An Analysis of Principal Methods for Company Account Evaluation

This report comprehensively examines the principal methods for analyzing company accounts, including horizontal, vertical, ratio, and DuPont analysis. It provides a detailed overview of each method, explaining their application and significance in evaluating a company's financial performance. The report also delves into the limitations of each method, such as the failure of horizontal analysis to account for policy changes and the limited scope of vertical analysis. Furthermore, it explores contemporary methods to overcome these shortcomings, including Economic Value Added (EVA), the Capital Asset Pricing Model (CAPM), and the Efficient Market Hypothesis (EMH). The report uses examples from Booker Plc and Tate & Lyle to illustrate the application of these methods and concludes with a discussion on how these methods can be used to improve financial analysis. This report is a valuable resource for understanding financial statement analysis and its practical applications.

“Principal Methods of analysing company Accounts”
Words: 3000

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Table of Contents
1 Introduction to financial statements analysis process..............................................................5
2 Critical Evaluation of Financial Analysis Methods.................................................................7
3 Contemporary Methods to overcome shortcomings in financial analysis process and method
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4 Conclusion..............................................................................................................................13
References......................................................................................................................................14
Appendices....................................................................................................................................16

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List of Tables
Table 1: Horizontal and Vertical Analysis- Tate & Lyle..............................................................24
Table 2: Horizontal and Vertical Analysis-Booker Plc.................................................................24

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List of Figures
Figure 1: Liquidity ratios of Booker Group Plc.............................................................................16
Figure 2: Liquidity ratios of Tate & Lyle......................................................................................17
Figure 3: Leverage ratios of Booker Group Plc.............................................................................17
Figure 4: Leverage Ratios of Tate & Lyle.....................................................................................18
Figure 5: Activity Ratios of Booker Group Plc.............................................................................18
Figure 6: Activity ratios of Tate & Lyle........................................................................................19
Figure 7: Profitability ratios of Booker Group Plc........................................................................20
Figure 8: Profitability Ratios of Tate & Lyle................................................................................21
Figure 9: Market Ratio...................................................................................................................22
Figure 10: Horizontal Analysis......................................................................................................22
Figure 11: DuPont Analysis...........................................................................................................25

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1 Introduction to financial statements analysis process
The analysis of financial statements of a company is done to evaluate the performance of a
company from different perspectives. There are number of methods which are presented by
different researcher to do the analysis of the company’s accounts. However, there are four
principal methods which are horizontal analysis, vertical analysis, ratio analysis and Du Pont
analysis, used to analyse the financial statements (Deegan, 2013).
Horizontal Analysis of Financial Statements
Horizontal analysis is done by comparing the values of the financial statements which a company
has incurred over a period of time. It shows the results in a percentage value which makes it
easier to identify the growth or decline in the different sectors of a company. If any area shows
an abnormal amount of change, it can be highlighted easily so that the further investigation can
be done in that particular area to observe the reasons behind change. Therefore, it can be said
that it will be helpful in the detection of fraud also. It is performed by defining a base year and
than all the future values will be regarded as the percentage of the base year which is assumed to
be 100%. (Healy and Palepu, 2012).
It will also help a company to have complete information about the procedures which have been
followed in the company to perform different functions. Horizontal analysis broadens the view of
the users about a company’s insight as it evaluates all the financial statements at a same time for
the same period. It is a possibility that the outcomes are quite different for both the statements.
(Brochet, Jagolinzer and Riedl, 2013). The horizontal analysis can be done by using the normal
values which does not involve any percentages and can be regarded as absolute comparison. On
the other hand, percentage analysis can also be done which is preferred by many users as it
provides better understanding. (DeFusco, McLeavey, Pinto, Anson and Runkle, 2015)
Vertical Analysis of Financial Statement
Vertical analysis is also regarded as a principal method which is used to analyse the performance
of a company’s accounts. In this method, all the items will be valued in the form of percentages

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in comparison with their totals. It means that if a vertical analysis has performed for the income
statement than all the items will be calculated as the percentage value of sales as sales is the
dominant item in the income statement. Similarly, if the vertical analysis is done for the balance
sheet, assets, liabilities and equities will be identified as the percentage of their respective
sections total amounts. The total amounts are assumed to be 100% in vertical analysis.
(Horngren, Sundem, Schatzberg and Burgstahler, 2013).
It is helpful to analyse that if a certain item is showing similar share in the total amount as the
last year or not. For example if it is identified that the operating expenses are 15% in the year
2015 and they are observed to be 20% in 2016, the reasons can be find out behind this increase in
order to increase the profitability. The horizontal analysis involves two years for the comparison;
however, vertical analysis can be done for a single year. The final percentages will then be
analysed on the timeline that either the share of a single item is increasing or decreasing in the
total values (Healy and Palepu, 2012).
Ratio Analysis of Financial Statement
Ratio analysis is the most common method which is used to analyse the performance of a
company’s accounts. It is preferred by the stakeholders as it analyses the values of financial
statements from different perspectives. Liquidity, solvency, profitability, efficiency and investing
are some frequently used ratios which are calculated to analyse the performance of financial
statements (Rothaermel, 2015). The ratio analysis also identifies the performance of a company
in comparison with the industry so that it can be identified that how well a company is
performing compared to its competitors. It will create opportunity for an investor as he can invest
in the most well performed company which is present in the industry (Pratt, 2013).
If the ratios of a company are unfavourable, the reasons can be identified behind the low
performing areas. It is helpful in making strategic decisions also by highlighting the low
performing areas so that the importance can be given to them in order to improve it. (Robinson,
Henry, Pirie and Broihahn, 2015). It also identifies the profitability of a company and the impact
of its decisions in different area, mainly in the dividends so that the investors can be attracted foe
the investment in a company (Warren, Reeve and Duchac, 2013).

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DuPont Analysis of Financial Statement
The DuPont analysis is a ratio which is calculated to analyse that to what extent the return on
equity of a firm can be increased. It can be calculated by taking a product of asset turnover ratio,
profit margin and equity ratio (Weil, Schipper and Francis, 2013). The detail of all these three
components is discussed below.
1. Profit margin: It is calculated by dividing the net income by net sales. If the profit
margin increases than the return will be increased (Weygandt, Kimmel and Kieso, 2015).
2. Asset turnover ratio: It is basically an efficiency ratio which shows the ability of a firm
to efficiently utilize its assets for profit. Increase in this ratio will increase the amount of
ROE (Weygandt et al, 2015).
3. Equity ratio: It analyses that how much a company depends upon its investments. This
is also positively related to the ROE as the increase in equity ratio will give a better result
for return on equity (Weygandt et al, 2015).
2 Critical Evaluation of Financial Analysis Methods
All four processes of the analysis of financial statement have some limitations. These limitations
and methods to rectify them are discussed below.
Limitations of Horizontal Analysis
Horizontal analysis does not show the impact of policies changes in the final results. It means
that that if the policies if the company changes during the period, there will be no effect
highlighted regarding the change in the end results. This can cause a delivery of unreliable values
to the investors which can harm a company negatively because unreliability creates lack of
confidence in the stakeholders of a company (Healy and Palepu, 2012). This can also be result in
the understatement or overstatement of the financial values which is regarded as the fraud in the
accounting terms. This can be resolved by mentioning the change in the policies on a real time
basis to avoid the delivery of unreliable information to the investors of a company (Deegan,
2013).

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Limitations of Vertical Analysis
The limitation of vertical analysis is that it compares the data of one year only which results in
the limited information to the investors. The limited information will not be helpful for the
decision making purpose and if the decision is taken on the basis of this than the shareholders of
the company are likely to face loss in the future (Warren et al, 2013). It is necessary for a
company to provide all the material information to the investors so that they have a clear
understanding of the financial position of a company. Vertical analysis is more helpful for the
management of a company as it helps to take strategic decisions but it is not much helpful for the
investors (Rothaermel, 2015). This limitation can be rectified by presenting the information of
multiple years and then compare all the values over the period of time to show the trend of a
company in recent years.
Limitations of Ratio analysis
Ratio analysis is considered as the most effective method for the analysis of financial statement
as it tells s about the performance of a company in various areas. The business activities and the
operations which are carried by the business can be evaluated on a wider perspective by the use
of ratio analysis (Robinson et al, 2015). However, with all its positive points, it has also a
drawback that it ignores the effect of horizontal and vertical analysis of a company’s financial
statements. The ratio analysis identifies the percentages of different operational activities and it
is highly anticipated by the investors while decision making process but the absence of both the
analysis is its limitation (DeFusco et al, 2015). This can be solved by the addition of both the
analysis that first the ratios should be calculated and then the analysis will be done over the
period of time.
Limitations of DuPont Analysis
The technique evaluates the performance of the firm while analyzing the generated return from
employed equity capital. On the other hand the DuPont analysis also involves several limitations.
The major limitation is that it does not consider a cost of capital; moreover, the analysis of the
sub three categories is irrelevant to conclude the financial performance of the firm. The DuPont
analysis evaluates financial performance by assessing accounting information that can be

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modified as per the situation. Thus, the financial performance of the firm cannot measured
effectively (Rakicevic, Milosevic, Petrovic and Radojevic, 2016)
3 Contemporary Methods to overcome shortcomings in financial analysis process and
method
Economic Value Added
For the evaluation the performance of the business, economic value added method can be used. It
is used when the cost of the capital of a firm is lower than the profit that is computed after tax.
This is termed as effective model being used by the companies (Koopman, Wang and Wei,
2014). Economic Value Added is the estimation of the economic profits or determines the value
that has been created by the firm from the employed capital in business operations (Patel, 2015).
It also measures business performance by analyzing the difference between the profits and
opportunity cost of business capital. It analyzes business performance by analyzing the economic
profits and its comparison with the cost of capital acquired by the firm (Chetty, Friedman and
Rockoff, 2016).
CAPM model
The CAPM model is considered as the capital asset pricing model and evaluates business cost
while analyzing the cost incurred for financing business. The model compares the cost raised
from equity capital as compared to debt capital about the risk involved in the project (Dempsey,
2013). To compare the generated sales by both firms, it has been analysed that the sales of
Booker Plc are increasing; however, the stable sales position has been analysed in the case of
T&L Plc in the upcoming periods. The projected beta for the Booker Plc is 0.63 according to
Booker Plc (2016), and it is 0.31 for Tate & Lyle as analyze from the peer analysis of the
financial information (Tate & Lyle, 2016).
Efficient Market Hypothesis
The Efficient Market Hypothesis has been considered as an investment approach that declares
that it is not possible for the stock to beat the market concerning the market efficiency and
information revealing in the capital market. The concept declares the price of the stock always

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incorporate the information revealed in the market along with the influence on the trading
behaviours of the investors investing in the stock (Wojcik, Kreston and McGill, 2013, 2016). In
this study, the method of EMH can be applied while assessing the value of the assets. It has been
analysed that the market efficiency of the stock can be increased when the value of the business
assets are recorded based on the fair value despite book value of the asset.
Analysis of Booker Group Plc and Tate & Lyle
Ratio Analysis
Liquidity Ratios
The liquidity ratios define the stability of the company that how much longer it can survive if it
performs at the current pace (Pratt, 2013). The calculation of various liquidity ratios of Booker
Group Plc is shown in figure 1. The trend shows that the improving current ratio till 2015 has
declined for the current year which shows inefficiency of policies. Quick ratio is good but it has
also decreased from 1.55 to 1.48 and the cash ratio is also unsatisfactory showing a value of only
0.18. On the other hand, the liquidity ratios of Tate & Lyle in figure 2 are showing increasing
trend which depicts that the company is performing well and are continuously making decisions
that can improve liquidity position of the company.
Leverage Ratios
Leverage ratios are also known as solvency ratios and it shows that how much the company is
dependent on its debts and how much on investors (Pratt, 2013). The leverage ratios are shown in
the calculations presented in figure 3. It shows that the solvency position of the company is
critical. Increasing debt to equity ratio shows that the performance of the company is not is more
dependent on the loans as compare to its investment which is not good. Decreasing equity ratio
and increasing debt ratio also showing negativity in the performance Booker Group Plc.
Leverage ratios for the Tate & Lyle are shown in the figure 4. It can be observed that the debt to
equity ratio shows that the company is highly depends on its loans. However, as compare to the
year 2015 it has gone down considerably. It can be evident from the increasing equity ratio and
decreasing debt ratio that the company is shifting its burden on investments.

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Activity Ratios
Activity ratios show that how efficiently the company performs its day to day operations. These
ratios are also known as efficiency ratios (Weil et al, 2013). Figure 5 shows the activity ratios
calculation for the Booker Group Plc. The performance of the company is satisfactory regarding
the current year activity ratios as they are showing good values. However, it is observed that they
all have been decreased except day’s sales in inventory from the past year which shows a
decrease in efficiency. Figure 6 shows activity ratios of Tate & Lyle which indicate that the
efficiency of the company is decreasing as the ratios are falling in the values.
Profitability ratios
Profitability ratios are calculated to define the ability of the company to generate the profit.
Different ratios are calculated to define the profitability of the company (Weygandt et al, 2015).
The calculation of the profitability ratio of Booker Plc is shown in the figure 7. ROCE and ROE
are showing increased values which are good for the company while the remaining ratios are
constant which is not a positive factor because it is showing that the company has not made any
progress since past years. Profitability ratios for Tate & Lyle can be observed in the figure 8. It
can be observed from the calculations that the performance of the company is increasing
regarding the profitability as the ratios are showing increasing trends. However, the company has
to manage its operating expenses as the difference between gross profit margin and net profit
margin is quite high i.e. 33%.
Market ratio
The market ratio measures the performance of the firm illustrating the return earned by
shareholders from investing funds in the business. The earnings per share measures generated
income from the invested funds in the business (Prett, 2013). The comparison of both the
companies according to the market ratio is illustrated in the figure 9. The earnings per share of
T&L are 0.7 in 2015 and increased to 0.35 in 2016. However, the EPS of Booker Plc has
remained constant for both the years. The payout ratio of Tate & Lyle is also more favourable as
it is growing more rapidly as compare to the Booker Plc. The dividend yield measures business

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dividends that can be expressed as a percentage of the current share price (Deegan, 2013). The
dividend yield is also better for Tate & Lyle.
Horizontal analysis
The horizontal analysis measures the financial performance while comparing financial
information with the historical performance (Warren et al, 2013). In this study, the horizontal
analysis has been performed while considering 2012 as a base year for evaluating financial
information over time. From the data analysis, it is found that in the year 2016, the sales revenue
has been decreased by 19 % as compared to generated revenue in the period 2012. The decrease
in the cost of sales has been identified by 26 % and the decrease in the net income has also been
analysed in the case of T&L Plc as shown in the table 1. In the case of Booker Plc, the increasing
trend for net revenue has been analyzed i.e. sales is reported at 27% in 2016 as shown in table 2.
The derived results declare that the T&L, as well as Booker Plc both, are operating the business
by utilising equity capital as reflected from the increasing liabilities for the period.
Vertical Analysis
The vertical analysis is the technique of financial analysis that compares information with the
historical data (Kaplan and Atkinson, 2015). In this study, the vertical analysis of firm’s balance
sheet and income statement has been performed for the period 2012 to 2016. From the data
analysis in table 1, it has been identified that in the case of T&L, the cost of sales is 70% of total
sales that has been decreased to -62% in 2016. The net income is 10 % of the total sales in 2012
and dropped to 7 % in 2016. The balance sheet declares that the cash and cash equivalents are
15% of total assets in 2012 and it has been decreased to 12 % in the period 2016. Moreover, the
short-term debt was 5 % of total liabilities and increased to 8 % in the period 2016. In the case of
Booker Plc, the data findings in table 2 assert that the cost of sales was 96 % in 2012 and it
becomes 95 % of total sales in the period 2016. Furthermore, the percentage of net income was 2
% in 2012, and it increased to 3 % in the period 2016. In perspective with the balance sheet, the
proportion of cash and cash equivalents has increased from 7% to 9% in 2016.
DuPont Analysis

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The DuPont analysis is the technique of performance measurement that measures business
performance through analysis of profit margin, asset turnover and the leverage ratio of the firm
(Sheela and Karthikeyan, 2012). The computed DuPont ratio has been illustrated in the figure 11
which shows that the performance of the Booker Plc is better as compare to the performance of
Tate & Lyle. .
Analysis through contemporary method
The financial performance of the Booker Plc and T&L has been measured in this study through
common size analysis and financial analysis that assesses financial information based on the
book value method utilised by the firm. In this regards, the efficiency of the firm cannot be
determined. The EMH method supports investors and analyst to evaluate the financial
performance of the firm based on the book value of the stocks and assets acquired by the firm in
business operations. Apart of it, a chance of human error can be highlighted while assessing
financial performance through EMH method. The financial performance assessed above
explained that the Booker Plc is more effective as compared to T&L while assessing the
profitability and other business returns for the period.
4 Conclusion
In conclusion it can be said that the processes and methods which are followed for the analysis of
financial statements are good and evaluate the performance of a company by keeping in view all
the areas. However, there are some limitations also which are identified in the discussion and the
methods are also identified to rectify them. The contemporary methods solve the issues which
can be occurred as a result of use of principal methods. The analysis of the financial statements
of the Booker Group Plc and Tate & Lyle identifies that both the companies are almost parallel
to each other according to all the aspects in which the ratios are calculated. The liquidity position
of both the firms is not satisfactory. However, Booker Group Plc has performed a little well as
compared to the Tate & Lyle. The other three areas of both the companies are unsatisfactory
which leads to the result of low investment by the investors in both the companies for future. It
has also been highlighted that the efficiency market hypothesis can also be used in order to
improve the efficiency of results.

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References
Booker Plc (2016). “Booker Group Plc” [Online] Available at
<http://markets.ft.com/data/equities/tearsheet/summary?s=BOK:LSE> [Accessed: 30th
November, 2016]
Brochet, F., Jagolinzer, A. D. and Riedl, E. J. (2013). “Mandatory IFRS adoption and financial
statement comparability”. Contemporary Accounting Research, 30(4), pp.1373-1400.
Chetty, R., Friedman, J. N. and Rockoff, J. (2016). Using Lagged Outcomes to Evaluate Bias in
Value-Added Models. The American Economic Review,106(5), 393-399.
Deegan, C. (2013). “Financial accounting theory”. Australia: McGraw-Hill Education.
DeFusco, R. A., McLeavey, D. W., Pinto, J. E., Anson, M. J. and Runkle, D. E.
(2015). “Quantitative investment analysis”. John Wiley & Sons.
Dempsey, M. (2013). The capital asset pricing model (CAPM): the history of a failed
revolutionary idea in finance? Abacus, 49(S1), 7-23.
Healy, P. M. and Palepu, K. G. (2012). “Business Analysis Valuation: Using Financial
Statements”. Cengage Learning.
Horngren, C. T., Sundem, G. L., Schatzberg, J. O. and Burgstahler, D. (2013). “Introduction to
management accounting”. Pearson Higher Ed.
Kaplan, R. S. and Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Koopman, R., Wang, Z. and Wei, S. J. (2014). Tracing value-added and double counting in gross
exports. The American Economic Review, 104(2), 459-494.
Patel, K. J. (2015). A study of economic value added based performance measurement of
selected automobile companies in India.
Pratt, J. (2013). “Financial accounting in an economic context”. Wiley Global Education.

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Rakicevic, A., Milosevic, P., Petrovic, B. and Radojevic, D. G. (2016). DuPont Financial Ratio
Analysis Using Logical Aggregation. In Soft Computing Applications (pp. 727-739).
Springer International Publishing.
Robinson, T. R., Henry, E., Pirie, W. L. and Broihahn, M. A. (2015). “International financial
statement analysis”. John Wiley & Sons.
Rothaermel, F. T. (2015). “Strategic management”. Australia: McGraw-Hill.
Sheela, S. C. and Karthikeyan, K. (2012). Financial performance of the pharmaceutical industry
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2016]
Warren, C. S., Reeve, J. M. and Duchac, J. (2013). “Financial & managerial accounting”.
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concepts, methods and uses”. Cengage Learning.
Weygandt, J. J., Kimmel, P. D. and Kieso, D. E. (2015). “Financial & Managerial Accounting”.
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Wojcik, D., Kreston, N. and McGill, S. (2013). Freshwater, saltwater and deepwater: efficient
market hypothesis versus behavioural finance. Journal of Economic Geography, 13(2),
257-277.

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Appendices
2016 2015 2014 2013 2012
Current Assets 662.40 599.60 590.80 440.90 413.70
Current Liabilities 699.10 605.90 602.00 507.70 487.10
Current ratio 0.95 0.99 0.98 0.87 0.85
2016 2015 2014 2013 2012
Total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Inventory 354.10 328.10 327.60 267.10 268.50
Current Liabilities 699.10 605.90 602.00 507.70 487.10
Quick ratio 1.48 1.55 1.54 1.66 1.37
2016 2015 2014 2013 2012
Cash and cash equivalents 127.40 147.00 149.60 77.20 63.50
Current Liabilities 699.10 605.90 602.00 507.70 487.10
Cash ratio 0.18 0.24 0.25 0.15 0.13
Booker Group Plc
Ratio Analysis
Liquidity Ratios
Current ratio=Current assets/Current Liabilities
Quick ratio=Total assets-Inventory/Current Liabilities
Cash ratio=Cash and cash equivalents/Current Liabilities
Figure 1: Liquidity ratios of Booker Group Plc

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2016 2015 2014 2013 2012
Current Assets 1,064.00 930.00 1,062.00 1,362.00 1,289.00
Current Liabilities 650.00 704.00 706.00 590.00 691.00
Current ratio 1.64 1.32 1.50 2.31 1.87
2016 2015 2014 2013 2012
Total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Inventory 389.00 363.00 372.00 510.00 450.00
Current Liabilities 650.00 704.00 706.00 590.00 691.00
Quick ratio 3.33 2.93 2.97 3.86 3.55
2016 2015 2014 2013 2012
Cash and cash equivalents 317.00 195.00 346.00 379.00 424.00
Current Liabilities 650.00 704.00 706.00 590.00 691.00
Cash ratio 0.49 0.28 0.49 0.64 0.61
Tate & Lyle
Ratio Analysis
Liquidity Ratios
Quick ratio=Total assets-Inventory/Current Liabilities
Cash ratio=Cash and cash equivalents/Current Liabilities
Current ratio=Current assets/Current Liabilities
Figure 2: Liquidity ratios of Tate & Lyle
2016 2015 2014 2013 2012
Total debt 795.50 677.90 658.60 570.60 567.10
Total equity 590.20 598.10 596.60 538.10 369.40
Debt to equity ratio 1.35 1.13 1.10 1.06 1.54
2016 2015 2014 2013 2012
Total equity 590.20 598.10 596.60 538.10 369.40
Total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Equity ratio 0.43 0.47 0.48 0.49 0.39
2016 2015 2014 2013 2012
Total debt 795.50 677.90 658.60 570.60 567.10
Total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Debt ratio 0.57 0.54 0.52 0.51 0.61
Leverage Ratio
Debt to equity ratio=Total debt/Total equity
Equity ratio=Total equity/Total assets
Debt ratio=Total liabilities/Total assets
Figure 3: Leverage ratios of Booker Group Plc

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2016 2015 2014 2013 2012
Total debt 1,525.00 1,487.00 1,418.00 1,751.00 1,848.00
Total equity 1,029.00 936.00 1,050.00 1,036.00 1,058.00
Debt to equity ratio 1.48 1.59 1.35 1.69 1.75
2016 2015 2014 2013 2012
Total equity 1,029.00 936.00 1,050.00 1,036.00 1,058.00
Total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Equity ratio 0.40 0.39 0.43 0.37 0.36
2016 2015 2014 2013 2012
Total debt 1,525.00 1,487.00 1,418.00 1,751.00 1,848.00
Total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Debt ratio 0.60 0.61 0.57 0.63 0.64
Leverage Ratio
Equity ratio=Total equity/Total assets
Debt to equity ratio=Total debt/Total equity
Debt ratio=Total liabilities/Total assets
Figure 4: Leverage Ratios of Tate & Lyle
2016 2015 2014 2013 2012
Net credit sales 4,991.50 4,753.00 4,681.60 3,992.20 3,932.80
Average accounts recievable 180.90 124.50 113.60 96.60 81.70
Accounts recievable turnover 27.59 38.18 41.21 41.33 48.14
2016 2015 2014 2013 2012
Net sales 4,991.50 4,753.00 4,681.60 3,992.20 3,932.80
Avg total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Asset turnover ratio 3.60 3.75 3.73 3.60 4.20
2016 2015 2014 2013 2012
Cost of goods sold 4,737.90 4,524.80 4,475.40 3,832.80 3,784.10
Avg inventory 354.10 328.10 327.60 267.10 268.50
inventory turnover 13.38 13.79 13.66 14.35 14.09
2016 2015 2014 2013 2012
Ending inventory 354.10 328.10 327.60 267.10 268.50
Cost of goods sold 4,737.90 4,524.80 4,475.40 3,832.80 3,784.10
Days sales in inventory 27.28 26.47 26.72 25.44 25.90
Activity ratios
Accounts recievable turnover=Net credit sales/Avg accounts recievable
asset turnover ratio=Net sales/Average total assets
Inventory turnover ratio=Cost of goods sold/Avg Inventory
Days sales in inventory=ending inventory/cost of goods sold*365
Figure 5: Activity Ratios of Booker Group Plc

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2016 2015 2014 2013 2012
Net credit sales 2,355.00 2,341.00 2,754.00 3,256.00 3,088.00
Average accounts recievable 301.00 290.00 265.00 383.00 332.00
Accounts recievable turnover 7.82 8.07 10.39 8.50 9.30
2016 2015 2014 2013 2012
Net sales 2,355.00 2,341.00 2,754.00 3,256.00 3,088.00
Avg total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Asset turnover ratio 0.92 0.97 1.12 1.17 1.06
2016 2015 2014 2013 2012
Cost of goods sold 2,228.00 2,308.00 1,927.00 2,281.00 2,155.00
Avg inventory 389.00 363.00 372.00 510.00 450.00
inventory turnover 5.73 6.36 5.18 4.47 4.79
2016 2015 2014 2013 2012
Ending inventory 389.00 363.00 372.00 510.00 450.00
Cost of goods sold 2,228.00 2,308.00 1,927.00 2,281.00 2,155.00
Days sales in inventory 63.73 57.41 70.46 81.61 76.22
Activity ratios
Accounts recievable turnover=Net credit sales/Avg accounts recievable
asset turnover ratio=Net sales/Average total assets
Inventory turnover ratio=Cost of goods sold/Avg Inventory
Days sales in inventory=ending inventory/cost of goods sold*365
Figure 6: Activity ratios of Tate & Lyle

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2016 2015 2014 2013 2012
Gross profit 253.60 228.20 206.20 159.40 148.70
Net sales 4,991.50 4,753.00 4,681.60 3,992.20 3,932.80
Gross profit ratio 0.05 0.05 0.04 0.04 0.04
2016 2015 2014 2013 2012
Net profit 150.80 138.80 122.10 92.10 90.80
Net sales 4,991.50 4,753.00 4,681.60 3,992.20 3,932.80
Net profit ratio 0.03 0.03 0.03 0.02 0.02
2016 2015 2014 2013 2012
Net Income 127.80 117.70 105.20 76.00 74.90
Average Total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Return on asset 0.09 0.09 0.08 0.07 0.08
2016 2015 2014 2013 2012
Net operating profit 152.80 140.30 123.80 94.90 89.60
Total assets 1,385.70 1,267.00 1,255.20 1,108.70 936.50
Current liabilities 699.10 605.90 602.00 507.70 487.10
Return on capital employeed 0.22 0.21 0.19 0.16 0.20
2016 2015 2014 2013 2012
Net income 127.80 117.70 105.20 76.00 74.90
Shareholder's equity 17.70 17.60 17.40 17.30 15.70
Return on equity ratio 7.22 6.69 6.05 4.39 4.77
Profitability ratios
Gross profit ratio=gross profit/net sales
Net profit ratio=Net profit/Net sales
Return on asset=Net income/Avg total assets
Return on capital employeed=Net operating profit/Total assets-Current liabilities
Return on equity ratio=Net income/shareholder's equity
Figure 7: Profitability ratios of Booker Group Plc

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2016 2015 2014 2013 2012
Gross profit 884.00 826.00 827.00 975.00 933.00
Net sales 2,355.00 2,341.00 2,754.00 3,256.00 3,088.00
Gross profit ratio 0.38 0.35 0.30 0.30 0.30
2016 2015 2014 2013 2012
Net profit 126.00 25.00 277.00 301.00 379.00
Net sales 2,355.00 2,341.00 2,754.00 3,256.00 3,088.00
Net profit ratio 0.05 0.01 0.10 0.09 0.12
2016 2015 2014 2013 2012
Net Income 163.00 30.00 273.00 273.00 309.00
Average Total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Return on asset 0.06 0.01 0.11 0.10 0.11
2016 2015 2014 2013 2012
Net operating profit 127.00 33.00 251.00 334.00 404.00
Total assets 2,554.00 2,423.00 2,468.00 2,787.00 2,906.00
Current liabilities 650.00 704.00 706.00 590.00 691.00
Return on capital employeed 0.07 0.02 0.14 0.15 0.18
2016 2015 2014 2013 2012
Net income 163.00 30.00 273.00 273.00 309.00
Shareholder's equity 117.00 117.00 117.00 117.00 117.00
Return on equity ratio 1.39 0.26 2.33 2.33 2.64
Profitability ratios
Net profit ratio=Net profit/Net sales
Gross profit ratio=gross profit/net sales
Return on asset=Net income/Avg total assets
Return on capital employeed=Net operating profit/Total assets-Current liabilities
Return on equity ratio=Net income/shareholder's equity
Figure 8: Profitability Ratios of Tate & Lyle

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Figure 9: Market Ratio
Figure 10: Horizontal Analysis

23
2012 2013 % 2014 % 2015 % 2016 % 2012 2013 2014 2015 2016
Revenue 3,088 3,256 5% 2,754 -11% 2,341 -24% 2,355 -24% 100% 100% 100% 100% 100%
Cost of sales (2,155) (2,281) 6% (1,927) -11% (1,515) -30% (1,471) -32% -70% -70% -70% -65% -62%
Gross profit 933 975 5% 827 -11% 826 -11% 884 -5% 30% 30% 30% 35% 38%
Operating expenses 0% 0% 0% 0% 0%
Other operating & selling expenses (393) (429) 9% (388) -1% (475) 21% (480) 22% -13% -13% -14% -20% -20%
Other operating expenses (136) (212) 56% (188) 38% (318) 134% (277) 104% -4% -7% -7% -14% -12%
Total operating expenses (529) (641) 21% (576) 9% (793) 50% (757) 43% -17% -20% -21% -34% -32%
Operating profit 404 334 -17% 251 -38% 33 -92% 127 -69% 13% 10% 9% 1% 5%
Finance income 8 1 -88% 2 -75% 1 -88% 1 -88% 0% 0% 0% 0% 0%
Finance expense (33) (34) 3% (37) 12% (32) -3% (30) -9% -1% -1% -1% -1% -1%
Share of profit after tax of joint ventures and associates - - #DIV/0! 61 #DIV/0! 23 #DIV/0! 28 #DIV/0! 0% 0% 2% 1% 1%
Profit before tax 379 301 -21% 277 -27% 25 -93% 126 -67% 12% 9% 10% 1% 5%
Income tax expense (72) (46) -36% (32) -56% (21) -71% (5) -93% -2% -1% -1% -1% 0%
Profit for the year from continuing operations 307 255 -17% 245 -20% 4 -99% 121 -61% 10% 8% 9% 0% 5%
Profit for the year from discontinued operations 2 18 800% 28 1300% 26 1200% 42 2000% 0% 1% 1% 1% 2%
Profit for the year 309 273 -12% 273 -12% 30 -90% 163 -47% 10% 8% 10% 1% 7%
Income statement Vertical Analysis
2012 % 2013 % 2014 % 2015 % 2016 % 2012 2013 2014 2015 2016
Assets
Non-current assets
Goodwill and other intangible assets 325 11% 356 13% 307 12% 340 14% 390 15% 10% -6% 5% 20% 37%
Property, plant and equipment 922 32% 958 34% 732 30% 750 31% 926 36% 4% -21% -19% 0% 14%
Investment in Joint ventures - 0% - 0% 308 12% 323 13% 82 3% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Investment in associates 5 0% 6 0% 4 0% 4 0% 3 0% 20% -20% -20% -40% -32%
Available for sale financial assets 23 1% 27 1% 28 1% 15 1% 19 1% 17% 22% -35% -17% -6%
Derivative financial instruments 57 2% 54 2% 23 1% 30 1% 21 1% -5% -60% -47% -63% -58%
Deferred tax asset 37 1% 8 0% 4 0% 4 0% 3 0% -78% -89% -89% -92% -91%
Trade and other receivables 2 0% 3 0% - 0% 2 0% 1 0% 50% -100% 0% -50% -43%
Retirement benefit surplus 146 5% 12 0% - 0% 25 1% 45 2% -92% -100% -83% -69% -65%
Total non-current assets 1,517 52% 1,424 51% 1,406 57% 1,493 62% 1,490 58% -6% -7% -2% -2% 12%
current assets
Inventories 450 15% 510 18% 372 15% 363 15% 389 15% 13% -17% -19% -14% -2%
Trade receivables 264 9% 330 12% 231 9% 248 10% 238 9% 25% -13% -6% -10% 3%
Other receivables 68 2% 53 2% 34 1% 42 2% 63 2% -22% -50% -38% -7% 5%
Current tax assets 3 0% 4 0% 1 0% 2 0% 3 0% 33% -67% -33% 0% 14%
Available-for-sale financial assets - 0% - 0% - 0% 16 1% 4 0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Derivative financial instruments 80 3% 86 3% 78 3% 62 3% 43 2% 8% -3% -23% -46% -39%
Other financial assets - 0% - 0% - 0% 2 0% - 0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Cash and cash equivalents 424 15% 379 14% 346 14% 195 8% 317 12% -11% -18% -54% -25% -15%
Total current assets 1,289 44% 1,362 49% 1,062 43% 930 38% 1,057 41% 6% -18% -28% -18% -7%
Assets held for sale 100 3% 1 0% - 0% - 0% 7 0% -99% -100% -100% -93% -92%
Total assets 2,906 100% 2,787 100% 2,468 100% 2,423 100% 2,554 100% -4% -15% -17% -12% 0%
Liabilities and equity
Liabilities
Current liabilities
Trade payables 256 9% 264 9% 198 8% 228 9% 218 9% 3% -23% -11% -15% -3%
Other payables 126 4% 118 4% 85 3% 88 4% 119 5% -6% -33% -30% -6% 7%
Current tax liabilities 49 2% 53 2% 38 2% 45 2% 66 3% 8% -22% -8% 35% 53%
Borrowings and bank overdraft 141 5% 75 3% 323 13% 305 13% 200 8% -47% 129% 116% 42% 61%
Derivative financial instruments 94 3% 60 2% 49 2% 25 1% 22 1% -36% -48% -73% -77% -73%
Provisions for other liabilities and charges 10 0% 20 1% 13 1% 13 1% 23 1% 100% 30% 30% 130% 162%
676 23% 590 21% 706 29% 704 29% 648 25% -13% 4% 4% -4% 9%
Liabilities held for sale 15 1% - 0% - 0% - 0% 2 0% -100% -100% -100% -87% -85%
Total current liabilities 691 24% 590 21% 706 29% 704 29% 650 25% -15% 2% 2% -6% 7%
Non-current liabilities
Trade and other payables 4 0% 3 0% 2 0% 13 1% 13 1% -25% -50% 225% 225% 270%
Borrowings 805 28% 821 29% 437 18% 463 19% 556 22% 2% -46% -42% -31% -21%
Derivative financial instruments 19 1% 21 1% 2 0% 15 1% 19 1% 11% -89% -21% 0% 14%
Deferred tax liabilities 25 1% 24 1% 42 2% 32 1% 21 1% -4% 68% 28% -16% -4%
Retirement benefit deficit 286 10% 277 10% 220 9% 252 10% 253 10% -3% -23% -12% -12% 1%
Provisions for other liabilities and charges 18 1% 15 1% 9 0% 8 0% 13 1% -17% -50% -56% -28% -18%
Total non-current liabilities 1,157 40% 1,161 42% 712 29% 783 32% 875 34% 0% -38% -32% -24% -14%
Total liabilities 1,848 64% 1,751 63% 1,418 57% 1,487 61% 1,525 60% -5% -23% -20% -17% -6%
Stockholders' equity
Share capital 117 4% 117 4% 117 5% 117 5% 117 5% 0% 0% 0% 0% 14%
Share premium 406 14% 406 15% 406 16% 406 17% 406 16% 0% 0% 0% 0% 14%
Capital redemption reserve 8 0% 8 0% 8 0% 8 0% 8 0% 0% 0% 0% 0% 14%
Other reserves 128 4% 139 5% 58 2% 61 3% 127 5% 9% -55% -52% -1% 13%
Retained earnings 374 13% 366 13% 460 19% 343 14% 370 14% -2% 23% -8% -1% 13%
Total equity attributable to the owners of the Company 1,033 36% 1,036 37% 1,049 43% 935 39% 1,028 40% 0% 2% -9% 0% 13%
Non-controlling interest 25 1% - 0% 1 0% 1 0% 1 0% -100% -96% -96% -96% -95%
Total equity 1,058 36% 1,036 37% 1,050 43% 936 39% 1,029 40% -2% -1% -12% -3% 11%
Total liabilities and stockholders' equity 2,906 100% 2,787 100% 2,468 100% 2,423 100% 2,554 100% -4% -15% -17% -12% 0%
Horizontal AnalysisBalance Sheet

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Table 1: Horizontal and Vertical Analysis- Tate & Lyle
2012 2013 % 2014 % 2015 % 2016 % 2012 2013 2014 2015 2016
Revenue 3,932.8 3,992.2 2% 4,681.6 19% 4,753.0 21% 4,991.5 27% 100% 100% 100% 100% 100%
Cost of revenue (3,784.1) (3,832.8) 1% (4,475.4) 18% (4,524.8) 20% (4,737.9) 25% -96% -96% -96% -95% -95%
Gross profit 148.7 159.4 7% 206.2 39% 228.2 53% 253.6 71% 4% 4% 4% 5% 5%
Operating expenses 0% 0% 0% 0% 0%
Administrative expenses (59.1) (64.5) 9% (82.4) 39% (87.9) 49% (100.8) 71% -2% -2% -2% -2% -2%
Operating profit 89.6 94.9 6% 123.8 38% 140.3 57% 152.8 71% 2% 2% 3% 3% 3%
Finance income (expense) 6.3 - -100% - -100% 0.5 -92% 0.6 -90% 0% 0% 0% 0% 0%
Income before interest and income taxes 95.9 94.9 -1% 123.8 29% 140.8 47% 153.4 60% 2% 2% 3% 3% 3%
Finance costs (5.1) (2.8) -45% (1.7) -67% (2.0) -61% (2.6) -49% 0% 0% 0% 0% 0%
Profit before tax 90.8 92.1 1% 122.1 34% 138.8 53% 150.8 66% 2% 2% 3% 3% 3%
Tax (15.9) (16.1) 1% (16.9) 6% (21.1) 33% (23.0) 45% 0% 0% 0% 0% 0%
Profit for the period attributable to the owners of the Group 74.9 76.0 1% 105.2 40% 117.7 57% 127.8 71% 2% 2% 2% 2% 3%
Income Statement Vertical Analysis
2012 % 2013 % 2014 % 2015 % 2016 % 2013 2014 2015 2016
Assets
Non-current assets
Property, plant and equipment 71.9 8% 71.9 6% 204.5 16% 207.1 16% 229.8 17% 0% 184% 188% 220%
Intangible assets 437.1 47% 436.9 39% 438.7 35% 439.8 34% 466.7 34% 0% 0% 1% 7%
Investment in joint venture 0.5 0% 0.6 0% 1.1 0% 1.4 0% 1.5 0% 20% 120% 180% 200%
other investments - 0% 144.9 13% - 0% - 0% - 0% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Deferred tax asset 13.3 1% 13.5 1% 20.1 2% 28.1 2% 25.3 2% 2% 51% 111% 90%
Total non-current assets 522.8 56% 667.8 60% 664.4 53% 676.4 53% 723.3 52% 28% 27% 29% 38%
current assets
Inventories 268.5 29% 267.1 24% 327.6 26% 328.1 26% 354.1 26% -1% 22% 22% 32%
Trade receivables 50.1 5% 58.1 5% 60.3 5% 74.4 6% 121.6 9% 16% 20% 49% 143%
Other receivables 31.6 3% 38.5 3% 53.3 4% 50.1 4% 59.3 4% 22% 69% 59% 88%
Cash and cash equivalents 63.5 7% 77.2 7% 149.6 12% 147.0 12% 127.4 9% 22% 136% 131% 101%
Total current assets 413.7 44% 440.9 40% 590.8 47% 599.6 47% 662.4 48% 7% 43% 45% 60%
Total assets 936.5 100% 1,108.7 100% 1,255.2 100% 1,276.0 100% 1,385.7 100% 18% 34% 36% 48%
Liabilities and equity
Liabilities
Current liabilities
Interest bearing loans and borrowings 0.1 0% - 0% - 0% - 0% - 0% -100% -100% -100% -100%
Trade payables 420.4 45% 428.1 39% 496.2 40% 505.4 40% 573.3 41% 2% 18% 20% 36%
Other payables 51.4 5% 58.4 5% 90.0 7% 80.6 6% 104.6 8% 14% 75% 57% 104%
Current tax 15.2 2% 21.2 2% 15.8 1% 19.9 2% 21.2 2% 39% 4% 31% 39%
Total current liabilities 487.1 52% 507.7 46% 602.0 48% 605.9 47% 699.1 50% 4% 24% 24% 44%
Non-current liabilities
Other payables 28.2 3% 28.0 3% 27.5 2% 26.9 2% 26.0 2% -1% -2% -5% -8%
Retirement benefit liabilities 19.0 2% 6.8 1% 3.6 0% 19.7 2% 29.6 2% -64% -81% 4% 56%
Provisions 32.8 4% 28.1 3% 25.5 2% 25.4 2% 40.8 3% -14% -22% -23% 24%
Total non-current liabilities 80.0 9% 62.9 6% 56.6 5% 72.0 6% 96.40 7% -21% -29% -10% 21%
Total liabilities 567.1 61% 570.6 51% 658.6 52% 677.9 53% 795.5 57% 1% 16% 20% 40%
Stockholders' equity
Share capital 15.7 2% 17.3 2% 17.4 1% 17.6 1% 17.7 1% 10% 11% 12% 13%
Share premium 49.1 5% 34.9 3% 36.4 3% 41.2 3% 44.0 3% -29% -26% -16% -10%
Merger reserve 260.8 28% 260.8 24% 260.8 21% 260.8 20% 260.8 19% 0% 0% 0% 0%
Capital redemption reserve - 0% - 0% - 0% 60.9 5% 122.8 9% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other reserves - 0% 136.8 12% 136.8 11% 75.8 6% 14.0 1% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Share option reserve 3.8 0% 6.6 1% 8.5 1% 11.2 1% 12.4 1% 74% 124% 195% 226%
Retained earnings 40.0 4% 81.7 7% 136.7 11% 130.6 10% 118.5 9% 104% 242% 227% 196%
Total equity attributable to the owners of the Company 369.4 39% 538.1 49% 596.6 48% 598.1 47% 590.2 43% 46% 62% 62% 60%
Total liabilities and stockholders' equity 936.5 100% 1,108.7 100% 1,255.2 100% 1,276.0 100% 1,385.7 100% 18% 34% 36% 48%
Balance Sheet Horizontal Analysis
Table 2: Horizontal and Vertical Analysis-Booker Plc

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2016 2015 2014 2013 2012 2016 2015 2014 2013 2012
Net profit Margin (Net Income / Revenue) 0.03 0.02 0.10 0.08 0.10 0.07 0.01 0.10 0.08 0.10
Asset turnover (Revenue / Average Total Assets) 3.60 3.75 3.73 3.60 4.20 0.92 0.97 1.12 1.17 1.06
Equity Multiplier (Average Total Assets / Average Equity) 78.29 71.99 72.14 64.09 59.65 21.83 20.71 21.09 23.82 24.84
Tax Burden (Net Income / EBT) 0.85 0.85 0.86 0.83 0.82 1.29 1.20 0.99 0.91 0.82
Interest Burden (EBT / Operating profit) 0.99 0.99 0.99 0.97 1.01 1.01 1.32 0.91 1.11 1.07
Operating profit Margin (Operating profit / Revenue) 0.03 0.03 0.03 0.02 0.02 0.05 0.01 0.09 0.10 0.13
Asset Turnover (Revenue / Average Total Assets) 3.60 3.75 3.73 3.60 4.20 0.92 0.97 1.12 1.17 1.06
Equity Multiplier (Average Total Assets / Average Equity) 78.29 71.99 72.14 64.09 59.65 21.83 20.71 21.09 23.82 24.84
Net profit margin (Net Income / Revenue) 0.03 0.02 0.10 0.08 0.10 0.07 0.01 0.10 0.08 0.10
Asset turnover (Revenue / Average Total Assets) 3.60 3.75 3.73 3.60 4.20 0.92 0.97 1.12 1.17 1.06
Dupont - 2 factor ROCE - optional
Dupont - 5 factor ROE - optional
Dupont - 3 factor ROE optional Booker Plc Tate & Lyle
Figure 11: DuPont Analysis