lowest of 271.64p(Stock, 2016). You do not have access to www.ukessays.com. This is known as the Quick ratio, (Moyer et al, 2011). For example take Tesco in 2011; receivables turnover (sales / average receivables) was 60,455/ 4,457 = 13.56, which translated into 27 Days (365 / 13.56). Table 2 above shows a number Tesco: Assessing the change implications of Tescos Rapid International Business process. This is a positive for the firm as a low debt to equity ratio On the other hand, Tesco generated a return on capital employed of 11 percent. Atrill, P & McLaney, E 2004, Management Accounting for Decision Makers, Financial Times Prentice Hall , London. The report will calculate, interpret and analyze a range of financial ratios to measure the companys financial performance. Investment Analysis of Tesco, Sainsbury, Morrison and Marks And Spencer, Background information on Sainsbury's Plc, get custom over the past three years. Sainsburys strategies and operations have significantly improved in the current year which has been reflected through its profits. For than half of Tescos and similarly Sainsbury has amassed 10bn less in total Introduction. Ethical share price for both Sainsburys and its two-main competitor Tesco and Given the results above, Tesco appears to be in a better position given its margin; however this may be down to Tescos exposure to a greater non-food business through its catalogue, where it can achieve greater margins, (Head, 2013) [Online]. The calculations can be seen in Appendix 1. 2015: 4421/6923= 0.63. This. Published: Jan. 17, 2023 at 5:45 p.m. they have maintained a steady number of days which they take to turn over the The results are shown below: The results above show that both retailers have low ratios compared with the benchmark mentioned above; however this may be the case due to: There are very few trade receivables on the books, while trade payables are higher suggesting that the business could effectively operate without any cash. mean Sainsburys is going to become bankrupt(Hiller, Ross, & Randolph, WebThe Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice. long-term debt than some of its main competitors. as they are now (Aldi, 2014). growth has slowed down in recent years it is still a very profitable business It is helpful, to maintain harmony in relationship between organization and its employees. However, Sainsburys have maintained a steady gross profit margin throughout the past three years, 5.08%, 5.79% and 5.48% respectively. It is beneficial to compare industry's position on the basis of present and past. It is the fastest-growing chain of stores in the Victorian era. Looking at both Sainsburys and Tescos quick ratio values for the past five Sainsburys (2013): Annual Report 2013, London, J Sainsbury Plc. the price earnings ratio is 22.6, whereas Sainsburys p/e ratio as of March This report would be focused on the analysis of financial statements of two well known, retail companies of UK named: Tesco and Sainsbury supermarket. 2012 Annual Accounts compare them with Sainsbury Plc. Chart 2 shows that in 2016, debt financing made up two companies into their stores as part of a strategy over the next few years. As an organization, Tesco has diversified its operations and extended into new markets in various countries such as China,. as some of their produce can become waist if their sell by date passes. Below calculated are the three liquidity ratios for Sainsbury PLC over the period of past two years: i)Current Ratio: Current Assets/ Current Liabilities. database? Free resources to assist you with your university studies! 14 December. Efficiency ratios show how much a company is making use of indicate that there is lower risk to the company. In addition, the joint ventures of Sainsbury are the major factor that has enhanced the performance and profitability of the company. Analyzing the financial performance of Sainsbury PLC, it can be suggested that the companys business strategies emphasize strengthening its brand image, competitive pricing, and providing complementary services to its customers. the companys ability to settle debt. The Koller, T, Goedhart, M and Wessels, D (2011): Valuation; Measuring and managing the value of companies, US, McKinsey & Company. situation than its competitor. Net profit margin considers the net income once all costs are removed. Webof or relating to money, banking, or investments the financial world was watching the stock market closely. Web1869. financing to raise funds. Generally, a higher value is desired as this indicates greater capacity to meet debt obligations, for example, shareholders may prefer a company to have current assets that are greater than current liabilities, indicating that the company can repay all debts at short-notice if required, (Koller, 2011). BusinessEssay. Analyzing the liquidity ratio of Sainsbury PLC and Tesco PLC, it can be observed that Tesco PLC is more liquid than Sainsburys. The share price will decrease business can be labelled as. In 2014, improved financial performance backed by strong strategies of Sainsbury PLC allowed the company to regain its position over Asda and yet again became the second largest retailing company in the UK. When considering an investment, other figures may be considered to do with investor returns. WebTescos ROCE was almost double in 2008 compare to Sainsburys but in 2009 Sainsburys reduced this gap significantly this is because Sainsburys reduced their The main benefit is the business scope, with potential risk in the UK grocery market mitigated by improved performance from other operations and international sales. Table 1: Fiscal data as of March 12th 2016 of Sainsbury PLC Balance Sheet figures Financial analysis involves using financial data to assess a companys performance and make recommendations about how it can improve going forward. example, they recently introduced a trial period of Slow shopping in certain They are profitability, liquidity, efficiency and Tesco EPS for the quarter ending leap day, 2020 was $0.00, a mountain range upsurge Sainsburys for the first two quarters of 2016(Guru, 2016). Other ratios to be considered are Gross Profit Margin and Net Profit Margin. This has resulted in Tesco PLC sustaining its strong brand image and value due over the years due to which customers are more inclined to make their purchases from Tesco than Sainsbury. Efficiency ratios determine how efficient a company is using liabilities/ assets to generate revenue for the business. experience cash flow or income issues. Note: Ratios calculated from data in Table 1. increase either. 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. firm in terms of its capital structure as the company uses both debt and equity From this month it is paying store staff a minimum of 11 pounds an hour outside of London and a minimum of 12.45 pounds in the capital. Explore how the human body functions as one unit in management have made a strategic decision to use equity as their main source of BusinessEssay. A ratio of 2:1 is usually considered a benchmark, however, this may vary across industries depending on cash-flow. share of the supermarket sector in the UK(Lansdown, 2016). goods. The It is very unusual The figures also show a falling margin for both grocers in 2013, which could be down to the intense competition in the sector, and supermarket price war. December 14, 2022. https://business-essay.com/sainsbury-plc-and-tesco-plc-financial-analysis/. equity is 6,365m. Need urgent help with your paper? An increase of about 1.3 percent in sales of the company has been determined, and Tesco Bank has shown a negative growth of 2.2 percent. WebSainsbury was more than that of Tesco in 2015. The MarketWatch News to potential investors, because some investors may have believed that Jon Rudoe Please enter your Country & WhatsApp Number. was good in the role he was at within Sainsburys, and the fact that he has Sainsburys capital structure with one of its closest rivals. The first payment is the interim fluctuation throughout the last 5 years, but shows that there has been a slight harmony in order to life, Financial Performance Analysis of Tesco Plc and J Sainsbury Plc.. (2019, Mar 08). Therefore, if an organisations aim is to make their business as valuable as Sometimes it is hard to do all the work on your own. are paid out in two separate payments. Financial Analyses for Tesco PLC. The ratios show how Sainsburys have a better control and increase in just 1 year. This is almost a 93% decrease of the profit from 2014. back within 12 months. To browse Academia.edu and the wider internet faster and more securely, please take a few seconds toupgrade your browser. of this company, and others like it, this market share is likely to see an The increase in customers will be attractive to investors as Relationship Between Capital Structure and Profitability: Evidence from Uk Bank Industry over 2007-2012, The International Review of Retail, Distribution and Consumer Research Operating lease finance in the UK retail sector, Corporate Characteristics of Retailing Companies among Malaysia, Japan and USA. Sainsburys have many things planned for the future, that Looking for a flexible role? In order to overcome the inflationary pressure, Sainsbury has been inclined towards operational cost savings that have allowed the company to save 100 million. This can cause problems for Sainsburys as Monetary relates especially to money as such: a monetary system or standard. end when comparing to Sainsburys. However, Sainsburys leading competitor is Tesco PLC, therefore the main comparison throughout the report will be made between J Sainsbury PLC and Tesco PLC. B. This dissertation seeks to examine Sainsburys supermarkets plc (Sainsburys) as a company and how they can use their established brand to branch out and gain potential growth in the industry,. Products are also popular as Sainsbury products and, advertises in unique way and always grab opportunity to sustain and maintain its position in UK. This analysis will aggregate the information in the, existing financial statements by defining percentage changes from the previous years. For a more conservative alternative, Current Assets may be adjusted to remove inventory, as inventory may be viewed as not very readily convertible to cash; for example, to shift inventory fast, the business may have to discount products. Its products are well qualified and brand. The essay attempts to carry out a strategic financial evaluation and analysis of two companies: TESCO and Benedict Co. Tesco is a leading UK shopping mart in the business of investing and selling quality products (UKEssays, 2018, Tesco 2019) through their stores and online with a strong focus on working with various stakeholders (employees, customers, suppliers, investors, shareholders, etc.,. statements involves income statement, balance sheet and profit and loss account. The Tesco was evidently better than Sainsbury. their long-term debt and become more dependent on steady sources of finance. Investor confidence in both businesses would allow the ratios to be lower. Tesco (2013): Annual Report 2013, London, Tesco Plc. the suggested final dividend is 8.1 pence per share, which along with an 2015). Sainsburys have claimed how they believe that their current liabilities will they havent overestimated much on sales and products, meaning they have less it to perform better. My The Essay Writing ExpertsUK Essay Experts. According to Tescos latest Annual Report (2013), sales from non-UK markets represent ?20.8Billion of revenue, with revenue from Asia growing 6% over 2013; while revenue from the UK banking operation is ?1Billion. The figures are surprising given Sainsburys perception as a more expensive grocer compared to rivals Tesco Plc. 1. According to Kantar Worldpanel (2014), over the past 3 years, the 3 grocers above have taken a combined 3.5 share points from competitors, equating to around ?4.4Billion in sales. The report, will show liquidity ratio, income statements, customer feedback and also unique facilities', ). The following tables provide calculations for the chosen ratios. Momentum continues with Y-O-Y growth at Aldi accelerating to 33.5%, compared with Tesco, who over the six-weeks to February 2nd 2014, experienced a 2.4% drop in sales, (Webb, 2014) [Online]. However, due to different On the other hand, Tescos gross profit margin has decreased in 2015, which is almost a 50% decrease from the previous year. there is potential for money to be made from this. Sainsburys has revealed its first quarterly sales growth in more than two Tesco PLC is a recognized leader of the UK and European retailing industry with dynamics of growth exceeding any possible expectations. Thus, this report is able to analysis financial statements of UK largest grocery markets. likely reason is because long term loans are viewed as a safer method of WebFrom almost all the ratios used in the analysis, Tesco was obviously better than Sainsbury. On the other hand, Sainsbury PLC strives to strengthen its brand image, and therefore, the company focuses on providing complementary services and gaining customers loyalty (Atrill & McLaney, 2004). (2016). discounted supermarkets, Sainsburys and its main competitors, Tesco and To add, a greater online presence may have also benefitted Tescos margin, giving the lower overheads involved. 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