Comprehensive Financial Management Report: Sainsbury's Case Study

This report provides a comprehensive analysis of Sainsbury's financial management practices. It begins with an overview of financial management principles and then delves into Sainsbury's sources of finance, highlighting the use of both internal and external resources, including equity and debt financing. The report examines Sainsbury's asset and balance sheet structure, followed by a discussion of the different budgeting methods employed, such as incremental, activity-based, value proposition, and zero-based budgeting. Furthermore, it explores Sainsbury's pricing policies, emphasizing the company's value-for-money approach and competitive strategies in the retail market. The report concludes by summarizing the key findings and emphasizing the dynamic flow of funds in strategic planning, organizing, directing, and controlling financial undertakings within the firm. References to academic journals and online resources support the analysis.

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Contents
INTRODUCTION...........................................................................................................................3
Overview..........................................................................................................................................3
Sources of Finance.......................................................................................................................3
Asset and Balance Sheet..............................................................................................................5
Kind of Budget............................................................................................................................5
Pricing Policy...............................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Financial management is one of important responsibilities for the business owner s and
business managers in term of increasing in field of wealth of investors and business concern. a
successful business has dynamic flow of funds in the strategi planning, organizing, directing an
controlling of financial undertaking in the firm (Guo and Wang, 2019). The main goal of
financial analysis is regarding assessment of financial statement of company operations. In this
report, there will be discussion on how Sainsbury is managing source of finance in term of
example of asset and balances sheet. In addition, the report will also have discussion on different
kind of budget employed by firm along with strategy of company pricing policy.
Overview
Sainsbury is one of major retail company headquarter in United Kingdom operating
basically in supermarket. The firm is selling out various convenience items including up food,
clothing, electronics and personal care products. The company is managing to have foster
information facilitating easier communication along with allowing employee motivated.
Sources of Finance
The source of finance for business is capital requires for business expansions and expenditure.
The identification of right resources helps in matchup firm requires classified as internal and
external resources of finance. A business always hopes for positive impacts taking on varied
occasion leading to negative impact in term. The Sainsbury is majorly financed through asking
up its capital for its investors by buying of shares. the firm is issuing up of billions of shares
making out high level of profits as competitive to last year (al Habibi, 2019). Sainsbury is
leveraged firm in its capital structure using both debt and equity funding to raise its adequate
funds. The fir have made up decision regarding holding up more long term funds as comparative
to short term. this is because longer term funds are considered as safer method of accumulating
funds. This is because of longer pay back period.
On the other hand, it term of arranging the firm liabilities against assets, Sainsbury is
highly reliant on equity for raising finance along with simultaneous decrease in firm debts. The
firm have low debt equity ratio which is safe guarding the company for bankruptcy. This is clear
sign that of Sainsbury heathy business. On other hand ratios are strong indicators binging out to
have reliable choice for potential investors as compare to revival companies.
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on the other hand firm dividend policy is providing out greater affirmation to business paying
out dividends to its shareholders in order to be very discussed on building firm shareholder
value . On the other and annual sales of the firm have bitter impact as downfall of around
4% year on year reflecting tough comparatives and marketing investment in the first half, general
merchandise weakness and a change in transfer pricing which had the effect of switching around
£10 million of profits from Retail to Financial Services.
As impact of the change in finance sources and pricing policy, grocery sales have improvements
in tend along with outperforming main supermarket peers (Adewuyi,., 2016). The film have
launched up with 200 entry price point products along with online grocery sales have grew up
7.6 %and Convenience grew 1.3 %.
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Asset and Balance Sheet
Kind of Budget
There are many types of budget used in Sainsbury are basically incremental budgeting,
activity-based budgeting, value proposition and zero-based budgeting.
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Incremental budgeting taking out actual figures taking as simple and easy to understand.
In this primary cost drivers do not change yar to year as providing out opportunity to firm to
grow its business budget by 10% every year.
On the other hand, activity-based budgeting is top to own budgeting determining to
supports targets set by company. Sainsbury will determine activities to meet sales target and cost
carrying activities.
Value proposition budgeting is really mildest making everything to get include in budget
delivering business value. This is helpful in avoiding the unnecessary expenditures looking in
term of final budgeting option, zero based budgeting.
Pricing Policy
Sainsbury pricing strategy is based upon providing the customers with value of money
along with maintaining the products quality and services ensuring customer retention. This
practicing with competitive pricing policy instead of price cutting policy. This is helping out in
the gaining market share for short run only. Sainsbury is looking to offer value for money
looking at different pricing for different set of products. This ensure firm to have greater
customer retention trying to maintain quality and balance between price sensitivity. The mobile
app of Sainsbury Nector have been used by 4.5 million customers along with £6 billion of digital
sales across the group
Supermarkets have to deal with price sensitivity of consumer along with facing aggressive threat
from discounters turning out to be major challenges for Sainsbury (Shallow, 2017). The
competitive or tactical pricing of Sainsbury is one of biggest challenges showing up increase in
sales. The retailer has to deploy with smart pricing strategy in order to compete effectivity in the
market place in perfect manner.
On the other hand, Sainsbury have reduced the promotional activity in favour lowering
the prices turning out to have increase in volume and transaction across the stores. Sainsbury is
ensuring the price competitiveness for communicating better jobs to its customers.
CONCLUSION
From the above file, it can be concluded as successful business has dynamic flow of funds
in The strategic planning, organizing, directing an controlling of financial undertaking in the
firm. Sainsbury is leveraged firm in its capital structure using both debt and equity funding to
raise its adequate fund. The change in finance sources and pricing policy, grocery sales have
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improvements in tend along with outperforming main supermarket peers. Activity-based
budgeting is top to own budgeting determining to supports targets set by company. Sainsbury
pricing strategy is based upon providing the customers with value of money along with
maintaining the products quality and services ensuring customer retention. Competitive or
tactical pricing of Sainsbury is one of biggest challenges showing up increase in sales
REFERENCES
Books and Journals
Guo, L. and Wang, Z., 2019. Ratio analysis of J Sainsbury plc financial performance between
2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial and
Business Management, 9(2), pp.325-341.
al Habibi, B., 2019. HR practices of Marks & Spencer, Selfridges, Primark, and Sainsbury’s
(Doctoral dissertation, University of Science & Technology).
Adewuyi, A.W.A.W., 2016. Ratio Analysis of Tesco Plc Financial Performance between 2010
and 2014 in Comparison to Both Sainsbury and Morrisons. Open Journal of Accounting, 5(03),
p.45.
Shallow, K.N., 2017. Strategies for Effective Financial Management in Vincentian Small
Businesses.
Online
Sainsbury's: Strategic Planning, Budgeting and Forecasting.2018. [online].available
throughhttps://www.accountingforsustainability.org/en/knowledge-hub/case-studies/sainsbury-
s--strategic-planning--budgeting-and-forecasting.html
Is Sainsbury’s pricing strategy working ?2016. [online].available through<
https://www.insitetrack.co.uk/is-sainsburys-pricing-strategy-working/>
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