HiOp - Fi

A1.2 - ROIC Tree

Distribuidora Internacional de Alimentación, S.A. (DIA) is a Spanish international hard-discount

supermarket chain founded in 1979 which as of 2012 operates 6,914 stores internationally, making
it Europe's third largest food sector franchiser. As of January 2012 it became listed on IBEX 35
stock market.

P&L 2014 2015

SALES 8,010,967 8,925,454

Other revenues 105,520 96,215
YOY Total Revenues growth 11.15%
Total Revenues 8,116,487 9,021,669
COGS - 6,350,221 - 7,018,881
Gross Profit 1,766,266 2,002,788
Gross margin 21.76% 22.20%
Payroll - 660,282 - 847,233
Overhead - 580,120 - 644,034
EBITDA 525,864 511,521
Ebitda margin 6.48% 5.67%
Depreciation expense - 184,604 - 214,026
Impairments - 5,525 - 11,013
Results from divestments - 11,558 - 12,340
Operating Profit (EBIT) 324,177 274,142
Operating margin 3.99% 3.04%
Financial results: - 40,709 - 56,026
Earnings before taxes (EBT) 283,468 218,116
Income taxes - 74,556 82,610
Net income 208,912 300,726
Recurrent Net Margin 2.57% 3.33%
Extraordinary results 120,582 - 1,477

Net income 329,494 299,249

Net margin 4.06% 3.32%

BALANCE SHEET (000 euros) 2014 2015

ASSETS:
Inventory 553,119 562,489
Accounts receivable 351,532 340,330
Financial investments 18,506 22,266
Other current assets 7,836 7,815
Cash and equivalents 199,004 154,627
Total Current Assets 1,129,997 1,087,527

L-T Operating investments 1,915,465 2,287,607

Net plant and equipment 1,270,366 1,372,010
Tax receivable 147,890 271,480
Goodwill & Other intangible assets 497,209 644,117
L-T Financial investments 81,525 67,495
Total Fixed Assets 1,996,990 2,355,102
TOTAL ASSETS 3,126,987 3,442,629

LIABILITIES & O'S EQUITY:

S-T financial debt 336,101 519,958
Accounts payable 1,784,300 1,615,893
Total Current Liabilities 2,120,401 2,135,851

L-T financial debt 540,167 938,857

Provisions 86,100 51,503
Tax payable and other 2,749 3,193
Total Non- Current Liabilities 629,016 993,553

Common stock 65,107 62,246

Retained earnings and reserves 312,509 250,997
Minority equity - 46 - 18
Total Owner's Equity 377,570 313,225
 TOTAL LIABILITIES & EQUITY 3,126,987 3,442,629

OPERATIONS MANAGEMENT 2014 2015

ANALYSIS

ROIC: OPAT / Invested Capital in

= 23.3% 0.0%
operations
+ Operating profit / sales (Operating margin 3.99%
x Capital invested turnover 7.78
x Fiscal policy: (1-tax rate) 75.00% 75.00%

By estimating ROIC we can see the capability of the company to generate returns
from its operations.
Initially, ROIC is unfold on 3 main drivers as shown below.

ROIC = Operating profit / Revenues x Revenues / Invested Capital x (1- Tax rate)

ROIC tree 2014 2015

YoY Growth
Gross margin 21.8%
Ebitda margin 6.5%
Operating margin 4.0%
Receivables / total revenues 4.3%
Inventories / total revenues 6.8%
Other current assets / total revenues 0.1%
Payables / total revenues 22.0%
L-T Operating assets / total revenues 23.6%
Fiscal policy: (1-tax rate) 75.0%
By relating each of the IC's components to total revenues, we can track performance and have a

After having solved the calculations, please writte a short summary explaining trends and co
different value drivers.
 HiOp - Financial Decision Making For Managers

2 - ROIC Tree

MERCADONA is a Spanish family-owned

international hard-discount
supermarket chain. Leader in the country with
ores internationally, making
presence in 46 provinces of 17 autonomous
became listed on IBEX 35
communities-

2016 2014 2015 2016

8,867,621 18,441,861 19,059,157 19,802,382

110,976 17,106 18,324 21,133
-0.48% 3.4% 3.9%
8,978,597 18,458,967 19,077,481 19,823,515
- 6,942,007 - 13,907,913 - 14,376,994 - 15,028,974
2,036,590 4,551,054 4,700,487 4,794,541
22.68% 24.65% 24.64% 24.19%
- 846,103 - 2,329,392 - 2,391,368 - 2,502,267
- 653,549 - 1,216,019 - 1,171,680 - 1,199,962
536,938 1,005,643 1,137,439 1,092,312
5.98% 5.45% 5.96% 5.51%
- 232,953 - 330,375 - 372,076 - 312,977
- 13,262 - 11,053 - 2,594
4,336 982
295,059 676,250 754,310 776,741
3.29% 3.66% 3.95% 3.92%
- 51,939 61,665 33,849 26,161
243,120 737,915 788,159 802,902
- 69,119 - 194,656 - 198,920 - 166,652
174,001 543,259 589,239 636,250
 1.94% 2.94% 3.09% 3.21%
- - - -
174,001 543,259 589,239 636,250
1.94% 2.94% 3.09% 3.21%

2016 2014 2015 2016

669,592 612,458 654,578 716,407

340,781 78,260 98,477 128,180
25,954 33,988 74,660 102,520
8,140
364,600 2,883,414 3,256,993 3,301,810
1,409,067 3,608,120 4,084,708 4,248,917

2,448,019 3,451,995 3,575,406 3,945,720

1,469,078 3,413,712 3,529,883 3,898,464
314,273 38,283 45,523 47,256
664,668 - - -
59,243
2,507,262 3,451,995 3,575,406 3,945,720
3,916,329 7,060,115 7,660,114 8,194,637

315,376
2,053,847 3,040,411 3,160,963 3,191,051
2,369,223 3,040,411 3,160,963 3,191,051

1,065,058
45,841 - - -
44,109 107,303 82,685 66,471
1,155,008 107,303 82,685 66,471

62,246 15,921 15,921 15,921

329,972 3,868,285 4,376,342 4,895,922
- 60
392,158 3,884,206 4,392,263 4,911,843
 3,916,389 7,031,920 7,635,911 8,169,365

2016 2014 2015 2016

0.0% 0.0% 0.0% 0.0%

75.00% 75.00% 75.00% 75.00%

y to generate returns

d Capital x (1- Tax rate)

2016 2014 2015 2016

24.7%
5.4%
3.7%
0.4%
3.3%
0.0%
16.5%
18.7%
75.0%
can track performance and have a clear idea of what has made ROIC change.

summary explaining trends and conclusions for ROIC overall, and for the
erent value drivers.
Managers
Not needed to generate sales or to run operations.

To not distort the analysis we assume no-cash is needed to operate.

Not needed to generate sales or to run operations.

Non-interest bearing debt.

The lower the CI required in the business model, the higher the turnover and
ROIC.

* It's kept fixed to not distort ROIC's analysis and stay on operations
efficiency.

The higher, the higher the ROIC.

The higher, the higher the ROIC.
The higher, the higher the ROIC.
The higher, the higher the ROIC.
The lower, the higher the ROIC.
The lower, the higher the ROIC.
The lower, the higher the ROIC.
The higher, the higher the ROIC, as it is not-interest beraring financing.
The lower, the higher the ROIC.
The higher, the higher the ROIC