MOD000983 Strategic Financial Analysis

Running head: STRATEGIC FINANCIAL ANALYSIS
Strategic Financial Analysis
Name of the Student
Name of the University
Authors Note
Course ID

1STRATEGIC FINANCIAL ANALYSIS
Table of Contents
Introduction:...............................................................................................................................2
Critical review of Traditional Methods of Financial Analysis:.................................................2
Horizontal Analysis:...................................................................................................................2
Vertical analysis:........................................................................................................................4
Traditional Ratio Analysis:........................................................................................................5
Contemporary methods of financial analysis:............................................................................6
Capital asset pricing model (CAPM):........................................................................................6
Dividend growth model:............................................................................................................7
Effective market hypothesis:......................................................................................................9
Conclusion:..............................................................................................................................10
Reference List:.........................................................................................................................12
Appendix:.................................................................................................................................14
Horizontal Analysis..................................................................................................................14
Wolseley:..................................................................................................................................14
Income Statement:....................................................................................................................14
Balance Sheet:..........................................................................................................................14
Cash Flow Statement:..............................................................................................................16
Booker......................................................................................................................................17
Income Statement:....................................................................................................................17
Balance Sheet:..........................................................................................................................17

2STRATEGIC FINANCIAL ANALYSIS
Cash Flow Statement:..............................................................................................................18
Vertical Analysis:.....................................................................................................................19
Wolseley...................................................................................................................................19
Income Statement:....................................................................................................................19
Balance Sheet:..........................................................................................................................19
Cash Flow Statement:..............................................................................................................21
Income Statement Analysis:.....................................................................................................21
Booker:.....................................................................................................................................21
Balance Sheet:..........................................................................................................................22
Cash Flow Statement:..............................................................................................................23
Ratio Analysis:.........................................................................................................................24
Wolseley:..................................................................................................................................24
Booker:.....................................................................................................................................25

3STRATEGIC FINANCIAL ANALYSIS
Introduction:
The present study is concerned with performing a critical analysis of the several
traditional and modern approaches that are involved in the determination of the fiscal and
operational situation of the organization. Numerous financial analysis elements have been
proposed and assessed by the researchers from the very long time. The most recognized
method of analysis the financial report is the vertical and horizontal method of analysis for
analysing the financial position of an organization. Another important tool of measuring the
financial analysis is the ratio analysis that helps in determining the financial position of a firm
(Deegan 2013). Ratio analysis is treated as the central part of the financial analysis since it
assesses an organizations financial aspects by investigating into the rotational and financial
activities of the firm.
The study will be performing a critical analysis of the finical positon of the Wolseley
and Booker by applying the tools of financial analysis such as the vertical, horizontal and
ratio analysis to assess the operational efficiency of the company. As an alternative to this,
other methods such as Capital asset pricing method, dividend growth model and effective
market hypothesis will be implemented (Williams 2014). The study will cover the descriptive
analysis of the models and would be addressing the shortcoming that is accompanied by the
model. Additionally, a conclusive evidence will be presented to present the tool that is
available in the analysis of the fiscal positon of the organization.
Critical review of Traditional Methods of Financial Analysis:
Horizontal Analysis:
One of the most widely used tool of performing financial analysis is the horizontal
analysis (Whitecotton, Libby and Phillips 2013). Horizontal analysis are those statements that
offer profitable and financial position of a firm for numerous period in respect of comparative

4STRATEGIC FINANCIAL ANALYSIS
form to provide an overview of the financial position of the company for more than two
accounting period. Horizontal analysis is applicable to the to the financial statements namely
income statement and statement of financial position to comparatively draw the financial
position of the organization. The data derived from the horizontal analysis provides a
comparative overview of the company with similar principles of accounting is put into the
use preparing those statements (Weil, Schipper and Francis 2013). If this is not the situation,
any kind of changes in the methods of accounting principles should be methods in the
footnotes.
As evident from the financial assessment a fluctuating trend is noticed for Wolseley.
On performing a detailed analysis, it is noticed that Wolseley has reported a declining line of
trend for the sales recorded since the company had incurred a declining trend of sales in 2012
and 2013. Notably, the organization in the subsequent years of 2015 and 2016 the sales
revenue of Wolseley gained strength as the company recorded a rising trend of sales in those
years. Conversely, Booker reported a mix trend of performance as the revenue for the year
2014 gained to 17.27% from the previously recorded figures of 1.51% which subsequently
declined in the following years of 2015 and 2016 to 1.53 and 5.02% respectively. The
revenue reported by the company represented a declining trend in the following year of 2015
though gaining marginally in the following year of 2016. Therefore, it can be stated that the
horizontal analysis is considered as the beneficial for the readers because it offers them with
the benefit of assessing and comparing the financial position of the organization for a specific
period.
Additionally, the method of horizontal analysis suffers from shortcomings as the
aggregate information in the financial statements might be changed over the specific period
(Bushman 2014). The reason behind this is that the continuous changes in the accounting
may be shifted to different accounts and result in alterations in the accounting period. The

5STRATEGIC FINANCIAL ANALYSIS
analysis suffers from criticisms as it does not take into the consideration the impacts of the
inflation or current market value of cost. Additionally, these analysis have very small bearing
on the future of the company such as technological obsolescence, future decision of
management and varying trends in market.
Vertical analysis:
There are some forms of statements that reflects that the association of numerous
items on the financial statements having similar components by reflecting each component as
the percentage of common constituents (Henderson et al. 2015). Vertical analysis is referred
as the proportional analysis of the financial statements in which every line of items of the
financial statements is logged as the percentage of the other constituents. Characteristically, it
states that every line of item in the profit and loss account is regarded as the percentage of
total sales whereas on the balance sheet every line of item is regarded as the total sales
percentage.
Taking into the consideration the vertical analysis of the companies it is found that
Booker reported a profit from its business 11.88 and 8.58 respectively for the financial year
of 2015 and 2016. It can be stated that the company reported declining trend of profit in the
subsequent year of 2016. Conversely, it is found that Wolseley reported a profit for the
financial year of 2013-14 stood 2.25% and 4.11% accordingly. Nevertheless, in the
subsequent year of 2015 and 2016 the profit from the operations of the company for the
shareholders arrived at 1.60% and 4.57% respectively.
Whereas taking into the considerations the short comings associated with the vertical
analysis there are certain limitations that have been associated in the analysis. In the words of
Pratt (2016), assesses the tool because it does not meet the significant changes in relation to
the extent of inflationary effect. Therefore, the results generated from the inputs could be

6STRATEGIC FINANCIAL ANALYSIS
considered as deceptive because the financial information is relatively dependent on the
historical cost. Another criticism surrounding the vertical analysis is that it fails to consider
the qualitative elements while assessing the performance of the firm such as the work quality,
association with the stakeholders etc. The vertical analysis is only focussed on the liquidity
aspects of the analysis and does not takes into the considerations the current ratio and debt
ratio that comprises of the entitlement of the determining the liquidity and solvency (May
2013). The usefulness of the vertical analysis breaks down when an organization reports
fluctuating figures in every quarter in each year. As a result of this the numbers become more
erratic when the amount of reported earnings fluctuates in each quarter. Therefore, vertical
analysis suffers from the limitations of fluctuating numbers.
Traditional Ratio Analysis:
Ratio analysis is regarded as the most commonly method of assessing the financial
and functional efficiency of the organization. According to Marshall (2016), it has been
stated that the ratio analysis is important in ascertaining the organizational efficiencies
regarding the functional and financial performance. The ratio analysis provides the managers
to make decision in generating profits from the assets employed. As stated in the table below;
Year 2012 2013 2014 2015 2016
Wolseley Fixed asset turnover % 4.86 4.59 4.31 5.21 4.94
Booker fixed asset turnover % 7.52 5.98 7.05 7.03 6.90
From the above stated ratio analysis it can be stated that the readers would be able to
gain an in depth analysis of the fixed asset turnover reported by both the companies namely,
Wolseley and Booker. It can be stated that the Wolseley has recorded a higher amount of
fixed assets while its rival company Booker has reported a relatively higher amount of fixed
asset turn of over during the period of five years (Weygandt, Kimmel and Kieso 2015).
Booker has reported a rising trend of fixed asset turnover even though the fixed asset

7STRATEGIC FINANCIAL ANALYSIS
turnover ratio reported by the company declined in the year 2013 to 5.98 however in the
following years of 2014 it gained strength as the company reported fixed asset turnover of
7.05.
In addition to this, ratio analysis is regarded as the efficient method of identifying the
limitations relating to the performing the operations of the companies even though the
company reported an overall better performance (Narayanaswamy 2017). The information
derived by the managers and higher level authorities assist in taking decision by assessing the
past performance.
2012 2013 2014 2015 2016
Current Ratio of Wolseley 1.69 1.51 1.49 1.38 1.46
Current Ratio of Booker 0.85 1.94 1.91 1.88 1.74
As evident from the it can be stated that Booker has reported a strong trend of current
ratio with its counterpart Wolseley reporting marginally lower current ratio (Warren, Reeve
and Duchac 2013). To critically analysis the current ratio it represents that the Booker has
reported a strong liquidity position of the organization during the past five years while
Wolseley reported tumultuous trend of ratio with inferior current ratio in 2015 and 2016 of
1.38 and 1.46 respectively. The analysis however can be ended by stating that both Wolseley
Booker should align appropriate strategies to overcome its liquidity short comings.
Concerning the limitations of the ratio analysis the information that is used in
obtained from the historical result and the same could not be carried forward in future.
Additionally, the information that is provided in the income statement is based on current
costs and some components on balance sheet is based on the historical costs as a result of this
such disparity would lead to unusual result of ratio.

8STRATEGIC FINANCIAL ANALYSIS
Contemporary methods of financial analysis:
Capital asset pricing model (CAPM):
The method of capital asset pricing model is reliant on certain assumptions having
similarity with the CAPM and MPT. There is a wide appreciation of the mode relating to its
capability of computing the risk effectively. As stated by the Ross (2013), he considers the
model of the CAPM as the instrument of the systematic risk so that the investors can
diversify their risk involved in the portfolio by removing the unsystematic risk. In addition to
this, the model has been reinforced in comparing the perspective of the CAPM by comparing
it in the market. There are certain investors that uses this model to maximize the usefulness of
the capital. The central difference between model is that firms generally prefer in taking into
the account the concept of utility.
While some have preferred taking large amount of risk which would have rising
marginal utility on capital (Kuehn, Simutin and Wang 2017). There are other investors that
prefer less risk in raising capital and would be regarded as less attractive if it is attached with
greater volume of risk. The model of CAPM is regarded as one of the better tool for investors
for making investment appraisal since it offers sufficient association with the needed rate of
return and methodical risk. The modern process of CAPM overcomes the limitations of the
other forms of traditional model by addressing the risk through performing comparison of the
performance which is not considered by the traditional method of analysis.
Investors have similar expectations relating to the risk and return. However, without
the consensus standard the estimations is associated with the mean variance that may lead to
varied forecast result where critical portfolio of each investors would not be identical from
the others. As noted that investors do not have similar expectations there would no similarity
in their notion and single effective frontline would be applied to each portfolio (Barberis et

9STRATEGIC FINANCIAL ANALYSIS
al. 2013). According to the assumptions made under the CAPM, the expected rate of return
and market return is equal to the required rate of return for the stated amount of risk. The
model of CAPM provides liner link among the required rate of and it is linked with the
market risk or the Beta which is not possible to avoid.
The CAPM is not regarded as realistic because it is based on the assumption that each
investors are averse to risk and with higher amount risk leading to higher rate of return. Even
after obtaining high amount of support, the CAPM model possess certain kind of
shortcomings. Initially the mode of CAPM is reliant on the assumptions that have introduced
the queries reliant on the certainty of the model because the existence of the perfect market is
not present from the pricing model (Zabarankin Pavlikov and Uryasev 2014). Additionally,
investors borrowing is not done at the risk free rate and it reflects that original security
market line would be vertical. Relating to competition under CAPM, investment appraisal
offers wider insight on the investment returns while the model of CAPM limits the time to
short and single period.
Dividend growth model:
The model of Dividend Growth is regarded as the widely known model in the finance
which uses the value so that it assesses the essential values of the stocks. The dividend
growth model is based on the assumption that direct functions of the cash flow is expected in
the future. In respect of the common stock, the cash flow represents the dividends which is
paid together with the value of the common stock when they are sold (Jordan 2014). The
value of the share that is generated from the future stream of dividends is regarded as the
inherent price of stocks. On assuming that the dividends are paid at the end of the year, an
investor would be able to predict the fair price of stock that can be held for three years.

10STRATEGIC FINANCIAL ANALYSIS
As stated by the Bodie, Kane and Marcus (2014), the benefit of using the dividend
growth model is that it provides consistency because dividends usually last for a long period
of time in respect to the other component such as earnings. As stated by Kung and Schmid
(2015), additionally supports the model for the wide aspects of coverage which takes into the
account the minority stakeholders. It is noteworthy to denote that dividend growth model is
the effective tool in comparison to the traditional analysis because it provides the companies
with the facilities of comparing different industries and market conditions which is primarily
restricted to ratio analysis.
The model of dividend growth provides an opportunity of creating explicit returns
along with the individual stocks and aggregate market (Belo et al. 2015). The Dividend
Growth Model effectively contributes in the appraisal of comparative attractiveness of the
individual stocks along with the assessment of the stock attractiveness in the market for the
overall allocation of the asset. Furthermore, the model of dividend growth model offers the
effectiveness in assessing the factors of risk namely changes in the interest rate with varying
amount of inflation rate lead to an impact on the stock.
Despite the achievement of the model, there are certain forms of shortcomings that is
associated with the model. As stated by Jovanovic, Andreadakis and Schinckus (2016), the
dividend growth model is dependent on the inputs because slight variation in the required rate
of return a constant growth would lead to high variation in the terminal value together with
the price of stock. The model of dividend growth faced criticism for presuming that the rate
of growth is constant which apparently makes the dividend of the company on the liner side
while the indications have suggested that dividend growth model is liner and lead to the
validity of the model to appear in question. The fails to consider the non-dividend element
namely, loyalty for brand, customer retention and ownership of intangible asset that increases
the company’s value. It assumes that the price of stock is hypersensitive to the dividend

11STRATEGIC FINANCIAL ANALYSIS
growth rate and the rate of growth would not go beyond the cost of equity which usually does
not happens.
Effective market hypothesis:
The theory of effective market hypothesis is considered as the constituents where the
stock prices evidently reflects the info that can be obtained concerning the organizational
value with no other method of deriving additional quantity of profit (Hildenbrand 2014). The
tool of effective market hypothesis is related with the principles and present issues in finance
by looking into the reason regarding the variation in the price and process involved in the
price variation of security market. For an investor the effective market hypothesis consists of
important implications with the managers involved in the traditional method of analysis.
Numerous investors have attempted to identify the securities that is undervalued and
they are expected to raise the value of the stock in the future and particularly those which
might increase more than others have anticipated. Numerous investors together with the
investment management have considered choosing securities that can outclass in the stock
market. They can use numerous forms of valuation and techniques of forecasting to help the
investors in taking investment decision.
Arguably, there are hardly any theory of economics and theories of finance that have
generated more ardent conversation concerning its challenges and proponent. According to
the words of Kelly, Pástor and Veronesi (2016), there are no such theories of economics that
provides a solid empirical evidences of supporting the effective market hypothesis. It must be
noted that the effective market hypothesis provides suggestion that making profit through
price movements is burdensome and improbable prospect. The main component of price
change is the inflow of new indications. A market is regarded as effective given that the price
adjusts speedily and not becoming bias to the new evidences. As a consequence of this,

12STRATEGIC FINANCIAL ANALYSIS
current value of securities provides all the relevant information that is available at any time
period. There is no reason to believe that the price is very high or low. The value of stock
adjusts prior to an investor has the time to adjust the trade and profit arising from the new
source of information.
The major motive of the effective market hypothesis is promoting high amount of
competition among the investors to make profit from new source of information (Mele 2015).
The ability of recognizing the stock that are under-priced is necessary since it provides the
investors of purchasing some stock at lower value and selling the same stock to others at
higher value. In natural terms the are large number of investors that compete against each
other in order to take the advantage of over and undervalue stocks with the probability of
recognizing the exploitation such as miss-priced stocks turn out to be small. Under the
effective market hypothesis any form of time price of stocks offers information that is
accessible to the investors. There is no means of deceiving investors since investments under
the efficient market hypothesis is priced fairly and investors would get just what they would
pay for.
Conclusion:
From the above stated literature review a conclusive evidence can be presented that
arguably puts forward that the traditional instrument of financial analysis namely vertical,
horizontal and ratio analysis have some kinds of short comings that makes such analysis
inappropriate for use. Additionally, the model of market hypothesis has strongly responded to
the criticism as provides the investors with information relating to the fair price of the stock.
Additionally, the model offers investors with the possibility of identifying the stock at higher
market value.

13STRATEGIC FINANCIAL ANALYSIS
An important consideration in this regard can be bought forward by stating that the
systematic risk has been ignored under the other method of analysis however under the
efficient market hypothesis the under-priced stocks can be identified and offers the investors
with the opportunity of purchasing stock at lower price. The traditional method of analysis
such as vertical, horizontal and ratio analysis suffers from the shortcomings however under
the hypothesis it provides the investors with the main component of price change involved in
the inflow of new indications.

14STRATEGIC FINANCIAL ANALYSIS
Reference List:
Barberis, N., Greenwood, R., Jin, L. and Shleifer, A., 2013. X-CAPM: An extrapolative
capital asset pricing model (No. w19189). National Bureau of Economic Research.
Belo, F., COLLIN‐DUFRESNE, P.I.E.R.R.E. and Goldstein, R.S., 2015. Dividend dynamics
and the term structure of dividend strips. The Journal of Finance, 70(3), pp.1115-1160.
Bodie, Z., Kane, A. and Marcus, A.J., 2014. Investments, 10e. McGraw-Hill Education.
Bushman, R.M., 2014. Thoughts on financial accounting and the banking industry. Journal
of Accounting and Economics, 58(2), pp.384-395.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Hildenbrand, W., 2014. Market demand: Theory and empirical evidence. Princeton
University Press.
Jordan, B., 2014. Fundamentals of investments. McGraw-Hill Higher Education.
Jovanovic, F., Andreadakis, S. and Schinckus, C., 2016. Efficient market hypothesis and
fraud on the market theory a new perspective for class actions. Research in International
Business and Finance, 38, pp.177-190.
Kelly, B., Pástor, Ľ. and Veronesi, P., 2016. The price of political uncertainty: Theory and
evidence from the option market. The Journal of Finance, 71(5), pp.2417-2480.
KUEHN, L.A., Simutin, M. and Wang, J.J., 2017. A labor capital asset pricing model. The
Journal of Finance.

15STRATEGIC FINANCIAL ANALYSIS
Kung, H. and Schmid, L., 2015. Innovation, growth, and asset prices.
Marshall, D., 2016. Accounting: What the numbers mean. McGraw-Hill Higher Education.
May, G.O., 2013. Financial accounting. Read Books Ltd.
Mele, M., 2015. On the Inefficient Markets Hypothesis: Arbitrage on the Forex
Market. IJE, 9(2), pp.111-122.
Narayanaswamy, R., 2017. Financial accounting: a managerial perspective. PHI Learning
Pvt. Ltd..
Pratt, J., 2016. Financial accounting in an economic context. John Wiley & Sons.
Ross, S.A., 2013. The arbitrage theory of capital asset pricing. In HANDBOOK OF THE
FUNDAMENTALS OF FINANCIAL DECISION MAKING: Part I (pp. 11-30).
Warren, C.S., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting.
Cengage Learning.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial & Managerial Accounting.
John Wiley & Sons.
Whitecotton, S., Libby, R. and Phillips, F., 2013. Managerial accounting. McGraw-Hill
Higher Education.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.
Zabarankin, M., Pavlikov, K. and Uryasev, S., 2014. Capital asset pricing model (CAPM)
with drawdown measure. European Journal of Operational Research, 234(2), pp.508-517.

16STRATEGIC FINANCIAL ANALYSIS
Appendix:
Horizontal Analysis
Wolseley:
Income Statement:
Balance Sheet:

17STRATEGIC FINANCIAL ANALYSIS

18STRATEGIC FINANCIAL ANALYSIS
Cash Flow Statement:
Booker
Income Statement:
Booker 201
2
2013 2014 2015 2016
Revenue 100
%
1.51% 17.27
%
1.53% 5.02%
Cost of revenue 100
%
1.29% 16.77
%
1.10% 4.71%
Gross profit 100
%
7.20% 29.36
%
10.67
%
11.13
%
Operating expenses
Administrative expenses 100
%
9.14% 27.75
%
6.67% 14.68
%
Operating profit 100
%
5.92% 30.45
%
13.33
%
8.91%
Finance income (expense) 100
%
-
100.00
%
#DIV/
0!
#DIV/
0!
20.00
%
Income before interest and income taxes 100
%
-1.04% 30.45
%
13.73
%
8.95%

19STRATEGIC FINANCIAL ANALYSIS
Finance costs 100
%
-
45.10%
-
39.29
%
17.65
%
30.00
%
Profit before tax 100
%
1.43% 32.57
%
13.68
%
8.65%
Tax 100
%
1.26% 4.97% 24.85
%
9.00%
Profit for the period attributable to the owners of
the Group
1.47% 38.42
%
11.88
%
8.58%
Balance Sheet:
Booker 201
2 2013 2014 2015 2016
Balance Sheet
Assets
Non-current assets
Property, plant and equipment
100
% 0.00%
184.42
% 1.27%
10.96
%
Intangible assets
100
% -0.05% 0.41% 0.25% 6.12%
Investment in joint venture
100
% 20.00% 83.33%
27.27
% 7.14%
other investments
100
% 0.00%
-
100.00
% 0.00% 0.00%
Deferred tax asset
100
% 1.50% 0.00%
39.80
% -9.96%
Total non-current assets
100
% 27.74% -0.51% 1.81% 6.93%
current assets
Inventories
100
% -0.52% 22.65% 0.15% 7.92%
Trade receivables
100
% 15.97% 3.79%
23.38
%
63.44
%
Other receivables
100
% 21.84% 0.00% 0.00% 0.00%
Cash and cash equivalents
100
% 21.57% 93.78% -1.74%
-
13.33
%
Total current assets
100
% 6.57% 0.00% 0.00% 0.00%
Total assets
100
% 18.39% 0.00% 0.00% 0.00%
Liabilities and equity
Liabilities
Current liabilities
Interest bearing loans and borrowings 100
%
-
100.00
0.00% 0.00% 0.00%

20STRATEGIC FINANCIAL ANALYSIS
%
Trade payables
100
% 1.83% 0.00% 0.00% 0.00%
Other payables
100
% 13.62% 54.11%
-
10.44
%
29.78
%
Current tax
100
% 39.47%
-
25.47%
25.95
% 6.53%
Total current liabilities
100
% 4.23% 18.57% 0.65%
15.38
%
Non-current liabilities
Other payables
100
% -0.71% -1.79% -2.18% -3.35%
Retirement benefit liabilities
100
%
-
64.21%
-
47.06%
447.22
%
50.25
%
Provisions
100
%
-
14.33% -9.25% -0.39%
60.63
%
Total non-current liabilities
100
%
-
21.38%
-
10.02%
27.21
%
33.89
%
Total liabilities
100
% 0.62% 15.42% 2.93%
17.35
%
Stockholders' equity
Share capital
100
% 10.19% 0.58% 1.15% 0.57%
Share premium
100
%
-
28.92% 4.30%
13.19
% 6.80%
Merger reserve
100
% 0.00% 0.00% 0.00% 0.00%
Capital redemption reserve
100
% 0.00% 0.00% 0.00%
101.64
%
Other reserves
100
% 0.00% 0.00%
-
44.59
%
-
81.53
%
Share option reserve
100
% 73.68% 28.79%
31.76
%
10.71
%
Retained earnings
100
%
104.25
% 67.32% -4.46% -9.26%
Total equity attributable to the owners of the
Company
100
% 45.67% 10.87% 0.25% -1.32%
Total liabilities and stockholders' equity
100
% 18.39% 13.21% 1.66% 8.60%
Cash Flow Statement:
Consolidated cash flow statement
Booker
Particulars 2012 2013 2014 2015 2016
Cash generated from operating activities
100
% 1.54% 47.26% 6.66% 30.09%
Net cash outflow from investing activities 100 42.45 - 177.27 188.93

21STRATEGIC FINANCIAL ANALYSIS
% % 74.79% % %
Net cash outflow from financing activities
100
%
-
12.91
% 21.29%
150.67
% 10.11%
Net increase/(decrease) in cash and cash
equivalents
100
%
-
20.81
%
428.47
%
-
103.59
%
653.85
%
Cash and cash equivalents at the start of the
period
100
%
37.45
% 21.57% 93.78% -1.74%
Cash and cash equivalents at the end of the period
100
%
21.57
% 93.78% -1.74%
-
13.33%
Vertical Analysis:
Wolseley
Income Statement:

22STRATEGIC FINANCIAL ANALYSIS
Balance Sheet:

23STRATEGIC FINANCIAL ANALYSIS
Cash Flow Statement:
Income Statement Analysis:
Booker:
2012 2013 2014 2015 2016
Revenue
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
Cost of revenue
96.22
%
96.01
%
95.60
%
95.20
%
94.92
%
Gross profit 3.78% 3.99% 4.40% 4.80% 5.08%
Operating expenses 0.00% 0.00% 0.00% 0.00% 0.00%
Administrative expenses 1.50% 1.62% 1.76% 1.85% 2.02%
Operating profit 2.28% 2.38% 2.64% 2.95% 3.06%
Finance income (expense) 0.16% 0.00% 0.00% 0.01% 0.01%
Income before interest and income taxes 2.44% 2.38% 2.64% 2.96% 3.07%
Finance costs 0.13% 0.07% 0.04% 0.04% 0.05%
Profit before tax 2.31% 2.31% 2.61% 2.92% 3.02%
Tax 0.40% 0.40% 0.36% 0.44% 0.46%
Profit for the period attributable to the owners
of the Group 1.90% 1.90% 2.25% 2.69% 2.56%

24STRATEGIC FINANCIAL ANALYSIS
Balance Sheet:
Balance Sheet Booker 2012 2013 2014 2015 2016
Assets
Non-current assets
Property, plant and equipment 7.68% 6.49%
16.29
%
16.23
%
16.58
%
Intangible assets
46.67
%
39.41
%
34.95
%
34.47
%
33.68
%
Investment in joint venture 0.05% 0.05% 0.09% 0.11% 0.11%
other investments 0.00%
13.07
% 0.00% 0.00% 0.00%
Deferred tax asset 1.42% 1.22% 1.60% 2.20% 1.83%
Total non-current assets
55.82
%
60.23
%
52.93
%
53.01
%
52.20
%
current assets 0.00% 0.00% 0.00% 0.00% 0.00%
Inventories
28.67
%
24.09
%
26.10
%
25.71
%
25.55
%
Trade receivables 5.35% 5.24% 4.80% 5.83% 8.78%
Other receivables 3.37% 3.47% 4.25% 3.93% 4.28%
Cash and cash equivalents 6.78% 6.96%
11.92
%
11.52
% 9.19%
Total current assets
44.18
%
39.77
%
47.07
%
46.99
%
47.80
%
Total assets
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
Liabilities and equity 0.00% 0.00% 0.00% 0.00% 0.00%
Liabilities 0.00% 0.00% 0.00% 0.00% 0.00%
Current liabilities 0.00% 0.00% 0.00% 0.00% 0.00%
Interest bearing loans and borrowings 0.01% 0.00% 0.00% 0.00% 0.00%
Trade payables
44.89
%
38.61
%
39.53
%
39.61
%
41.37
%
Other payables 5.49% 5.27% 7.17% 6.32% 7.55%
Current tax 1.62% 1.91% 1.26% 1.56% 1.53%
Total current liabilities
52.01
%
45.79
%
47.96
%
47.48
%
50.45
%
Non-current liabilities 0.00% 0.00% 0.00% 0.00% 0.00%
Other payables 3.01% 2.53% 2.19% 2.11% 1.88%
Retirement benefit liabilities 2.03% 0.61% 0.29% 1.54% 2.14%
Provisions 3.50% 2.53% 2.03% 1.99% 2.94%
Total non-current liabilities 8.54% 5.67% 4.51% 5.64% 6.96%
Total liabilities
60.56
%
51.47
%
52.47
%
53.13
%
57.41
%
Stockholders' equity 0.00% 0.00% 0.00% 0.00% 0.00%
Share capital 1.68% 1.56% 1.39% 1.38% 1.28%

25STRATEGIC FINANCIAL ANALYSIS
Share premium 5.24% 3.15% 2.90% 3.23% 3.18%
Merger reserve
27.85
%
23.52
%
20.78
%
20.44
%
18.82
%
Capital redemption reserve 0.00% 0.00% 0.00% 4.77% 8.86%
Other reserves 0.00%
12.34
%
10.90
% 5.94% 1.01%
Share option reserve 0.41% 0.60% 0.68% 0.88% 0.89%
Retained earnings 4.27% 7.37%
10.89
%
10.24
% 8.55%
Total equity attributable to the owners of the
Company
39.44
%
48.53
%
47.53
%
46.87
%
42.59
%
Total liabilities and stockholders' equity
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
Cash Flow Statement:
Consolidated cash flow statement
Booker
2012 2013 2014 2015 2016
Cash generated from operating activities
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
Net cash outflow from investing activities 29.03% 40.72% 6.97% 18.13% 40.26%
Net cash outflow from financing activities 50.47% 43.29% 35.66% 92.27% 70.93%
Net increase/(decrease) in cash and cash
equivalents 20.50% 15.99% 57.37% 14.56% 11.19%
Cash and cash equivalents at the start of the
period 54.74% 74.10% 61.17%
109.21
% 83.95%
Exchange differences and other adjustments 75.24% 90.08%
118.54
% 94.65% 72.76%
Ratio Analysis:
Wolseley:
Wolseley
2012 2013 2014 2015 2016
Liquidity Ratios Current Ratio 1.69 1.51 1.49 1.38 1.46
Current Assets 4,334 4,121 3,870 4,722 5,175
Current Liabilities 2566 2729 2600 3431 3537
Quick Ratio 1.05 0.87 0.85 0.88 0.89

26STRATEGIC FINANCIAL ANALYSIS
Cash and Cash
Equivalents 813 339 240 1,105 940
Add: Trade Receivables 1,617 1,743 1,636 1,646 1,894
Other receivables 258 291 329 269 313
Current Liabilities 2566 2729 2600 3431 3537
Cash Ratio 0.32 0.12 0.09 0.32 0.27
Cash and Cash
Equivalents 813 339 240 1,105 940
Current Liabilities 2566 2729 2600 3431 3537
Asset Efficiency
Ratio
Accounts Receivable
Turnover 7.16 6.47 6.24 6.96 6.54
Turnover 13,421 13,154 12,271 13,332 14,430
Accounts Receivable 1,875 2,034 1,965 1,915 2,207
Fixed Asset Turnover 4.86 4.59 4.31 5.21 4.94
Fixed Asset 2763 2868 2849 2559 2920
Turnover 13,421 13,154 12,271 13,332 14,430
Total Asset Turnover
Ratio 1.88 1.87 1.82 1.78 1.77
Total Asset 7,140 7042 6748 7482 8151
Sales 13,421 13,154 12,271 13,332 14,430
Profitability
Ratios
Gross Margin Ratio 0.28 0.28 0.28 0.28 0.28
Gross profit 3697 3654 3408 3728 4079
Revenue 13,421 13,154 12,271 13,332 14,430
Net Margin Ratio 0.004 0.02 0.04 0.02 0.05
Net Profit 57 296 504 213 650

27STRATEGIC FINANCIAL ANALYSIS
Sales 13,421 13,154 12,271 13,332 14,430
Return on Debt 0.08 0.42 0.64 0.23 0.55
Net Profit 57 296 504 213 650
Debt 681 705 791 913 1,175
Return on Equity
0.01819
3
0.09695
4
0.17463
6
0.08192
3
0.22390
6
Net Profit 57 296 504 213 650
Equity 3133 3053 2886 2600 2903
Booker:
Booker
2012 2013 2014 2015 2016
Liquidity
Ratios Current Ratio 0.85 1.94 1.91 1.88 1.74
Current Assets 414 1,109 1,255 1,276 1,386
Current Liabilities 487.1 570.6 658.6 677.9 795.5
Quick Ratio 0.85 0.77 0.90 0.88 0.83
Cash and Cash Equivalents 63.5 77.2 149.6 147.0 127.4
Add: Trade Receivables and
Other receivables 81.7 96.6 113.6 124.5 180.9
Less: Inventories 268.5 267.1 327.6 328.1 354.1
Current Liabilities 487.1 570.6 658.6 677.9 795.5
Cash Ratio 0.13 0.14 0.23 0.22 0.16
Cash and Cash Equivalents 63.5 77.2 149.6 147.0 127.4
Current Liabilities 487.1 570.6 658.6 677.9 795.5
Asset
Efficiency
Ratio
Accounts Receivable Turnover 48.14 41.33 41.21 38.18 27.59
Turnover

28STRATEGIC FINANCIAL ANALYSIS
3,932.
8
3,992.
2
4,681.
6
4,753.
0
4,991.
5
Accounts Receivable 81.7 96.6 113.6 124.5 180.9
Fixed Asset Turnover 7.52 5.98 7.05 7.03 6.90
Fixed Asset 522.8 667.8 664.4 676.4 723.3
Turnover
3,932.
8
3,992.
2
4,681.
6
4,753.
0
4,991.
5
Total Asset Turnover Ratio 4.20 3.60 3.73 3.72 3.60
Total Asset 936.5 1108.7 1255.2 1276 1385.7
Sales
3,932.
8
3,992.
2
4,681.
6
4,753.
0
4,991.
5
Profitability
Ratios
Gross Margin Ratio 0.04 0.04 0.04 0.05 0.05
Gross profit 148.7 159.4 206.2 228.2 253.6
Revenue
3,932.
8
3,992.
2
4,681.
6
4,753.
0
4,991.
5
Net Margin Ratio 0.019 0.02 0.02 0.02 0.03
Net Profit 74.9 76 105.2 117.7 127.8
Sales 3,933 3,992 4,682 4,753 4,992
Return on Debt 2.66 2.71 3.83 4.38 4.92
Net Profit 74.9 76 105.2 117.7 127.8
Debt 28.2 28.0 27.5 26.9 26.0
Return on Equity
0.2027
61
0.1412
38
0.1763
33
0.1967
9
0.2165
37
Net Profit 74.9 76 105.2 117.7 127.8
Equity 369.4 538.1 596.6 598.1 590.2