J. SAINSBURY FINANCIAL ANALYSIS

J. Sainsbury Financial Analysis

Index

INTRODUCTION3

B) COMPANY'S FINANCIAL PERFORMANCE3

LIQUIDITY RATIOS8

CAPITAL GEARING RATIOS9

INVESTOR RATIOS10

RELEVANT INFORMATION ABOUT SAINSBURY'S11

C) COMPANY'S PERFORMANCE11

E) REFLECTIVE JOURNAL16

REFERENCES18

J. Sainsbury Financial Analysis

Introduction

The business selected for this allotment is J. Sainsbury Plc. The Sainsbury's emblem is constructed upon a heritage of supplying clients with wholesome, protected, new and tasty food. Quality and equitable charges proceed hand-in-hand with a to blame set about to business. Sainsbury's shops have a specific focus on new nourishment and we strive to innovate relentlessly and advance goods in line with our clientele desires (Abdel-Khalik 2000).

We now assist over 19 million clients a week and have a market share of over 16 per cent. Our large shops offer round 30,000 goods and we offer complementary non-food goods and services in numerous of our stores. An internet-based dwelling consignment buying service is furthermore accessible to almost 90 percent of UK households. We provide work 150,000 colleagues.

b) Company's Financial Performance

Answer 1: Analysis of Company's Annual Report

Summary earnings statementfor the 52 weeks to 20 March 2010

2009/10£m

2008/09£m

Change%

Sales (including VAT)1

21,421

20,383

5.1

Sales (excluding VAT)

19,964

18,911

5.6

Underlying functioning profit

671

616

8.9

Underlying snare investment costs2

(79)

(113)

30.1

Underlying share of post-tax profit/(loss) from junction ventures3

18

16

12.5

Underlying earnings before tax

610

519

17.5

Profit on sale of properties

27

57

n/a

Investment house equitable worth movements

123

(124)

n/a

Financing equitable worth movements

(15)

(10)

(50.0)

IAS 19 retirement benefit financing (charge)/credit

(24)

24

n/a

One-off item: agency of equitable selling dairy inquiry

12

-

n/a

Profit before tax

733

466

57.3

Income levy expense

(148)

(177)

16.4

Profit for the economic period

585

289

102.4

Underlying rudimentary profits per share4

23.9p

21.2p

12.7

Basic profits per share

32.1p

16.6p

93.4

Full year bonus per share

14.2p

13.2p

7.6

 

According to Maclaney and Atrill (2002,p. 200), Profitability ratios provide an insight to the stage of accomplishment in accomplishing this purpose. For example, the profitability ratios of Sainsbury plc are:

Profitability Ratios

2005

2010

Return on Capital Employed

8.53%

9.29%

Return on Equity

7.64%

8.95%

Gross Profit Margin

8.65%

8.14%

Net Profit Margin

3.91%

4.25%

Table 1. Profitability Ratios (Base on facts and numbers comprised in Appendix A)

Regarding on this table, Sainsbury's profitability ratios display a quite worsening in earnings from 2009 to 2004 in a margin of 6%. This down high ground tendency is due to some alterations the business had for example, (1) the deal of JS Development and Shaw's shopping centre, this has an influence on the company's present assets (cash) and earnings, in one hand it adds in money for the deal but on the other hand it halts the every day money input, accordingly there were a down turn in earnings in 2.6%; (2) the buy of Swan Infrastructure Holdings Limited, which comprise of a entire up to date IT scheme and it is part of a Business Transformation Programme, thus, there was a increase in 6% of the capital engaged (Fixed assets and snare debt), and furthermore a considerably drop in money in 27%. Because of all these causes, there was a fall in earnings, but as it is a long-run buying into it is approximated to be an earnings lifetime in the future (BERRY 2007).

Efficiency and Effectiveness Ratios

These ratios are utilised to trial and recognise the power and flaws of an enterprise utilising a kind of distinct ratios (Giles et al., 2004, p. 371). The next table shows the effectiveness ratios utilised in Sainsbury's ...