SAINSBURY'S

Financial Analyses of Sainsbury's

Financial analyses of Sainsbury's

Introduction

J Sainsbury is involved in business of retailing, financial services, and property investment businesses in the UK. The company's retail stores and website offers a range of food and non-food products primarily under the Sainsbury's brand. In addition, it provides banking services like insurance, credit cards, savings products, and loans. The retailing segment of the company serves over 19 million customers weekly through a network of 872 stores including 335 convenience stores and 537 supermarkets. The supermarkets offer 30,000 varieties of food products, non-food products and services. The segment also operates internet-based delivery website, Sainsbury's online. The website reaches out to nearly 90% of UK households. Over 8,000 non-food products were also incorporated in the website recently.

Financial services segment consists of the operations of Sainsbury's Bank (trading as Sainsbury Finance). The bank is a joint venture between J Sainsbury and Lloyds Banking Group. According to the company's annual report, its segment revenues solely comprise of retail business and hence the financial reporting is based on one segment.

Ratio Analysis

J. Sainsbury PLC (NBB: JSAI Y)

Ratio Analysis

Profitability Ratios

03/19/2011

03/20/2010

03/21/2009

03/22/2008

03/24/2007

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

 

 

 

 

 

 

Liquidity Ratios

03/19/2011

03/20/2010

03/21/2009

03/22/2008

03/24/2007

Quick Ratio

0.29

0.38

0.28

0.36

0.48

Current Ratio

0.58

0.66

0.55

0.66

0.71

Net Current Assets % TA

(10.71)

(8.66)

(13.24)

(8.73)

(8.16)

 

 

 

 

 

 

Debt Management

03/19/2011

03/20/2010

03/21/2009

03/22/2008

03/24/2007

LT Debt to Equity

0.43

0.47

0.5

0.42

0.48

Total Debt to Equity

0.44

0.49

0.53

0.45

0.57

Interest Coverage

6.14

7.42

4.85

4.72

65.71

 

 

 

 

 

 

Asset Management

03/19/2011

03/20/2010

03/21/2009

03/22/2008

03/24/2007

Total Asset Turnover

1.9

1.92

1.88

1.82

1.54

Receivables Turnover

75.84

97.65

94.58

88.76

72.72

Inventory Turnover

26.34

27.15

26.09

26.49

27.41

Accounts Payable Turnover

11.7

11.41

11.05

10.49

11.01

Property Plant & Equip Turnover

2.49

2.5

2.49

2.45

2.42

Cash & Equivalents Turnover

31.63

27.35

28.18

19.37

15.95

 

 

 

 

 

 

Per Share

03/19/2011

03/20/2010

03/21/2009

03/22/2008

03/24/2007

Cash Flow per Share

0.46

0.55

0.53

0.47

0.44

Book Value per Share

2.9

2.67

2.49

2.82

2.51

The ratios are calculated for 5 year. The interpretations of different ratios of Sainsbury are as follows

Current ratio: the current ratio of the company has decreased from .66 to .58 which is a weakness for Sainsbury (Charles ,2006, 67).

Acid test ratio: the acid test ratio of the company has decreased from .66 to .58. Again it's a weakness, its means Sainsbury liquidity position is shaking.

Average collection period: the average collection period of the company has also changed from 97 to 75 which is a positive improvement and can be considered as strength).

Debt ratio: the debt ratio of the company has decreased from .47 to .43 which is a positive sign for the company that company's debt is reducing (strength).

Interest Coverage ratio: Interest coverage ratio has also been decreased from 7.42 to 6.14 which is a good sign, the reflection of which can be observed in debt ratio.

Operating profit margin: the operating profit margin of the company has significantly Increased from 3.61% to 4.3 (strength).

Cash flow per share: the cash flow per share ratio ...