Financial Performance Analysis of Sainsbury
Background and Introduction:
Sainsbury is the 3rd largest supermarket in UK after Tesco and ASDA. In the most recent financial year 2009, company has achieved £18.9 Billion annual revenue; additionally, company has a diversified business streams include property, banking as well as its main business retails. Sainsbury has listed in London Stock Exchange and it is one of the constitutions of the FTSE 100 index.
The purpose of this study is to analyse the historical financial information of Sainsbury in order to better understand the company operation, strategy, management and possible future growth areas. In order to make more sensible judgements, Marks & Spencer (M&S) will be used as a bench marker in the analysis. Marks & Spencer is a very good bench marker in terms of comparison, as it is also a very large retailed in UK, it has also listed in London Stock Exchange, it is also a constitution of FTSE 100 index, and moreover, both company has a very similar operational models which can make the financial performance comparable (Company annual report and company information).
Organisation and Market Analysis:
Both Sainsbury and M&S are the largest retailers in the United Kingdom. They have very well managed supply chain and very abundant distribution channels across the country. This has created much greater competitive advantages for Sainsbury and M&S over the corner shops.
The UK retail industry, as a whole is extremely competitive. On the supermarket site, there are multiple supermarkets competing at whole country level, such as Tesco, ASDA, Morrison and newly emerged Waitrose etc; on the legal site, there are repetitive calls from the government officials for restricting the expansion plans of the supermarkets in order to protect the local retailers; additionally, there are also repetitive calls from different Non-Profit Organisation on criticising harsh credit terms supermarkets being given to the local suppliers which put the local suppliers into extreme unfavourable conditions. These factors have introduced significantly difficulties and uncertainties for the operations of supermarkets.
PS；In order to meet this objective, a wide range of ratios will be calculated. This includes or more ratios:
(a)Profitability And Return