Portfolio Management in Sainsbury and Tesco

Portfolio Managerial
Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
PORTOFOLIO 1..............................................................................................................................3
a. Financial ratio analysis of Sainsbury as well as Tesco: ..........................................................3
b. Analysis of performance, financial position as well as investment potential in relevance to
both companies: ..........................................................................................................................5
c. Recommendations on the basis of financial performance of business:..................................12
d. Limitations of reliability of financial ratios in context to performance of company:............12
PORTOFOLIO 2............................................................................................................................13
a. Evaluating capital investment appraisals for identifying suitable project:............................13
b. Discussing limitations associated with investment appraisal techniques for the purpose of
decision-making in long run:.....................................................................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Portfolio management refers to a technique of analysing or overviewing various
investment options that company attains and selecting group of profitable investment alternatives
(Chen and Demirer, 2018). This report is based on evaluation of portfolio management in
Sainsbury and Tesco. Former organization was founded in 1869 by John James Sainsbury and is
based in London. While, later company is situated in England and was founded by Jack Cohen in
1919.
This repost consist ratio analysis of both the companies along with its interpretation.
Further, recommendations are provided on the basis of financial performance along with it
limitations of financial ratios are also discussed. Additionally, investment appraisal techniques
are studied and its results are interpreted with the intention of choosing appropriate project for
investment. Further, limitations of techniques regarding investment appraisal is discussed on the
basis of its result of long term decision-making.
PORTOFOLIO 1
a. Financial ratio analysis of Sainsbury as well as Tesco:
CURRENT RATIO Current assets / current liabilities
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Current assets 7581 7857 12570 13600
Current liabilities 11417 10302 20680 19233
Results 0.66 0.76 0.61 0.71
QUICK RATIO Quick assets / current liabilities
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Quick assets 5652 6047 9953 11336
Current liabilities 11417 10302 20680 19233
Results 0.5 0.59 0.48 0.59
NET PROFIT MARGIN Net profit / revenues * 100

Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Net profit 219 309 1320 1210
Revenues 29007 28456 63911 57493
Results 0.75 1.09 2.07 2.1
GROSS PROFIT
MARGIN Gross profit / Revenues * 100
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Gross profit 2007 1882 4144 3352
Revenues 29007 28456 63911 57493
Results 6.92 6.61 6.48 5.83
GEARING RATIO Debts / Equity
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Debts 15085 14590 34213 34404
Equity 8456 7411 14834 10480
Results 1.78 1.97 2.31 3.28
EARNING PER SHARE Total earnings / outstanding shares
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018
Total earnings 219 309 1320 1210
Outstanding shares 54 65 215 244
Results 4.06 4.75 6.14 4.96
PRICE EARNING RATIO Share price / EPS
Sainsbury Tesco
PARTICULARS 2019 2018 2019 2018