Financial Analysis of J Sainsbury Plc
1) Introduction
1.1 Chosen company of focus
The company I have chosen to focus this report on is J Sainsbury’s Plc. Sainsbury’s Supermarkets was established by John James and Mary Ann Sainsbury in 1869 and at present it is Britain’s longest standing major food retailing chain. I will be comparing and analysing Sainsbury’s financial information to form my judgement about the company’s performance and recommend whether investing in Sainsbury’s is a good idea.
1.2 Reasons for choosing Sainsbury’s
Sainsbury’s at present is one of the world’s leading retailers and today it has more than 2,000 stores around the UK. Sainsbury’s is one of the most famous retailers in the UK, however not everyone knows quite how successful Sainsbury’s really is. Therefore I have chosen Sainsbury’s for the purpose of identifying whether it is worth investing in, and how successful the company really is?
1.3 Aims and Objectives of this report
The main aim of this report is to advise clients on Sainsbury’s health and performance and recommend what action they should take in relation to the company’s shares. I will assess the financial health of J Sainsbury’s Plc in the year 2008 through its accounting ratios. The process of evaluation will be based on the comparison of Sainsbury’s accounting ratios of the financial year 2008 and year 2007. Five kinds of ratios have been used to analyse the financial health of Sainsbury’s, which are liquidity ratios, profitability ratios, efficiency ratios, investment ratios and gearing ratios. All financial data has been selected from Sainsbury’s recent two years annual reports. Mainly three financial statements have been approached for the purpose of ratio analysis, which are profit & loss accounts, balance sheets and cash flow statements.
2) Findings
In order to analyse the data held in Sainsbury’s financial reports, I have calculated the liquidity ratios, profitability ratios, efficiency...