Financial Ratio Analysis of Sainsbury and Morrison

Business Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Financial ratio Analysis...............................................................................................................1
Performance Factors....................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
APPENDIX......................................................................................................................................7

INTRODUCTION
The organization and coordination of different types of activities of a business in respect
to accomplish all defined objectives. In the management involves all the functions that use by
business to create corporate policy and organizing, planning, controlling and directing business
resources to accomplish set objectives in certain period of time (Binder, 2016). In the business
management requires the activity of the firm's resources in the most effective way. This report
based on the two companies such as Sainsbury or Morrison. Sainsbury is third largest retail
sector organisation in the United Kingdom. The company has been dealing into hypermarket,
convenience, supermarket and forecourt shop. It was founded in 1869 by John James Sainsbury.
The products of the company clothing, foods, groceries and many others. The headquarter of the
business established in 33, Holborn, London, United Kingdom. In past the company remain in
trends for the general and pick up options. merchandise and clothing offers provide online and
provide wide range of selection On the other side Morrison is fourth largest supermarket in the
United kingdom. It was founded in 1899 by William Morrison. The company has been operating
into food & drink, clothing, books, magazines, CDs and DVDs. The aim of the report to compare
financial activity of the both business to know actual position and which is best supermarket. In
this report analysis financial ratio of both company and determine which are financial and non
financial factors impact on the performance in positive as well as negative manner.
MAIN BODY
Financial ratio Analysis
Profitability Ratio: It is a class of financial metrics that are utilised by business to know
their efficiency to generate earnings that link with the revenues, operating costs, balance sheet
assets and using data from a specific point in time. There are consisting different types of ratio
that calculated to know efficiency of Sainsbury and Morrison.
Sainsbury Gross Profit Margin: As per the calculation it is interpreted that the gross profit
calculated by gross profit and net sales. For this apply the formula of gross
profit/sales*100. The company profit increase from 2018 to 2018 which was 1882 to
2007. The net sales of the business 28456 in 2018 & 29007 in 2019. So gross profit ratio
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of the company 6.61% in 2018 and 6.92% in 2019. There is identified increment in the
ratio in positive manner.
 Net profit ratio: To calculate this ratio apply the formula which is net profit/sales*100. In
the year 2018 company have 309 net profit which is decreasing and reach on 219 in 2019.
So after the calculation get results are 1.09% in 2018 & 0.75% in 2019 that was
decreased as compare of 2018 due to reduce amount of the net profit.
Morrison Gross Profit ratio: To analysis the ratio of Morrison apply authentic formula and get the
result that 3.66 in 2018 and 3.42 in 2019 which is increased as compare with the 2018.
The reason behind that decreasing gross profit of the company.
 Net Profit Ratio: As per the calculation it is getting that sales of the company increase in
the year of 2019 as compare in 2018 which is 17262 to 17735. It impact on the ratio
calculation which is decreased such as 1.80 in 2018 and 1.37 in 2019. It is not good for
the organisation.
Efficiency Ratio: These types of ratio calculated by business to examine how well
business uses its assets as well as liabilities at internally level. There are consisting of turn over,
liabilities and usage of equity etc. To understand the efficiency of business calculate this ratio of
Sainsbury and Morrison.
Sainsbury Stock turn over ratio: As per the calculation of calculate time that in which time turn
over increase of an organisation. To calculate this ratio apply formula of cost of goods
sold/ Average inventory. Cost of the goods sold increase in 2019 as compare of 2018 so it
impact on the average inventory which is also increase by 77. The results are 14.83 times
in 2018 and 14.44 times in 2019. It is good sign for the business due to reduce stock turn
over of Sainsbury.
 Total assets turn over ratio: To compute this ratio apply the formula of Net
sales/Average total assets of the business. The company have sales about 28456 in 2018
and 29007 in 2019 and average total assets 20869, 22771 respectively. So ratio of the
company about 1.36 & 1.27 in the year of 2018 & 2019.
Morrison
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