Ratio Analysis for Tesco and Sainsbury: A Financial Performance Comparison

Finance

INTRODUCTION.......................................................................................................................................3
PORTFOLIO 1............................................................................................................................................3
Ratio analysis..........................................................................................................................................3
PORTFOLIO 2..........................................................................................................................................14
Investment appraisal techniques............................................................................................................14
CONCLUSION.........................................................................................................................................18

INTRODUCTION
Money is the foundation of each business and to decide valid and reasonable situation of
budgetary circumstance of each business is as fundamental as bread for an individual. In this
unique circumstance (Enyi, 2019), there are different devices and strategies those can be utilized
as a method of deciding the budgetary situation of a business. This activity is vital so that in the
wake of examining into budgetary situation of that firm, productive key arranging should be
possible for future game-plan. This report is isolated into two portfolios. Initial segment is
focusing on examination of budgetary situation of Tesco plc and Sainsbury's plc through device
of proportion investigation. Abundance reliance of money related proportions is likewise not a
decent technique in since quite a while ago run and it is additionally clarified in this report.
Moreover, second portfolio is discussing significance of venture evaluation procedures which are
utilized to decide and recognize right and proper speculation choice for an organization.
PORTFOLIO 1
Ratio analysis
Tesco plc
Name of ratio Calculation Result
2018 2019
Current ratio Current assets/ current
liabilities
13,726 / 19,238
= 0.713484
12668/2
0680
=
0.61257
3
Quick ratio Quick assets/ current
liabilities
4379/ 19238
= 0.227622
3373/ 20680
= 0.163104

Net profit margin Net profit/ total sales (1206/57491)*100
=2.097%
(1322/63911)*100
= 2.068%
Gross profit margin Gross profit/ total sales (3350/57491)*100
= 5.827%
(4144/63911)*100
= 6.484%
Gearing ratio
(Debt to Equity Ratio)
Total debt/ total equity 44862/10480
= 4.280%
49047 / 14858
= 3.301%
P/E ratio Market value per share/
Earnings per share
229/ 9.35
=24.49
213.6/13.65
= 16.97
Earnings per share Income available/ total
number of shares
outstanding
9.35 13.65
Return on capital
employed
Operating profit/ capital
employed
5.13 6.86
Average inventories
turnover period
Net sales/ average
inventory
57491/2282.5
= 25.91 days
63911/2240.5
= 28.52 days.
Dividend pay-out ratio Dividend paid/ net
income
82/1206
= 0.68.
357/1322
= 0.27
Sainsbury plc
Name of ratio Calculation Result
2018 2019
Current ratio Current assets/ current
liabilities
7857/10302
=0.73
7550/11849
=0.63
Quick ratio Quick assets/ current
liabilities
1933/10302
=0.19
1283/11849
=0.19
Net profit margin Net profit/ total sales 309/28456
=0.11%
186/29007
=0.006%
Gross profit margin Gross profit/ total sales 518/28456 601/29007