Financial Statement Analysis - Tesco and Sainsbury

Added on - 21 Jul 2020

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FINANCIAL STATEMENT ANALYSIS2
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Backgound of companies and their position in the industry............................................................1Justification of methodology and approaches to analyze and interpret financial statements..........2Discussion of results........................................................................................................................2CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6APPENDIX......................................................................................................................................7
INTRODUCTIONRatio analysis is the one of the important approach that is used to meaure firmperformance. In the current report, performance of Tesco and Sainsbury is analyzed in detail andby considering ratios of both firms detail discussion is carried out on their performance. In startof the report backgroud of companies and their current state in industry is explained. In middlepart of the report, methodology that is used for analysis of facts is justified. At end of the report,results that were obtained are discussed in detail and comments are made on the firmsperformance. Reasons behind such kind of performancce are also identified in the report. It canbe said that scope of present research is wide and detailed analysis of firms is done in the report.Backgound of companies and their position in the industryTesco and Sainsbury are the two one of the largest retail firms in the UK that are lookingfor consistently expanding their business at rapid rate. In current time period it can be observedthat both firms are stuggling to maintain thweir position. Presently, both firms comes in top 5retailers in UK. Hence, it can be said that position of both firms is very strong in the industry.Low profitability is observed in both firms and it is major matter of concern for them (Financialperformance, 2017). Competion become more fierce adter advent of two German retailers whichare Lidl and Aldi. These firms are making available products at very cheaper rate and due to thisreason they are able to attract customers towards their business. Hence, it can be said that Lidland Aldi due to cheaper price of the product are successfully able to give tough competion toboth Tesco and Sainsbury. However, currently also both latter firms are in good position in theindustry but if same condition remain in existence then in that case situation may become worsethen estimated. Tesco in order to make its position strong is closing stores that are runing in lossand is using advanced tools and techniques like Analytics to make its position more stronger anddeveloping deep knowledge about customers. By targeting customers in better manner firm isplanning to expand its business at rapid rate. Sainsbury on other hand, is making every attempt tomaintain its position in the industry and in this regard it is launching many attractive promotionoffiers to the customers so that more and more can be created and retained in the business(Sainsbury warns over pay squeeze as profits slide, 2017). Hence, it can be said that bothh firmscondition is not so strong but currently also they control leading positions in the industry.1|P a g e
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