This report will compare Tesco Plc and Sainsbury Plc, paying close attention to selected ratios for comparison. The ratios have been chosen to show profitability, efficiency and liquidity of both companies over a three-year period.
Own Determination from the data given The above diagram shows a graphical presentation of return on equity for Sainsbury and Tesco supermarkets. From the diagram, there is an indication that Tesco has higher returns on equity within the three-year period.
This is owed to its diversified investments in other sectors such as financial sector, real estate investments. Ultimately, effective investment decisions by Tesco doubled by the huge proceeds from the investments have increased the level of returns within the company.
The net margin Source: Own Determination from the data given From the graph above Tesco still shows great ambience in its performance in terms of its profitability compared to Sainsbury.
Notably this increase in the profit margin is attributed to the efficient management of expenses and good strategies of marketing of its products to maximise on the sales. Sainsbury has been recording low volumes of sales revenue compared to Tesco with numerous retail outlets in the United Kingdom to boost the sales revenue.
In addition, Sainsbury low sales revenue can be linked to poor methods of products promotion, which lead to minimal sales revenues.
Tesco has effective methods of collective trade receivables, which boosts the collection of debts owed by customers to the company. Furthermore, it is definite that Tesco has done well in areas of risk management especially with the diversification of its businesses, which improves its ability to invest and expand the market outlets of its products.
Apparently, as noted from the introduction, it is also evident that the retail outlets by Tesco exceed by a bigger margin those of Sainsbury. Liquidity Ratios Liquidity ratios demonstrate the ability of the company to meet its short-term obligations with the available short-term assets.
This is exhibited by two main ratios; the current ration and the quick acid ratio Gibson, The current ratio The current ratio shows the ability of the company to meet its short-term liabilities with the available liquid or current assets.
The ratio is found by the formula; current assets divided by the current liabilities. From the diagram above it is evident that none of the companies was able to achieve a current ratio of 1 for the last three years.
This is a risky observation for the company. Notably it is recommended that a company should have a current ratio of more than one but not more than two.
Even though none of the two companies was able to achieve a current ratio of one in the food retail industry, Tesco showed a greater prowess in its results by having slightly better current ratio compared to Sainsbury.
Eventually the customers might lose trust in the supermarkets if products cannot be supplied in time. There are possible reasons that might have contributed to this observation in the trend of current ratio for the last three years. It is possible that both companies are having excessive orders of inventory, which is held by the company against the diminishing demand for the products.
Besides, it is also possible that the low current ratio is owed to increase in payables for the company which increases the amount of current liabilities to be payable.
Excessive inventory, poor methods of marketing or product promotion, which leads to low movement of goods and services, has a greater impact on the flow of inventory.Tesco has a higher market cap, at $ billion, versus Sainsbury’s at $ billion.
Tesco is a stock priced just over $ while Sainsbury stock is over $ per share. Sainsburys. The aim of this report is to analysis the financial performance of J Sainsbury plc by compare several ratios, in the view of an investor who seeking long term investment.
Four sections will be illustrated, the background of Sainsbury, 10 ratio analysis, a suggestion of whether the company is worth to invest and a limitation of current financial statements and ratio analysis.
Tesco Stores Ltd becomes Tesco Plc in Tesco has always been in competition with its competitors like Sainsbury’s, Till Sainsbury’s was the UK’s largest retailer but in Tesco overtook Sainsbury’s and also in A Financial Performance Analysis of Tesco and Sainsburys.
Published: November 27, Introduction. Food retailing has traditionally been highly competitive with significant pressure on margins and cost control. The UK retailers like Tesco, M&S, Sainsbury's, Asda faced further challenges when the consumer confidence index surged due to the.
Tesco and Sainsbury are in the same business, but there are differences investors should consider. Look at how each company is performing.
Comparing the Financial Performance of Tesco and Morrison from to ; Comparing the Financial Performance of Tesco and Morrison from to Words Jan 30th, 6 Pages. Essay on Tesco vs Sainsbury's Comparative Financial Analysis Words | 9 Pages. Sainsburys. The aim of this report is to analysis the financial performance of J Sainsbury plc by compare several ratios, in the view of an investor who seeking long term investment. Four sections will be illustrated, the background of Sainsbury, 10 ratio analysis, a suggestion of whether the company is worth to invest and a limitation of current financial statements and ratio analysis. Sainsburys and Tecso Financial Analysis. Uploaded by. Seaktheng Chhean. I. Executive Summary The report is intended to assess the financial performance of two well-known companies in the retail sector of the United Kingdom. The two firms are Sainsbury’s and Tesco. This report shows the comparison between the two companies in , , and.
Tesco vs. Sainsbury: Supermarkets on the Stock Market. The report hereto would investigate and compare the financial performance of two of the largest UK food retailers J Sainsbury plc and Tesco plc.
The scope of the analysis would be the three latest financial years