
-274.838

Net Value Added

1.373.319

531.674

1.625.679

547.184

Revenues
- Consumption of
merchandise
- Other external services

The Net value added, the difference between revenues and the production costs, gives
positive numbers in all periods, although as it is said before the numbers in 31/1 are so
much higher than the other ones, an aspect really to have to take into account by Inditex.
Distribution of Value added

Gross Value Added

Other income
expenses
Financial expenses
Taxes
Dep. & Amort.
Net Income

31/01/2007
1.806.746

31/07/2007
771.005

31/01/2008
2.122.342

31/07/2008
822.022

-17.060
-16.821
-329.502
-433.427

10.645
-3.660
-143.822
-239.331

26.501
-6.544
-387.872
-496.663

-113
-7.233
-129.600
-274.838

1.009.936

394.837

1.257.764

410.238