Ration Analysis Between Two Companies

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UNIVERSITY OF STRATHCLYDE GRADUATE SCHOOL OF BUSINESS

Master of Business Administration International
MANAGING FINANCIAL RESOURCES

FINANCIAL & MANAGERIAL

ACCOUNTING
ASSIGNMENT
October 2008 – September 2009

Prepared by;

Submitted On;

INDEX

No Contents 1 2 3 4 Table of Contents Table of Figures List of Tables Table of Appendices

Pg no 3 4 5 6

2

Table of Contents
Title
1 2 3 4 5 6 7 8 9 Abstract Profitability Ratios Efficiency Ratios Liquidity ratios Financial Gearing Ratios Investment Ratios Result of the Analysis Limitations of Financial Reports References

Pg no
7 10 15 20 22 25 27 27 29

3

Fig No

TITLE

Pg No

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Return on capital employed ratio Return on ordinary shareholders fund Gross Profit Margin ratio Operating Profit Net Profit Margin ratio Inventory holding period(M&S) Inventory holding period (J Sainsbury) Debtor payment period Creditors payment period Working capital cycle Current ratio analysis Quick ratio Analysis Gearing Ratio Interest Cover Ratio

10 11 12 13 14 15 16 17 17 18 20 21 23 23

4

List of Tables No
1 2. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Comparison of Ratios Return on Capital Employed Return on Shareholders fund Gross Profit Margin Operating profit margin Net profit Percentage Summary of profitability ratios Inventory holding period Debtor Payment period Creditor payment period Working capital cycle Sales revenue per employee Summary of Efficiency ratios Current Ratio Quick Ratio Summary of Liquidity ratios Leverage Interest cover Summary of Financial structure Dividend cover Dividend yield ratio Earnings per ratio Price/Earning Ratio Summary of Investment ratios

TITLE
Financial statement summary

Pg No
8 9 10 11 12 13 14 14 15 16 17 18 19 19 20 21 22 22 23 24 25 25 26 26 27

5

Table of Appendices

Title
Appendix A Appendix B
Financial Statement Marks and Spencer Financial Statement J Sainsbury

Page no
30 36

6

1.Abstract The report evaluates the performance and financial position of Marks & Spencer plc and J Sainsbury plc.

1.a) Marks and Spencer plcThis UK Group consists of shops that specialize in apparel, food, beauty products and household items.

1.b) J Sainsbury plcThe Company consists of Sainsbury’s, which has a chain of supermarkets, convenience stores and Sainsbury’s bank. 1.c) The Report The report explains financial analysis techniques used to evaluate the performance and the financial position of both the companies for a period of 3 years, from 2006-2008.A vertical and horizontal analysis of financial position of both the companies is done. A series of ratios are used to assess the Profitability, Efficiency, Liquidity, Financial gearing and Investment status of the companies.

7

Table 1

FINANCIAL STATEMENT SUMMARY MARKS AND SPENCER 2006 1 Revenue 2 cost of sales 3 Gross profit 4 5 operating profit PBIT interest 7797.7 4,812.1 2,985.6 850.1 104.4 745.7 225.1 520.6 1,142.1 4,116.8 5,258.9 2,007.8 2013 4020.8

SAINSBURY 2006
16,061 14,994 1,067 229 125 104 46 58 3,845 8,902 12747 4719

2007
8588.1 5,246.9 3,341.2 1045.9 109.2 936.7 277.5 659.2 846.4 4534.6 5381 1600.5 2102.5 3703

2008
9022 5,535.2 3,486.8 1211.3 82.2 1,129.10 308.1 821 1181.7 5979.3 7161 1977.8 2821.4

2007
17,151 15,979 1,172 520 43 477 153 324 1,940 7,636 9,576 2707

2008
17,837 16,835 1,002 530 51 479 150 329 1,722 8,393 10,115 2595

6 Profit before tax 7 Tax 8 interest and tax 9 Current asset 10 non current asset Profit after

11 total asset 12 Current liability 13 liability
Non current

3877 4799.2 8596

2269 4976

2191 4786

Excluded provisions and deferred tax Excluding minority interest Excluding other receivables Excluding other payables

14 Total liability 15 Total equity 16 receivables 17 Trade Payables 18 Inventory 19 Employees 20 Dividend 21 Dividend per share Earning per share Trade

1,203.70

1,646.80

1,956.70...
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