FINANCIAL ANALYSIS

Sainsbury Financial Analysis

Sainsbury Financial Analysis

Executive Summary

This report aims to provide the financial analysis of the company Sainsbury. The company has been doing well in the past five years and is a good opportunity for the investors to invest their money; however, there are minor concerns. The company is doing well in terms of its financials and has been a good source of income for the investors who have invested in the shares of this company. The beta analysis of the company shows that the stock is volatile and moves more than the stock market, but it provides huge returns as well. If an investor is ready to take the risk and has the risk appetite, it is beneficial for the company. Sainsbury is a big retailing company and falls in the industry of the huge supermarkets such as Tesco and Morrison. When the company is analyzed alone on its own financial statements, it is a good investment; however, if the company is compared to other companies in its industry, the company is behind Tesco. It still has a long way to go.

Introduction

Sainsbury is a big retailing company and is known for its financial services, as well. It has a supermarket, home based stores (online stores), convenience stores and also a Sainsbury bank. The two main segments in which the company operates are the food retailing companies and the financial services.

Sainsbury is a huge company and serves approximately 16 million customers every week. It has 752 supermarkets which includes 297 convenience stores in the United Kingdom. The Sainsbury bank is a joint venture between the Bank of Scotland the Sainsbury.

This report aims to provide financial analysis of the company for the past five years and will give an insight to the investors as to whether they should invest in this company or not. The report will present the financial analysis and the beta analysis, both of which will help the investors in knowing about the company and deciding whether they should invest or not. The analysis presented in this report will give information about the company for the past five years.

Ratio Analysis

The ratio analysis of a company tells the reader how the company is doing in terms of profitability, liquidity, debt management, share price etc. The following section will provide the ratio analysis for the company over the past 5 years:

Profitability Ratios

Profitability Ratios

2011

2010

2009

2008

2007

ROA % (Net)

5.77

5.62

2.88

3.35

2.92

ROE % (Net)

12.35

12.56

6.22

7.11

7.91

ROI % (Operating)

9.78

9.71

8.92

7.19

7.68

EBITDA Margin %

4.3

3.61

3.87

3.45

2.78

Calculated Tax Rate %

24.38

24.87

30.68

31.19

32.08

The profitability ratios of the company have increased over the past five years. The return on assets and the return on equity has increased which shows that the company is performing well. The return on investment has also increased which means that whatever the company has invested, it has started earning on it. The earning before interest and tax has also increased which shows that the earning of the company has increased as compared to the interest and tax rate. The tax rate of the company has declined which has increased the earnings of the company ...