Uk Supermarket Financial Analysis

Topics: Balance sheet, Generally Accepted Accounting Principles, Revenue Pages: 18 (5190 words) Published: April 7, 2013
Blue CLASS, Group 4|
J Sainsbury plc|
Financial reporting and analysis assignment|

Group members:
Daryush Arabnia
Petra Buckley
Luca Buonocore
Sudarshan Mohanasundaram
Jingsi Yang

Short description of the activities performed

 J Sainsbury plc is a leading food retailer in the United Kingdom. J Sainsbury plc was founded in 1869 and today operates a total of 934 stores comprising 557 supermarkets and 377 convenience stores. It jointly owns Sainsbury’s Bank with Lloyds Banking Group and has two property joint ventures with Land Securities Group PLC and The British Land Company PLC.

The Sainsbury’s brand is built upon a heritage of providing customers with healthy, safe, fresh and tasty food. Quality and fair prices go hand-in-hand with a responsible approach to business. Sainsbury’s stores emphasize fresh food and the staff strives to continuously innovate and improve products in line with customer needs. Their online groceries business continues to grow, with annual sales up over 20 per cent and weekly orders regularly over 130,000. The service reaches over 93 per cent of UK households, through its 187 stores. Non-food online sales also continue to grow, supported by the introduction of Click and Collect service, in over 160 stores. This allows customers the freedom to pick up non-food items ordered online at a store and time convenient for them, rather than waiting at home for a delivery.

In clothing, their TU brand is now the seventh largest in the UK in regards to market volume, which underlines their fashion credibility. They are enjoying growth rates of over 20 per cent in many areas, including books and home textiles. In entertainment and electrical they have been a market-leader in key titles. Major events occurred that affect the results of analysis

In October 2004, J Sainsbury plc announced Making Sainsbury’s Great Again (“MSGA”) recovery plan and completed it in 2008. The plan was based on improving the customer offer and operational efficiency to achieve sustained improvement in the level of sales and profit growth. This affected the performance of Sainsbury in the subsequent years. Assessment of the performance and the financial position

In this chapter, the balance sheet and the income statement of J Sainsbury plc from 2009 to 2011 are reformulated and reported. We list all financial ratios required to perform the assessment of the performance and financial position of the company. All problems encountered during the analysis and assumptions are reported. The chapter ends with a list of the sources used during the analysis. Balance sheet reformulation

J Sainsbury plcBalance sheet format (liquidity)19 March 2011, 20 March 2010 and 21 March 2009(in millions of £) (refer to problem 5)| ASSETS| 2011| %| 2010| %| 2009| %|
Short-term assets|
Cash and cash equivalents| 501| 4.33%| 837| 7.58%| 627| 6.13%| Short-term trade receivables| 93| 0.80%| 71| 0.64%| 49| 0.48%| Short-term other receivables | 188| 1.62%| 101| 0.92%| 88| 0.86%| Prepayments and accrued income | 62| 0.54%| 43| 0.39%| 58| 0.57%| Inventories, goods held for sale| 812| 7.02%| 702| 6.36%| 689| 6.74%| Short-term derivative financial instruments| 52| 0.45%| 43| 0.39%| 59| 0.58%| Non-current assets held for sale| 13| 0.11%| 56| 0.51%| 21| 0.21%| Total short-term assets| 1,721| 14.87%| 1,853| 16.79%| 1,591| 15.56%|  |

Long term assets|
Deferred income tax assets(refer to problem 4)| 172| 1.49%| 183| 1.66%| 189| 1.85%| Long-term other receivables| 36| 0.31%| 36| 0.33%| 45| 0.44%| Long-term derivative financial instruments| 29| 0.25%| 20| 0.18%| 31| 0.30%| Available-for-sale financial assets| 176| 1.52%| 150| 1.36%| 97| 0.95%| Investments in joint ventures| 502| 4.34%| 449| 4.07%| 288| 2.82%| Property, plant and equipment| 8,784| 75.91%| 8,203| 74.32%| 7,821| 76.51%|...
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