Financial Ratio Analysis and Reports

This assignment delves into financial ratio analysis as a tool for assessing commercial bank performance. It specifically focuses on analyzing bank performance in South Africa using relevant financial ratios. Furthermore, the assignment explores the connection between corporate strategy and human resource management (HRM), examining how strategic decisions influence HRM practices. Finally, it touches upon the value relevance of consolidated versus parent company financial statements and the use of financial statements as monitoring mechanisms for small commercial loans.

Managing Financial
Resources

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Sources of finance available to a businesses.........................................................................4
1.2 Implication of different sources of finance..........................................................................5
1.3 Evaluation of different sources of finance............................................................................5
2.1 Cost of different sources of finance......................................................................................6
2.2 Importance of Financial Planning.........................................................................................6
2.3 Information which are needed for making decisions............................................................7
2.4 Impact of finance on the financial statements.......................................................................7
3.1 Cash budget for the business entity.......................................................................................8
3.2 Calculation of Unit Cost........................................................................................................9
3.3 Assess the viability of a project using investment appraisal techniques.............................10
TASK 2..........................................................................................................................................12
4.1 Main financial statement.....................................................................................................12
4.2 Compare the appropriate formats of financial statement in the different type of business.12
4.3 Interpretation of financial statements using appropriate ratios by using internal and
external ratios............................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Financial management includes the planning, organising, controlling as well as
monitoring the different resources so that they can attain the goals and objectives. The
employees of the business entity have to make the statements which are related to finance so that
they can improve the performance as well as viability of the organisation (Arthur, Cheng and
Czernkowski, 2010). It assist in providing the appreciation of costing along with the budgeting
techniques and they have their own role on the control system of business enterprise. They have
to develop the methods so that they can evaluate the capital investment proposals. The present
report is based on J Sainsbury PLC which is a second largest chain of supermarket in UK with
having a share of 16.9%. J Sainsbury PLC having three divisions which includes supermarket,
Bank and Argos . In the below mentioned report, discussion based on the different sources of
finance and also the cost should be analysed of the different sources of finance (Managing Your
Resources, 2017).
TASK 1
1.1 Sources of finance available to a businesses
Different sources of finance include the J Sainsbury plc which is following:
1. Equity share:- Equity share is also known as ordinary share. It is the owner of the
company is is also issue for cash. Ordinary share have right to take decision in a
company. In this share the risk is maximum with the business (Bennouna, Meredith and
Marchant, 2010). And also have voting rights to the holders. Equity shares are the
included the dividend after paying to the preference share and the dividend depend on the
profit of the company. And the dividend rate is not fixed in equity capital.
2. Debenture:- Debenture is a long term security and fixed rate of interest. It is also known
as bond which is issued by the company. Debenture is a type of loan but it is not issued
by the bank. Debenture have first right to take interest in fixed rate in the availability of
the profit. Debenture is debt which is used by companies to borrow money at a fixed rate
of interest that can help in raise of money regarding the company (Bodie, 2013).
3. Retained earning:- It is a reinvestment process that is recorded in the equity share capital.
It is non payable but also reinvest in the company. In this process the net income added in
the retained earning and subtracting the net losses and opening retained earning and also

subtracting dividend paid by the share holders. It is profit generated by the company that
is not give the customers as well as suppliers(stakeholders). It can reduce the company y
losses (Bradbury, 2011).
1.2 Implication of different sources of finance
1. Equity share:- Equity share is a ordinary share to take decision regarding the J Sainbury
plc company that is helps in investment process and also take the right decision about the
invest the money to earn the higher profit in the company but it is more risky to the
company in the issue of share (Carballo-Penela and Doménech, 2010). Either availability
of the profit or loss the equity share to have the right after paying the preference share
capital to give the dividend at no fixed rate. In the implication process the equity share
holders have to higher return and higher risk.
2. Debenture:- Debenture is a log term finance for the J Sainbury plc company. The
debenture includes the fixed rate of interest to pay for the company in the instalments.
The debenture relates in debt financing that is includes the benefits of tax. Debenture can
help for the company that is include the rate of interest in a availability of the profit. In
the debenture the profit is not share in the debenture holder the can charge only fixed rate
of interest.
3. Retained earning:- Retained earning is a important financial sources of internal uses for
working capital. In can be increase the value of the share holder regarding the boost up
the firm in a financial term (Collier and et. al., 2010). In the retained earning the cost of
financing that shows the no cost of the company regarding the general process of the
company. In the retained earning the important advantage is cheaper source of finance
which is not involved the coast as well as obligation to pay anything in the company. And
the disadvantage of thr retained earning that is improper utilization of fund.
1.3 Evaluation of different sources of finance
There are different sources of finance which helps in making appropriate and relevant
decision for doing the investments. In the equity share is a best way to get money in the business
to helps in cash flow. In the investing decision the fundamental analysis is also based on the
companies balance sheet that can helps in show the cash flow of the company ans also provide
the income statement. Foe the appropriate decision the saving is the most important factor of
putting the money in the company (Collins, Hribar and Tian, 2014). In the terms of finance by

using as well as issuing share company can raise their finance. In the sources of finance the risk
is always there so the company can evaluated the risk in a investment process in the company
they can define the higher investment as well as higher risk. When investment is low the risk is
automatically low ans the investment is hight the risk is also high. In a business to take a loan to
achieve the more finance by the bank. Before provide the loan bank must to know about the
business as well as business opportunities and also involve the risk regarding the loan (Cui and
Ryan, 2011).
2.1 Cost of different sources of finance
There are several sources of finance by which J Sainsbury PLC get the amount to do
more investments. They can earn money by issuing equity shares, preference shares, debentures
etc. Along with this it helps in making the correct and appropriate decisions. Different sources of
finance are:
Equity shares: For those person who are having the equity shares of the business entity they
have to pay dividend cost in which price of the shares is given to the equity shareholders and the
cost which are related to equity shares they are included in the working capital (Drivelos and
Georgiou, 2012). Cost of equity shares can be measured by price ratio method, earning yield
method etc.
Debentures: These are also issued by J Sainsbury PLC to earn money as these also helps in
making the appropriate decisions regarding investments. In this interest cost can be charged. It is
the second bond holders and they are paid at a fixed or specified time. Along with this they are
charged on the face value of debentures. There is a formula to calculate the cost of debentures
that is:
Kd = I/Po
Retained earnings: It is also a part of the company which provide the sources to do more finance
as well as investment. In this cost which is calculated that is opportunity cost. Moreover, it is
different from the other sources which includes the debt or equity (Gervais, 2010). Cost of
retained eraning can be measured or calculated by the formula that is:
Kr = Ke(1-t)(1-b)
2.2 Importance of Financial Planning
Financial planning is necessary for J Sainsbry PLC as it assist in determining the
financial goals whether it is short term or long term. Along with this the employees have to

create a balanced plan so that they can meet the targets. It assist in making the relevant decision.
Along with this financial planning is important as it helps in managing the income and by that
they can make the tax payment, expenditure and savings (Healy and Palepu, 2012). Financial
planning increases the cash flow on the basis of that they can monitor the spending patterns and
expenses. When financial planning increases the cash flow then it also increases the capital. So,
that higher authorities of J Sainsbury PLC can make the correct decisions for making the
investments. When the business entity make the proper financial plan and for that they have to
consider the personal circumstances, objectives and risk tolerance. It provides the guidance to
choose the right type of investments so that they can fit into the needs, personality along with the
goals. Further, financial planning aid in making the changes so that they can not face any
problem in making the correct decision for investment on the basis of high liquidity (Hodge,
Hopkins and Wood, 2010). They have to establish a relationship so that they can make a advice
on the basis of finance. They have to meet and assess the current financial circumstances. Along
with this they have to develop the comprehensive plan so that they can attain the goals and
objectives.
2.3 Information which are needed for making decisions
They have to make the appropriate decisions in the terms of financial planning in which
employees of J Sainsbury PLC. While doing the financial planning some information which is to
be used by the employees that is size of J Siansbury PLC. When the size of the organisation is
huge then they require the large amount of money. Management of the projects is also essential
so that they can invest the money in the different projects in which they are having the definite
life as well as objectives (Kirkham, 2012). They have to manage the cost of capital as well as
opportunity cost so that they can attain the good result and on the basis of that they can improve
the performance in the market place. Leaders, managers and management of a cited company
are the final decision makers. They collect appropriate amount of information form external and
internal environment and then lead in taking effective decisions. Hence they can use either one of
the style of decision making through which they can attain all of their goals and objectives in an
effective manner:
1. Command: According to the scenario they take effective decision without consulting
their teams. This form of style is also consider as the autocratic style of leader because

there is not even a single information and judgement is based on subordinates. Such style
is only use at the time of financial decision or at the time of crises.
2. Collaborative: This is a sound form of decision making. In this form decision are taken as
a whole. Leaders get their team and take decision on their basis. The final call is
ultimately call by the leader itself but decision are take on the basis of whole team.
There are different decision makers in the company who can make the correct decisions
for the betterment and also to collect the actual information. Managers is the person who help the
firm in making correct decision so that they require the budgets as well as other internal records.
Leaders are also helps in making the correct decision and provide the information to their
subordinates. Another one is shareholders who help in making the correct and appropriate
decisions in investing in the company so that they can increase their assets. Along with this they
require the different financial statements to make better decisions.
2.4 Impact of finance on the financial statements
Financial system is a process of interchange of funds between the lenders, investors as
well as borrowers. It is at national and global level to used the money in the financial system. It
is used by the organisation that involve the three basic financial statements:
Balance sheet: In this statement the company involve their assets, liabilities, share capital to
explain the financial situation in a systemic manner (Kumbirai and Webb, 2010). It is basically
show the true image of the company. All the assets as well as liabilities are takeover by the firm
at the time of using the finance. If any change in the firm takes place which affect the balance
sheet.
Income statement: It is also known as profit and loss statement that is show the income and
expenditure as well as profit of the company in this statement the information related to the
operation. This record is set up keeping in mind the end goal to earn the benefits that have been
made and for that every individuals income that are earned and all expenses that have been
caused in any period will be recorded in it. As all these will be made as far as fund so one might
say that with the adjustment in these sums the money related statement will be modified.
Statement of retained earning: it is can be calculated by the profit of the specific time and it is
divided by the dividend which is given to the shareholders and retained earnings. Along with this
they are out into balance sheet so that the accumulate under owners equity (Minnis and
Sutherland, 2017).

For any working concern finance is consider as the life line of any organisation. Without
any financial related activity a statement will not lead to prepare. Hence finance made a positive
and negative impact because if the financial statement have good monetary values then it leads in
increase more and more investors for that firm. Also if the reports showing positive and
appropriate information which is related with all organisation long term and short term
investment then it lead in satisfy their investors more and more.
For example, if company purchase the raw material then it will affect the income statement.
Along with this if wages and rent is due then this affect the profit and loss statement. Likewise, if
Bank loan would increase liability in balance sheet and interest on the same would increase
expenses in income statement, Equity capital would increase overall capital and cash in balance.
3.1 Cash budget for the business entity
Table 1: Budget for J Siansbury PLC for six months
Particular January February March April May June
Opening balance 100000 88800 54800 -42000 -146000 -59000
Cash Inflow
Credit Sales 45000 60000 56200 80000 120000 60000
Cash Sales 15000 25000 20000 15000 22000 24000
Total 160000 173800 131000 53000 -4000 25000
Cash outflow
Credit Purchase 20000 30000 100000 120000 60000 50000
Cash Purchase 30000 40000 30000 20000 10000 5000
Loan repay 0 7500 7500 7500 7500 7500
Interest 0 300 300 300 300 300
OD interest 200 200 200 200 200 200
wages 20000 20000 30000 30000 30000 30000
Capital Expenditure 20000 20000
Bill 4000
Allowance 1000 1000 1000 1000 1000 1000
Total 71200 119000 173000 199000 55000 94000
Surplus/ deficit 88800 54800 -42000 -146000 -59000 -69000

The cash budget helps in identifying the position of cash whether it is inflow and outflow
for J Sainsbury PLC for the upcoming budget of six months which prepared above. Along with
this it presents the income as well as expenses of the business entity. From the above cash
budget, it can be analysed that J Sainsbury PLC is going to improve or earn surplus in the
starting months but after two months the company is facing the deficit. The major areas of the
business expenses are interest paid against the bank loan as well as overdraft. Along with this, in
addition wages as well as capital expenditure is the another form of expense as it helps in
controlling its expenses (Müller, 2011). Moreover, it helps in improving the position of cash and
they are suggested to use the cash management techniques.
3.2 Calculation of Unit Cost
Unit cost of any product is that the quantity of money which assist in producing the
product and by that they can manage the cost of the merchandise. There is a formula which helps
in calculating unit cost of the product:
Unit cost = C/U
Here, C is total cost of the merchandise which is producing by the staff members of the
business entity and U is total no. of units. There are three type of cost i.e. fixed cost, direct labour
cost and direct material cost. Fixed cost of the product is that they do not vary always remain
fixed with the units which are produced by them. Direct labour cost is also a cost which is
directly paid to workers by making merchandise. Direct material cost is that cost by which
material purchased and making the product (Petzke, Fuller and Metges, 2010).
For example, calculate the unit cost of J Sainsbury plc for the month of august by using the
following information for this time period. Suppose
Units produced is 6000
Direct material cost is £ 10,000
Direct labour cost is £ 12,000
Fixed cost is £ 14,000
Profit margin = 10%
To solve this, use that formula Uc= c/u
Uc = ( £10000+£12000+£14000) / (6000 units)
Uc = £36000 / 6000 units
Uc = £6unit

Assuming that how much unit produced is £6000, direct material cost is £10000 and direct
labour cost is £12000. Along with this the fixed cost is £14000. After the calculation, find that
unit cost is £6/unit and profit margin is 10%. Moreover, if profit margin is added to the unit cost
then selling price of the product can be calculated (Purce, 2014). So,
Profit = £6* 10% = £0.6
Selling price = unit cost + profit
SP = £6+ £0.6
SP = £6.06
So, selling price of the product is £6.06 and on the basis of that J Sainsbury PLC earn £0.6 profit.
With the help of calculation of cited firm profit and unit cost it leads in calculate their product
price also. According to statement an organisation profit margin is 10% and thus it signifies that
they are generating appropriate level of revenue. Their per product unit cost is 6 through which it
get identify that their final cost or selling price will be £6.06. this process of calculation is used
in take an effective pricing decision. Sainsbury is an established business and people are used to
the products and services which is delivered by them. So, they will ready to pay the price that
will be charged by the company. So, there is a scope for business entity that they can charge
higher amount. This is why cost plus pricing method is adopted by which Sainsbury will able to
earn the required profits and maintain stability.
For example, if we calculate ROI from the values which includes that investor buys
£1,000 which is a value of stock and sell the shares after two years in £1,200. the net profit
which from the investment is £200. so Return on investment is:
(200 / 1000) * 100 = 20%
ROI is also a method which helps in analysing the flexibility of the company. When the
employees of the firm is using ROI to make the comparison among the investments then they
have to use the same inputs to do comparison.
So, cost plus pricing method is best for the company which will helps in maintaining the
position in the competitive market.

3.3 Assess the viability of a project using investment appraisal techniques
The technique of the investment appraisal which assist in evaluating the practicality of a
project so that they can select the best project (Rana, Islam and Kouzani, 2010). The calculation
of Net Present Value and Pay back period are shown below:-
Year Project A
(£)
Project B
(£)
1
2
3
4
5
Salvage value
Initial Investment
50000
40000
30000
20000
10000
20000
100000
20000
25000
40000
50000
60000
20000
100000
Net Present Value:
Table 1: NPV of Project A
Year Project A (£)
PV at discount
factor rate of
10% Present Value (£)
1 50000 0.91 45500
2 40000 0.83 33200
3 30000 0.75 22500
4 20000 0.68 13600
5 10000 0.62 6200
Resalable value 20000 0.62 12400
Total Present Value 133400
Initial Investment 100000
NPV 33400
Table 2In this section, you are supposed to write impact of acquiring funds through different
sources on financial statements. Such as: Bank loan would increase liability in balance sheet and

interest on the same would increase expenses in income statement; Equity capital would increase
overall capital and cash in balance, etc. : NPV of Project B
Year Project B (£)
PV at discount
factor rate of
10% Present Value (£)
1 20000 0.91 18200
2 20000 0.83 16600
3 35000 0.75 26250
4 30000 0.68 20400
5 40000 0.62 24800
Resalable value 20000 0.62 12400
Total Present Value 106250
Initial Investment 100000
NPV 6250
NPV is a important and essential method which helps in evaluating the practicality of the
projects which are based on the specified time as well as value of money and the project with
high NPV is to be selected. The net present value of of Project A is £33400 and the Project B
NPV is £6250, So Project A is to be chosen for investment purpose.
Payback Period:
Table 1: Payback period of Project A
Years Cumulative cash flow
Initial investment 100000
1 50000 50000
2 40000 90000
3 30000 120000
4 20000 140000
5 10000 150000

Payback period for project A=
3+20000/30000
= 3.67 years
Table 2: Payback period of Project B
Years Cumulative cash flow
Initial investment 100000
1 20000 20000
2 20000 40000
3 35000 75000
4 30000 105000
5 40000 145000
Payback period for project B=
4+5000/30000
= 4.16 years
Pay back period includes the specified time and in that project can be repay the money
back in a limited time frame. From the above calculation it has been analysed that project A is
repaying the amount back in 3.67 years whereas Project B is profitable amount back in 4.16
years.
TASK 2
4.1 Main financial statement
Balance sheet is a basically based on accounting equation:
ASSEST= LIABILITIES+ CAPITAL
Balance sheet is the statement of the financial activities that is shows the assets, liabilities, share
capital and total debt etc. it is include the asset which is show in the right and the liabilities
shows the left side in the balance sheet statement. Is is also shows the financial position of the
company in a particular time .In a balance sheet the liabilities are the obligation of the company
it is also divide in the current liabilities and long term liabilities (Serafeim, 2011).

Income statement is a financial statement which shows the performance of the financial
activity at a specific accounting period. It is the giving the summary that how the company can
enhance the income and expenses related to the operating and non operating activities. Is also
known as profit and loss statement. It is a summary of the management performance that show
the companies profit and losses. It is based fundamental accounting equation.
Cash flow statement is also known as statement of cash flow that show the change ion
balance sheet regarding to cash equivalents. It is also analysis in a operating, investing and
financial activities which is show the income and outcome of the company (Smith, 2014).
4.2 Compare the appropriate formats of financial statement in the different type of business
Every company and every business have to use appropriate financial statements so that
they can maintain the data. There are four formats which are to be used or considered so that
they can start the different businesses. These are:
Sole proprietorship: It is the business who carries by the one individual person. The major
disadvantage of this business is personal liability. There is unlimited liability for the lawsuits
against the business. It is a type of business activity owner of the company having all rights. In
this type of business, owner can make income statement and balance sheet at the end of yearn
which assist in managing the cash (Stent, Bradbury and Hooks, 2010). This type of business
would keep running under an individual person. The entire risk of a business is bear by him as it
were. So individual need to distinguish the sources from which it can deal with the majority of its
rear exercises in an appropriate way. Subsequently for this they need to first recognize their
requirements and requests and after such examination which had been identity can utilize proper
approach in putting forward its money related expression. For this they can utilize wage
explanation and in addition monetary record procedure. Both the methodologies are useful for
them in making their reports accurately.
Partnership: It is that business which is started by the two or more person. In this the financial
statements which can be used by them that is income statement, statements of partner's capital as
well as balance sheet. Income statement includes the income as well as expenses of the year
which is done by the partners. Statement of Partner's capital in this capital which is contributed
by the partners are to be included. Balance sheet includes the assets and liabilities.
[ASSETS= LIABILITIES+ OWNER'S CAPITAL]

Corporations: It is owned by the separate legal person under the law as well as separate legal
entity and they are not related with the owners. They can make the different financial statements
which includes P&L statement, Balance sheet and Cash Flow statement. In Profit and loss
statement, income and expenditure of the business. In cash flow, inflow and outflow of cash
which helps in managing the cash of the business (Financial Resource Management, 2016).
All these business formats use different forms financial statement through which they can
prepare their financial statement and become able to take effective decisions which are beneficial
for them in their long run. Various formats of financial statement are as follow:
Balance sheet Income statement Cash flow
This form of statement can be
use by sole proprietor,
partnership and corporations.
But this format is used by
small business organisations.
Generally partnership firms are
use this frame work because it
lead them in analyse their
share prices as well as fund
which is invested by different
number of partners.
This format provides analysis
of inflow and outflow of
income. This is used by the
corporates and thus they can
take effective decision with the
help of this.
Statement of changes in the equity: It is also known as statement of retained earnings
which assist in providing the proper details for the movements in the owner's equity over a
specific period of time. Some components which are included in this: net profit or loss during the
period which was recorded in the income statement. Along with this share capital issued or
repaid during the period. Payments of dividends.
Balance sheet:

Income statement:

Cash flow:

Retained earnings:
4.3 Interpretation of financial statements using appropriate ratios by using internal and external
ratios
Ratios Formula 2014 2015 2016
1.Profitability ratio

Gross profit ratio (Gross profit / Net
sales)*100
5.8% 5.1% 6.2%
Operating profit ratio (Operating profit / Net
sales)*100
4.2% 0.3% 3.0%
Net profit ratio (Net profit / Net
sales)*100
2.99% -0.70% 2.00%
2. Liquidity ratio
Current ratio (Current assets / Current
liabilities)
0.64 0.64 0.66
Quick ratio (Quick assets-stock /
Current liabilities )
0.49 0.48 0.50
3. Total assets turnover
ratio
(Net sales / Average total
assets)
1.64 1.44 1.40
4. Inventory turnover
ratio
(Cost of goods sold /
Average inventory)
22.65 22.54 22.44
Interpretation of the financial statement is necessary which helps in determining the
performance of the business entity in the market. After doing the ratio analysis as well as
examining the different financial statements of J Sainsbury PLC and it has been found that in the
year of 2014 gross profit ration of the business entity is 5.8% but in 2016 it increases up to 6.2%.
In 2014, operating profit ratio is 4.2% and in 2016 it is 3.0% that is decreasing and that shows
the lack of efficiency. Along with this net profit also decrease (Financial Resources Management
(FiRM), 2017). Here, the current ratio is below than 1, and it is not good for the company but
quick ratio is increasing and it denotes the better position of the company. Inventory ratio is
almost same in all the year. Total assets turnover ratio is also decreasing and it is not good for J
Sainsbury PLC.
Computation of average ratio of retail sector:
Ratios Formula 2014 2015 2016
1.Profitability ratio

Gross profit ratio (Gross profit / Net
sales)*100
6.3% +37.5
+58.8
+ 6.1 = 27.2%
-3.9%+38.7+
57.0+4.5 =
24.075%
5.3%
+39.1+55.
2+3.8 =
25.9%
Operating profit ratio (Operating profit / Net
sales)*100
4.1%+
6.7+16.9+ (-
0.5) = 6.8%
-10.1%
+6.8+14.9+(-
4.1) = 1.875%
2.0%
+5.5+12.4
+1.9 =
5.45%
Net profit ratio (Net profit / Net
sales)*100
1.53%+5.09+
+13.19 + (-
1.35) = 4.61%
-9.22%
+4.72+11.55+
(-4.53) =
0.63%
0.25%
+3.85+9.6
9+ 1.38 =
3.79%
2. Liquidity ratio
Current ratio (Current assets / Current
liabilities)
0.73+0.58
+2.11+ 0.50 =
0.98
0.60+0.69 +
1.99+ 0.50 =
0.945
0.75+0.69
+ 1.60+
0.48 =
0.88
Quick ratio (Quick assets-stock /
Current liabilities )
0.43+ 0.17 +
1.07+ 0.16 =
0.46
0.42+0.24+
0.80 + 0.18 =
0.41
0.59+0.24
+0.53 +
0.22 =
0.40
3. Total assets turnover
ratio
(Net sales / Average total
assets)
1.27+
2.14+1.33+1.6
6 = 1.585
1.32+2.24+1.
28+1.69 =
1.6325
1.24+2.09
+1.27+
1.75 =
1.5875
4. Inventory turnover
ratio
(Cost of goods sold /
Average inventory)
16.27+ 3.46+
7.98 +20.34 =
12.0125
19.71+
3.51+7.69
+21.26 =
13.0425
19.51+3.0
4+8.05+24
.34 =
13.735

After doing the research or examine the ratios of average retail industry it has been
analysed that in 2014 company's gross profit ratio is 27.2% but in 2016, it was decreased to
25.9%. It defines that firm having the less purchases. Operating profit of average retail industry
is 6.8% in 2014 but in 2016, it also decreases to 5.45%. The company's current ratio is 0.98 in
2014 and in 2016 is 0.88 and it is below less than 1 which is not good for average retail industry.
Quick ratio of the firm is increasing year by year and it is profitable to the firm. Total assets
turnover ratio is decreasing in comparison to 2014 to 2016 but inventory turnover ratio is
increasing in 2014 to 2016.
CONCLUSION
After summing the above report it has been interpreted that J Sainsbury PLC have to
make appropriate financial statements so that they can manage their income as well as
expenditure and on the basis of that they can attain their long and short term goals. There are
different sources of finance which business entity can use to improve their financial condition.

REFERENCES
Books and journals
Arthur, N., Cheng, M. and Czernkowski, R., 2010. Cash flow disaggregation and the prediction
of future earnings. Accounting & Finance. 50(1). pp.1-30.
Bennouna, K., Meredith, G. G. and Marchant, T., 2010. Improved capital budgeting decision
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