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Innocent Drinks - Teaching Accounts Exercise
9th November 2009
Innocent Drinks has just published its 2008 accounts (they are required to submit them within 9 months of their financial year-end). They make interesting reading!
In 2008 Innocent recorded an operating loss of £10.9m compared with an operating profit of £12.2m in 2007. That’s a huge swing in profitability, which reflects three key issues:
- A decline in revenues of 12% in 2008 (Innocent faced significant competition from new entrants)
- A drop in gross profit margin from 36.4% in 2007 to 30.4% in 2008
- Development costs of building up Innocent’s European operations, adding around £10m to administrative expenses.
- Redundancy costs (see staff costs below)
We’ve produced an extract summary from Innocent’s last four years of accounts which you might find useful in teaching the interpretation and evaluation of financial accounting information. The extract also includes selected data from Innocent’s balance sheets. Some good data in there on changes in stocks, trade debtors and creditors + enough information for students to calculate net cash flow each year and do some other basic ratio analysis.
