Financial Analysis of Sainsbury's PLC: Ratio Analysis and Sources of Finance | Desklib

Assessment Brief/Task
The detailed requirements for this task are as follows:
There are four equally weighted parts to this assignment
Part 1
You are to select a PLC that has a listing on any recognized stock exchange of your choice and agree this with
the module tutor.
You are required to produce a Financial Analysis of the company based upon the following ratios for the
company for the years 2017 and 2016
1. Operating Profit Margin Ratio
2. Price to Equity [P/e] Ratio
3. Gearing Ratio
4. Asset Turnover Ratio
5. Return on Capital Employed (ROCE).
6. Interest Cover Ratio
(you will need to show all relevant workings and supporting documentation). Your analysis will be based
upon the ratios calculated and utilizing any background industry/company information you think is relevant.
Now examine the typical sources of finance options available to justify a 20% Net Asset investment in
meeting future management priorities of the chosen PLC w.r.t addressing its competitive and leadership
edge of staying invested in either :- R&D or Innovation or Debt Issuance {repayments}/ Restructuring / Re-
engineering or Technological upgrades or Divestitures or M&A/ JV’s or any other suitable Asset Purchase
constituting Capex requirements by integrating the management discussion & analysis from the Ratios
evaluated
# R&D – Research & Development, M&A – Mergers & Acquisitions, JV’s – Joint Venture, Capex- Capital
Expenditure.
Part 2
You are to discuss the question whether the budgeting process is still fit for purpose in the modern
environment from a planning and control dimension? How can scalable technologies such as cloud
computing, big data and predictive analysis software prove ‘reliable’ in strengthening the planning,
budgeting and forecasting exercise to be fully automated in the next five years.
Part 3
Discuss the different types of performance management tools and techniques which can be deployed in
large global companies for evaluating its suitability across a range of business and economic environments.
Part 4
Imagine you are a CEO of a large global corporation and one of your Group Directors has approached with a
business plan requiring significant capital expenditure. What types of capital investment appraisal
techniques would you deploy to arrive at, while examining the fiscal viability of business proposal?
Assessment Criteria
The proportions of the assignment should be

1. How does understanding the concepts of financial reporting help in appreciating the of
accounting standards (IFRS , GAAP), when judging true value of organizations (25%).
2. Comparison of company performance with industry based upon ratios calculated (25%)
3. Analytical discussion of the relevance of the budgeting process to the current commercial and
industrial/technology environment (25%)
4. Evaluate the various performance management tools and investment appraisal techniques of its
suitability and relevance in the evolving business and economic environment.(25%)
Assessment limits: No more than: 6500 words, excluding appendices
Assessment (For further details see the Module Guide)
Assessment 1: Coursework (weightage 50%, not Exceeding 3000 Words)
Assessment 2: Coursework (weightage 50%, not Exceeding 3000Words)
Special Assessment Requirements
Both elements of assessment must be passed in order to pass the module
ASSIGNMENT INFORMATION
Full/ Part Assignment Full
Date Assignment Issued
Date Assignment Due

Assignment IV by Col. Anil Ahluwalia
TO BE FILLED BY THE FACULTY
Faculty Name Mr Shahid A Wani
Contact No.
Email ID [e-mail]
TO BE FILLED BY THE SUTDENT
Student Name
Student ID
Email ID
Turinitin ID 17975395
Turnitin Enrollment key GM707
Course
Date Submitted
TO BE FILLED BY THE ASSESSOR
Assessment types Marks Marks
Awarded
Understanding the concepts of financial reporting help 25
Comparison of company performance 25
Analytical discussion 25
Evaluate various performance management tools and investment
appraisal techniques
25
Overall Marks 100
Overall Grade
Faculty Name
Summative Feedback by Faculty for further improvement
Table of Contents
Introduction..........................................................................................................................

Assessment 1.......................................................................................................................
Answer to Part 1..............................................................................................................
Answer to Part 2..............................................................................................................
Answer to Part 3............................................................................................................
Answer to Part 4............................................................................................................
Assessment 2.....................................................................................................................
Answer to Part 1............................................................................................................
Answer to Part 2............................................................................................................
Answer to Part 3............................................................................................................
Answer to Part 4............................................................................................................
Conclusion.........................................................................................................................
References..........................................................................................................................

Part1
The scope of the study has provided the assessment of ratios for Sainsbury’s PLC during
2017 and 2016. Some of the main ratios considered for the report includes “Operating Profit
Margin Ratio, Price to Equity [P/e] Ratio, Gearing Ratio, Asset Turnover Ratio, Return on
Capital Employed (ROCE) and Interest Coverage Ratio”. This section of the report has also
discussed on the typical sources of finance options available to justify a 20% net asset
investment for meeting future management priorities. The next part of the study has focused
on the necessity of including budgeting process as per planning and control dimension. The
third segment of the study has highlighted on the inclusion of performance management tools
which are depicted to be deployed in large global companies and discern the suitability of the
range of business and economic environments. The next section of the study has focused on
the understanding the concepts listed under the financial reporting beneficial in appreciating
the various types of the accounting standards listed as per IFRS and GAAP. This will be done
for judging the true value of the selected organization. The second part of assessment 2 has
provided the comparison of the company performance as per the industry-based standards as
per the ratios computed for the company. The significant nature of the analytical decision has
been able to provide the relevance of the budgeting process as per the present commercial and
industrial technology environment. The final section of this section has been conducive in
addressing the various techniques used as per the performance management with application
of the relevant management tools relevant with the suitability of the evolving business and
economic environment (Renz 2016).
Assessment 1
Answer to Part 1
Ratio Analysis of Sainsbury for 2017 and 2016
1. Operating Profit Margin Ratio
The operating profit margin is computed by dividing the total operating income with total
sales. As per the depictions of the profitability ratios it can be seen that the operating profit
margin has reduced from 3.01% in 2016 to 2.45% in 2017. This shows that Sainsbury’s PLC
was not able to maintain a sufficient short-term profit pertaining to increased reliance on short
term debt financing. It needs to be also ascertained that the operating income of the company
was reduced from $ 707m in 2016 to $ 642m in 2017 (Barr and McClellan 2018).
Particulars` 2017 2016
$m $m
Operating Income A 642.0 707.0
Revenue B 26224.0 23506.0