ADVANCED FINANCIAL REPORTING

Advanced Financial Reporting

Question 11

Introduction1

Ratio Analysis of J Sainsbury Plc1

Ratio Analysis of WM Morrison Supermarket Plc3

Comparative Ratio Analysis4

Nonfinancial performance5

Question 27

Segmental Reporting7

J Sainsbury Plc.7

WM Morrison Supermarket Plc9

Issues face by UK Food retailing industry11

Political Disadvantages12

References13

Appendices15

Advanced Financial Reporting

Question 1

Introduction

This report is basically an attempt to do a brief comparison between two giants in FMCG market of United Kingdom. The organizations which are selected in are J Sainsbury Plc and WM Morrison Supermarket Plc both of these organizations are considered as one of the few top performers of the industry.

This paper illustrates a brief ratio analysis in order to make the financial position of both the companies more clearer which lead towards comparison of those financial findings. Later on non financial performance will also be judge and in the second part of this paper segmental reporting will also be provided.

Ratio Analysis of J Sainsbury Plc

In first part of this analysis all the ratios of J Sainsbury Plc. are being demonstrated and interpreted by the researcher. This will give a brief overview of organization financial system and its current happenings.

J. Sainsbury PLC (NBB: JSAI Y)

Ratios

2012

2011

Profitability Ratios

Gross Profit Margin

0.05

0.054

ROI % (Operating)

9.78

9.78

Liquidity Ratios

Quick Ratio

0.33

0.29

Current Ratio

0.65

0.58

Debt Management

Total Debt to Equity

0.49

0.44

Interest Coverage

5.62

6.14

Asset Management

Total Asset Turnover

1.88

1.9

Inventory Turnover

24.09

26.34

Source: J-Sainsbury Plc. Annual Report (2011/12)

In the table above different ratios of J Sainsbury Plc are illustrated. Each of the ratios are helping in drawing a clearer picture of the organisation current happenings. The gross profit margin of the organisation is telling that the company has a recent decline in this particular ratio which is not good. But the decline is very slight and not on a very alarming situation yet.

The second profitability ratio illustrated is return on investments. This ratio shows that is the company making a good use of the investment it has. Keeping this ratio consistently moving upwards can result increase in level of investment deployed in the company. This ratio is one of the basic concerns of the investors and can bring more investment in the firms operations.

Quick and current ratio basically measures the liquidity of the company. This ratio tells that how readily firm has access to the ready cash for meeting its current obligations. This ratio is really important to be measured as it tells that in case of any sudden economic trouble how well the organization's can meet the end. Quick ratio is a more useful tool out of the two as it exclude inventory. Maintain a higher ratio is better for the organization. Here both the liquidity ratios are increasing which is good for the organization

Debt management is a very important concern for any organisation. The first ratio of this class is total debt to equity ratio; lower total debt to equity ratio is good. As it tells that the company's debts are decreasing or it may also mean that assets of the organisation are increasing. In case of J Sainsbury Plc this ratio has increased in the recent year which is not good for the organisation's well ...