Financial Ratio Analysis of Sainsburys

Financial Ratio Analysis of Sainsburys A sustainable company needs effective planning and financial management. Ratio analysis is a useful tool to get the financial results and the companys development tendency. It can be divided into four parts. They are profitability, liquidity, efficiency and gearing. This report discusses the analysis of two companies, one is Sainsbury, and the other is Tesco. It is necessary to compare these companies from the data and information in 2011 and 2012, so that demonstrates the use of an appropriate range of ratios. Sainsbury is engaged in grocery and related retailing. It is separated three segments: Retailing (Supermarkets and Convenience); Financial services (Sainsburys Bank joint venture), and Property investments (The British Land Company PLC joint venture and Land Securities PLC joint venture). In 2012, this company has operated over 1000 stores comprising 572 supermarkets and 440 convenience stores (Sainsbury company information, 2013). In the current competitive food retail market Sainsbury has focused on its clear strength: providing shoppers with an easy alternative to the larger out-of-town supermarkets whilst maintaining a commitment to fresh quality foods (Sainsbury, 2012). Tesco has the biggest supermarket chain in the UK. It has over 280, 000 employees working with them (Tesco, 2012). It can maintain their market share and profit in the UK, they also use social network to maintain the relationship with the customer. It is the biggest and most profitable supermarket chain in Britain; it has 30 per cent of grocery market. Tesco has over 2200 stores in the whole United Kingdom (Tesco, 2012). It is a superb development of Tesco, it is from a smaller store to be a superstores. Sales of non-food is one of the key parts of their strategy, it contributes to the growth picture in the UK. Tesco is launching a low price strategy; they offer the lower price for the similar product compare to others competitors. By comparing Sainsbury and Tesco, it is easy to use financial ratio analysis to pinpoint the strengths and weaknesses. This report provides an analysis based on ratio calculation and then compares these companies data to help grasp the current performance of the companies and thus showing a financial snapshot of the companies position. Financial Analysis The following part will analysis the two companies performance in the criteria of profitability, efficiency, liquidity and gearing ratios. Ratios are important when companies need to compare the financial health of various businesses in order to understand the performance and position in the industry. Although some companies are relatively larger than the others such as comparing Tesco with Sainsburys, different scale of operations can be eliminated using the ratios for the same market (Atrill McLaney, 2008). Profitability The purpose of profitability ratio is to measure the degree of success towards business objectives in terms of profit (Atrill McLaney, 2008). It express the generated profit such as expenses, labour cost and sales revenue in relation to a companys business resource. Gross profit margin measures differences between cost of sales and sales revenue, in other words a measure of profitability in purchasing and selling before any other expenses are taken into account. The data shows that gross profit margin had a slight decrease from 5.50% (2011) to 5.43% (2012), although both gross profit and Revenue increased, it could mean that sales prices were lower or an increased on purchasing. Operating profit margin is the comparison of both outputs of businesses: operating profit and sales revenue. It is used to measure the profit from trading operations before interest payable expenses are calculated. The operating profit margin has also decreased from 4.03% (2011) to 3.92% (2012) indicating a change in 2 %. ROCE describes the relationship between operating profit and non-current liability. It has decreased from 10.06% (2011) to 9.50% (2012) by 6%. The results indicate that Sainsburys profitability has decreased by a small amount. Liquidity Liquidity ratios represent the ability of business to meet its short-term financial liabilities in one year time (Atrill McLaney, 2008). The purpose of using current ratio is to compare the assets of the company that will be turned into cash with current liabilities. Different businesses have different rate of ratios, supermarket such as Sainsburys and Tesco usually have relatively lower ratio than 1:1 since the companies are to sell FMCG and all sales are converted into cash immediately. The calculation shows that current ratio of Sainsburys increased by 12.07% from 0.58 (2011) to 0.65 (2012). This suggests that the company is more efficient at converting its assets into cash in comparisons with current liabilities. Acid ratio is similar to current ratio but is calculated excluding inventories therefore the changes from both ratio changes should reasonably be similar. Therefore the result also shows an increase of 12.9% from 0.31 (2011) to 0.35 (2012), it suggests that the business of Sainsburys became more liquid throughout 2011. Efficiency Efficiency ratio is use for assessing the extent to how well assets are being managed (Atrill McLaney, 2008). Inventories turnover period represents the average period of inventories are being held. Since maintaining inventories require higher cost, therefore it is advisable for businesses to have shorter inventories turnover period. The data suggests that Sainsburys inventory turnover period increased by about 1 day from 15 (2011) to 16 (2012), meaning it took longer for the company to sell its goods. The data may also suggest that an increased number of inventories take longer to sell. Moreover, competitor Tesco had inventory three times more than Sainsburys and it took them even longer to clear their goods. Gearing Gearing ratio is a measurement of contribution of long-term lenders to the companys long-term capital structure (Atrill McLaney, 2008). The higher gearing ratio the higher risk for businesses because a small increase in operation profit tends to increase greater amount of returns to shareholders, but small decline also result in greater decline. The gearing ratio of Sainsburys increased by 8.31% from 35.86 (2011) to 38.84 (2012). It indicates a higher risk than the previous year. Interest cover ratio measures the quantity of available operating profit to cover interest payable (Atrill McLaney, 2008). Calculation shows a decrease on interest cover of -1 time from 7.34 (2011) to 6.33 (2012). It indicates greater risk for lenders where interest payments might not be met. However, Tesco has a higher rate of interest cover; the reason may be due to their higher operating profit with less interest payable comparing with Sainsburys. Comparative Financial Analysis In the context of financial report, it is essential to compare ratios internally and externally. In terms of internal, the objective is to criticise whether Sainsburys performance has an improvement or deterioration and it is usually being measured over time such as one, five or ten years. Such comparison helps the company to detect trends for example the ways of how Sainsburys should control the flow of its stock or the amount of dividends which affect its stakeholders action. Comparing financial performance with other competitors within the same industry is also essential, because having comparable levels of performance is one of the major ways to survive in the market (Atrill McLaney, 2008). Analysing from both annual report of Sainsburys and Tesco, the profitability section indicates that Sainsburys had a decrease on both gross profit and operating profit margin while Tesco had an increase performance on profitability for gross profit margin by 4.05% ((8.48 8.15) / 8.15) and operating profit margin by 5.02% ((6.48 6.17) / 6.17). In other words it means Tesco is more capable at generating profit in 2011 / 2012, the reason is probably due to Tesco is a larger company than Sainsburys in terms of the number of stores at about 6 times more than Sainsburys and higher market share at 26.9% while Sainsburys had 14% during 2011 (Mintel, 2012). The previous annual report of 2010 / 2011 shows that the online checkout system helped increase Sainsburys sales by 20% (130,000 weekly orders) which was the strength of the company (Sainsburys, 2011a). However the sales decreased in 2012 which was also partially caused by online shopping. The financial damage was due to sales cannibalisation and charging delivery at low rate. The reason to that is because the trend towards online grocery shopping where more and more customers are shopping online (Guardian, 2013). Another weakness of Sainsburys causing it to lose shares to its competitor Tesco was because of lack in investment internationally, particularly in China (The Independent, 2012). Currently Tesco already has over 100 stores in China. Sainsburys did not fully understand the trends and operating environment comparing to its home competitors. In addition, Current Ratios are also needed to make comparisons between two companies because the current ratios provide us with the first slight of the financial strength of a company, but the current ratio analysis of different companies can be misleading in some case so that investors must be careful while evaluating a company on the bases of its current ratio (Atrill McLaney, 2008). The Liquidity section demonstrates that Sainsburys had a modest increase on current ratio by 12.07% ((0.65-0.58) / 0.58) while the current ratio of Tesco had remained intact. In spite of this, it can be seen from comparison that Tesco is the winner in the current ratio contest as it has more current ratios that is 0.67 in 2012 compared to Sainsbury where the result is 0.65. Consequently, Tesco has more money to afford the liabilities and deal with its bills better than Sainsbury. The reason of this is probably due to the number of operating profit for Tesco at about 4 times more than Sainsburys in 20 12, which was 3,985Â £m and 874Â £m respectively. In order to make an exact measure of financial leverage, demonstrate the degree to which a firms activities are funded by owners funds versus creditors funds, the gearing ratios are needed to be compared also (Atrill McLaney, 2008). According to the annual report of Sainsburys and Tesco, it can be shown that in this section, Sainsbury is doing better because its lower proportion of debts. The calculations demonstrate that the liability of Tesco shows more than approximately 73% of its debt is from borrowings while the loans of Sainsbury is lower than about 73% comparing with Sainsbury. Limitation Ratios provide an efficient and straight forward method to analyse the performance and position of businesses, however there are limitations companies should take into account. Firstly, all numbers are taken and are used from the financial statements; therefore the results of all ratios can only be based on the quality of the information. It indicates that intangible non-current assets such as the value of brand names and goodwill cannot be included into the balance sheet. Moreover, no businesses are identical therefore companies should be aware of differences in accounting policies, financial year ends between businesses and financing methods when carrying out ratio analysis especially during benchmarks. Secondly, inflation can affect the values of ratio analysis. Since balance sheet is made for the previous financial year, therefore the values of assets held could change in a period of time which results little relation to current values. Inflation can also affect the measurement of profit, it may show that the current prices does not reflect to previous expense, in that case profit may be overstated leading to inaccuracy. Thirdly, companies should only use ratios as an insight but not fully rely on it. The reason is due to the fact ratio cannot measure information such as differences in scale between businesses and capital employer, profit / sales used for measuring changes of company size over time. As ratio can only measure relative position and performance of a business. Conclusion Recommendations This report reveals the financial analysis techniques used to evaluate the financial performance of Sainsburys, and the evaluation of the companys position and performance. The result shows that Sainsburys overall performance in 2012 was similar to 2011 but with minor decrease which may affect shareholders / investors decision on whether or not to continue investing on the company. It is advisable for Sainsburys to increase dividends in order to keep its investors at a satisfy level. As the company is also the initiative to the Click Collect service, it should focus investment on improving its quality and differentiation from the competitors. In terms of pricing issue leading to decrease on profitability, there are two choices for Sainsburys. First is to keep the pricing at the same level because its market share has been increasing, or secondly to increase price to gain profit where the decision is depending on Sainsburys objectives.

physiotherapeutic management of stroke :: essays research papers

Introduction Cerebrovascular disease or the term stroke is used to describe the effects of an interruption of the blood supply to a localised area of the brain. It is characterized by rapid focal or global impairment of cerebral function lasting more than 24 hours or leading to death (Hatano, 1976). As such it is a clinically defined syndrome and should not be regarded as a single disease. Stroke affects 174-216 people per 10,000 population in the UK per year and accounts for 11% of all deaths in England and Wales (Mant et al, 2004). The risk of recurrent stroke within 5 years is between 30-43%. One problem is that the incidence of stroke rises steeply with age and the number of elderly people in the UK is on the increase. To date people who experience a stroke occupy around 20 per cent of all acute hospital beds and 25 per cent of long term beds (Stroke Association, 2004). The British Government now identifies stroke as a major economic burden on the National Health Service (DoH, 2002). Fifty percent of stroke survivors will experience some residual impairment (physical and cognitive), which is devastating to the individual and their families (Rudd et al, 2002). It is therefore vital for patients and resources that maximum functional recovery is achieved as fast as possible. The physiotherapist has a key role to play in the management of stroke patients, through assessment, prevention strategies, acute management and recovery. This essay aims to critically discuss physiotherapeutic management and examine how it has and may be influenced by a number of factors (e.g. type of organized system for the delivery of post stroke care, setting of therapy, evidence based practice from which National Guidelines are produced etc). The first stage is to outline stroke pathology, of which forms the basis of appropriate management. Pathology There are two major stroke sub groups, those resulting from infarction (ischemic stroke) and those resulting from haemorrhage (intracerebral and subarachnoid). Each of the types can produce clinical symptoms that fulfil the definition of stroke. The types often differ with respect to survival and long-term disability, from recovery in a day to incomplete recovery, severe disability and death (Warlow et al, 2001). Ischemic stroke is the most common type of stroke, which accounts for approximately 85% of all cases (Rudd et al, 2002). It affects 35 people per 100,000 of the population per year (Coull et al, 2004).

Patton-Fuller Hospital Essay

Patton-Fuller Hospital is a community hospital that has remained aiding the community since the year 1975. Yearly examinations have been conducted by self-governing audits to review this year’s financial performance in comparison to preceding years. The financial statement review highpoints the alteration between the audited and unaudited reports classifies the association amongst revenue resources and expenses, despite the fact defining the assets of revenue sources on recording. Financial statement assessments subsidize an excessive level accounting of the statistics controlled in the audit. Financial statements of audited and unaudited statements contain the same type of statistics. Patton-Fuller Community hospital conducts audits agreement with auditing ethics in the United States. Self-governing Auditors ensure audited the balance sheet of Patton-Fuller Community Hospital as of December 31 of 2009 and 2008. The audited balance sheet reports the assets for 2009 which a sum of $587,767. The audited balance sheet reports the whole assets for 2008 of a total $548,535. The upsurge from 2008 to 2009 is 39,232. Liability total for 2009 is $ 462,153. The liability volume for the year 2008 is $213,450. This was a rise from 2008 to 2009 and the amount of the growth is $248,703. The entire equity and liabilities for 2009 is $587,767 and 2008 $548,535. This is an upturn from 2008 to 2009 with $ 39,232. In 2009 the total revenues show for $ 462,982 and then for 2008 $ 42,314. This total increase from 20o8 and 2009 is $41,668 according to the audited revenue and expenses annual report. The increase of $25,869 from 2008 to 2009 is shown from the audited revenue and expenses annual report. The year 2009 had $463,293 and 2008 had $437,424. The effects of revenue can be seen on the financial reporting by the fluctuations versus the expenses. From year to year you can see the fluctuation in revenue for the hospital. The revenues and expenses are grouped together by total revenues, total expenses, and net income. The total revenues include net patient revenues and other revenues. The total expenses include salaries and benefits, supplies, utilities, and depreciation. The net income shows the non-operating income (loss) as well as the investment income. By grouping the revenues and expenses it will help with separation and looking at the reports. The Patton – Fuller Community Hospital’s revenue comes from a  variety of sources, this includes net patient revenue and other different types of revenue. The revenue has definitely increased from 2008. When comparing the revenue received by the hospital to its operating expenses the difference lies in what revenue items are included in each ratio formula. In 2008 the total operating revenue is less than the total operating expenses therefore; the hospital operated at a loss and gave them a negative operating margin. In 2009 the total operating revenue exceeds the total operating expenses therefore; the hospital had a profit that year. As a result there was a positive operating margin. The way in which a hospital’s revenues and expenses are grouped for planning and control varies from hospital to hospital. At Patton-Fuller Community Hospital, the expenses are grouped by salaries and benefits, supplies, interest, and a lot more. During salaries, the staff of the hospital must be paid for the work they do. Members of the staff (therapist or surgeons) have a highly qualified job in which they have spent more time in education which causes them to have higher wages. During benefits, there are hospitals who offer benefits for the employee and their family with a discount. This can be very expensive for the hospital. The hospital needs supplies in order to fulfill their duty and many of the supplies are expensive as well as cheap. Because the hospital has to order the supplies in large quantities, it becomes very expensive. Interest is another expensive thing that the owners of the hospital have to deal with. With the hospital building costing so much, it leads to the owners taking a big mortgage out to pay for the building. When a mortgage is being taking out, interest develops. Another reason for an interest to develop is a loan to buy high price technology or machinery. There are many ways that Patton- Fuller Community Hospital grouped for planning and control for revenues and expenses. Inclusive the analysis of the financial statement originate many constructive results and the audited information and unaudited information enclosed the equivalent data. The revenue sources ensured a confident influence on the hospital and will lead to forthcoming development. Patton-Fuller Hospital Revenue review did not disclose any concealed problems. Financial managers need to carry on making assessments of the daily actions. Reference Patton-Fuller Community Hospital. Retrieved July 14, 2014 from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Healthcare/PFCH/isoverview.asp?subgroup=hr

The Problem Of Conflict Resolution - 1383 Words

Abstract Everyday people in the educational setting are required to work in groups and make decisions that affect everyone. There are very few situations where everyone in a group or team will agree totally, as a result, conflict is inevitable. It is important that we, as Human Resource administrators understand that our schools are comprised of employees representing different cultures, backgrounds, races and religious beliefs. We must ensure that we adopt and practice modes of communication that are conducive to the promotion of great teamwork. Conflict can arise from any one or more general sources in the workplace (McShane Von Glinow, 2003). Conflict as it arises should be addressed immediately, as if left unattended can create†¦show more content†¦Where is the combination of what is the daily work together to situations that arise from the interaction between people, there are several times clashes of ideas, outlooks and values. What is teamwork? There are many variables that attribute to having a great team. There are many people that have to define and recognize good team work but none more important than the Human Resource Department. Team work is simply defined by many HR departments as the dynamics that occur between employers and employees that promote and encourage effort on behalf of the employee which ultimately translate into an increase in productivity of the employees. In most cases, this process produces profits or the desired result for the company which in return ensures a certain level of comfort for the employee. What Is Conflict? Conflict is defined as a fight, battle, or struggle, especially a prolonged struggle; strife. Simply put conflict is the disagreement and disharmony among active participants that if not addressed in a timely manner can result in lasting damage to relationships and the business. The Most Common Sources of Conflict Poor Communication Poor communication is probably the biggest cause of conflict between employees in the workplace. This can result in a difference in communication styles or a failure to communicate. Failing to communicate in the workplace may cause employees