WebWe collected financial data from recently published financial statements by Tesco and J Sainsbury to create financial analysis report for your review and consideration. This meaning that Sainsburys could continue being deprived of money. Kantar Worldpanel (2014): Unprecedented changes in grocery retailing in the UK, UK, Kantar Worldpanel. Sainsburys capital structure with one of its closest rivals. A company with a gross profit margin higher than that of its competitors, or the industry average, is deemed to be more efficient and is therefore, all things being equal, preferred, (Paramasivan, 2009). Finally, a summary of the findings and recommendations will be drawn. their long-term debt and become more dependent on steady sources of finance. To be more solvent, it is recommended that Sainsbury should enhance the availability of its current assets, particularly cash. Tesco is international grocery and one of the fifth largest retailer in the world, who, provides facilities to its customers. With this the value of inventories will be lower than the value recorded on financial statements. Retrieved from https://phdessay.com/financial-performance-analysis-of-tesco-plc-and-j-sainsbury-plc/, Hire skilled expert and get original paper in 3+ hours, Run a free check or have your essay done for you, Didn`t find the right sample? The ratios show how Sainsburys will be having more profit from each sale. an effect on the share price of the organisation. WebView Tesco_Sainsburys (1).docx from FINANCE 534 at Harvard University. With this, Tesco receives the all the money from sales in 27 Days on average, whereas it doesnt have to pay suppliers for the goods sold for 38 Days on average. The Essay Writing ExpertsUK Essay Experts. However, Sainsburys leading competitor is Tesco PLC, therefore the main comparison throughout the report will be made between J Sainsbury PLC and Tesco PLC. Both Sainsburys and Tescos main business comes from grocery sector, however both companies have additional businesses such as insurance and their own brand of clothing (Sainsbury, 2016). Tesco ensures the availability of assets to meet its current and long-term obligations, whereas Sainsburys obligations are relatively more than its assets. database? refers to money matters or transactions of some size or importance: a lucrative financial deal. long-term debt than some of its main competitors. In addition, the innovative marketing and pricing strategies of Tesco have attracted more customers (Dyson, 2007). Cardiff Metropolitan University, London School of Commerce, MBA Dissertation, International Journal of Business and Management. Investment Analysis of Tesco, Sainsbury, Morrison and Marks And Spencer, Background information on Sainsbury's Plc, get custom Tesco is third largest retail company produces, grocery products to customers by means of physical as well as online medium. Its financial position is very strong same as get succeed to fulfill customer, ). assignments. ?>, Order original essay sample specially for your assignment needs, https://phdessay.com/financial-performance-analysis-of-tesco-plc-and-j-sainsbury-plc/, Financial Stability of Tesco PLC and J. Sainsbury PLC, Profitability of Tesco PLC and J. Sainsbury PLC, Tesco Plc. 10 minutes with: Financial Performance Analysis of Tesco Plc and J Sainsbury Plc. WebTescos net assets decreased from 13369 in 2020 to 12325 in 2021. Well write a 100%plagiarism-free paper this fast! To learn more, view ourPrivacy Policy. Further, using Tescos annual report 2016, a review of the companys financial performance in terms of corporate and social responsibilities against its environmental, social and corporate governance report will be carried out. This shows that Sainsburys has the least movement in This is because any shares economic climate banks, as well as other lenders, have become much more cautious. Introduction equity is 6,365m. least liquid. Below calculated are the three liquidity ratios for Sainsbury PLC over the period of past two years: i)Current Ratio: Current Assets/ Current Liabilities. This would be the value of a companys current assets that could be converted to cash over the next twelve months compared to the value of liabilities that may mature over the same period, (Peterson, 2012). Retrieved 9 December 2016, Other ratios to be considered are Gross Profit Margin and Net Profit Margin. Sainsbury defied the gloomy rhetoric around consumer spending in its third quarter to January 7 as it raised full-year guidance on the back of a record Christmas. and compared to Tesco PLC is in a far more secure and risk friendly financial service in London(Butler, 2016) . Our academic experts are ready and waiting to assist with any writing project you may have. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. Any information contained within this essay is intended for educational purposes only. If you continue, we will assume that you agree to our, The usefulness of Supplementing Financial Analysis, (Current assets Inventory)/Current liabilities. Chapter I Innovation like This is a Direct has poached Sainsburys head of technology Jon Rudoe for a newly created (Sainsburys, 2010) Tesco plc and J Sainsbury Financial analysis. likely reason is because long term loans are viewed as a safer method of Sorry, preview is currently unavailable. Yes, we can! With Sainsburys constantly innovating with the launch of their premium fashion Note: Adapted from Tesco PLC, Financial Times, 2016, Chart 2: Pie Theory charts for Tesco PLC that Tesco has much higher debt to equity ratio, long term debt to capital Retrieved 9 December 2016, from https://markets.ft.com/data/equities/tearsheet/profile?s=SBRY:LSE, Tesco This reflects that Tesco has been inclined to ensure the availability of internal equity. WebBy comparing Sainsbury and Tesco, it is easy to use financial ratio analysis to pinpoint the strengths and weaknesses. 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.,. Although Tesco PLC is dividend that is being paid out. Tesco For my assignment I have chosen Tescos. This means that as of today, J Sainsbury is one Inflation has impacted the cost of inventory and goods due to which the gross profit of both companies has declined. One very recent thing is the Parent Sainsbury PLC is the second leading superstore chain in the United Kingdom. "Sainsbury PLC and Tesco PLC Financial Analysis." statements involves income statement, balance sheet and profit and loss account. Tesco PLC has sustained its leading market position in the UK retailing industry since 1995. This shows that likely to get lower interest rates. the debt. Investor confidence in both businesses would allow the ratios to be lower. Scholars acquisition of Home Retail Group, they should be looking to continue this First is dividend pay-outs; dividend growth has been stagnant for both companies over a three-year period, while Graph 1 below shows the share price performance, showing that over a three-year period, shares in Tesco and Sainsbury are down by 32.41% and 19.48% respectively. J Sainsbury PLC was founded in 1869 and falls under the supermarket sector. The technique of ratio analysis is used by an entity as. As an organization, Tesco has diversified its operations and extended into new markets in various countries such as China,. Investors may demand higher ratios from start-up or riskier companies. attractive to potential investors is how ethical they are as a company. Therefore, the operating profit margin has a huge decrease in 2015. Such measures have become increasingly popular among investors and financial evaluators as they provide detailed information about the financial performance of a company (Atrill & McLaney, 2004). 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. Analyzing the financial indicators of Sainsbury PLC and Tesco PLC, it can be determined that the overall profitability of Sainsbury PLC has remained relatively less than Tesco PLC. Both companies are famous to, achieve maximum profit with customer satisfaction that's why these two industries selected for, analyzing of t their financial statements. Sainsburys also offers shareholders a Dividend Reinvestment Plan. .I believe this is important to potential investors as a premium fashion brand Since 1869 Sainsburys has continued to grow and has become one of the largest supermarkets in the UK, with a current market share of 16.9%. total value of 8,778m at March 12th 2016. Comparing sales of both companies, it can be observed that Sainsburys has a higher sales volume. BusinessEssay. Another efficiency to mention could be the difference seen between average receivables and average payables. For the year 2015/16, as they are now (Aldi, 2014). ratio has faced a massive increase in 2015, this isnt good for Tesco as they In 2014 and 2013, Sainsbury has good interest coverage ratio that is 6.82 and 6.17 respectively, but in 2015, it drops to 0.6. Note: Ratios calculated from data in Table 1. is a fairly low value and so it seems the company is not being funded largely 2014/15 and a substantial decrease of 30% since 2014/15. of finance combine to form the total value of a firm, or the total Pie. This. In terms of return on capital employed computation, Sainsbury generated a four percent return on capital employed or ROCE. Atrill, P & McLaney, E 2004, Management Accounting for Decision Makers, Financial Times Prentice Hall , London. The managers use the information to determine the profitability of the company in comparison to its competitors. days is calculated by taking the inventory turnover ratio dividing the number Their market share is It is, Analysis of Financial Statements of Tesco and Sainsbury - Report. support@phdessay.com. Sainsburys recently Poached Poundlands boss Kevin Tesco: Assessing the change implications of Tescos Rapid International Business process. concept approaches to other small and retail businesses of UK in grocery and other food items. role as it merges its retail and IT terms(Bowden, 2016) .This is important Therefore, if an organisations aim is to make their business as valuable as You can clearly see from Table Efficiency ratios show how much a company is making use of 2022. In particular, investors and creditors are highly concerned with determining the financial positioning and performance of the company and are interested in its ability to utilize the investment or to pay off loans it acquires (Black & Al-Kilani, 2013). In comparison with Tesco, Tesco has excellent use of its capital, increasing to 26.13% in 2015, almost a 43% increase. two companies into their stores as part of a strategy over the next few years. Consumers purchasing power has been low, but Sainsburys brand value and competitive prices have enhanced the sales volume of the company. brand company to reach the target of better performance. According to the latest Kantar Worldpanel (2014) report, Tesco held 29.6% of the UK grocery market in top place, while Sainsbury held 17% of the market, company of big 4 retailer Sainsburys has confirmed its acquisition of Home companies tend to attract more customers as customers know they are buying from accumulating debt because the firm will have a longer time frame to pay back Order custom essay Financial Performance Analysis of Tesco Plc and J Sainsbury Plc. "Sainsbury PLC and Tesco PLC Financial Analysis." is a large contender in the grocery stores market, Sainsburys hold a 16.9% I have illustrated this concerned with current assets and current liabilities in view of Sainsburys financial Sainsburys have claimed how they believe that their current liabilities will for all three companies is a minus figure. as appropriate. From studying Sainsburys, it is clear that the company is over the past three years. My this defines the ability of an enterprise by categorising bin different variety such as profitability. little it relies on debt financing and how it has a much lower level of inventory in the past three years. on building shareholder value (Sainsbury, 2016). they havent overestimated much on sales and products, meaning they have less Table 1: Fiscal data as of March 12th 2016 of Sainsbury PLC Balance Sheet figures Tesco PLCs annual report (2013) indicates a major decline i.e. We're here to answer any questions you have about our services. From studying Sainsburys, it can be observed that Sainsburys could continue being deprived of.! And compared to Tesco PLC has sustained its leading market position in the UK retailing industry 1995! ).docx from finance 534 at Harvard University Sainsburys brand value and competitive have... Ratios from start-up or riskier companies Journal of Business and Management facilities to its competitors in 2015,. 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