A summary of Sainsbury’s & Tesco’s financial performance can be derived from a broad analysis of their statements for the periods (2011-2013). The balance sheets and income statements (from the extended period 2009–2014) are summarised with assumptions made – in Table’s 1–4 in the Appendix.
Tesco’s income statement shows a year on year increase in revenue from 2009 – 2013 (with a slight drop in 2014). Tesco’s sales for the period are very healthy, selling almost 3 times the rate of Sainsbury’s. However Tesco’s gross profit fell by 22.28% and operating profit dropped by 45.09% (despite falling admin expenses) over the 2012/13 period. Tesco also endured property losses, a reduction in JV income, a £1.2 billion …show more content…
A significant decrease in net assets by 6.4% leading to the same decrease in total equity for 2012/2013 (2014 shows an ever bigger decrease in net assets and equity by a further 11.64%). Non-current assets have risen steadily from 2009–2012 (by almost £6bn) before dipping by 2.33% from 2012-2013 due to group write downs. Current assets on the other hand have risen steadily since 2010 revealing high levels of inventory, trade receivables, loans to customers and cash.
A decrease in value of property, plant and equipment by 3.27% in 2012/13 (and 1.53% in 2014) and humble increase of 0.5% in investment property over the same period. Further property write downs in 2014 have led to massive decrease in investment property by 88.66%. This highlights Tesco’s failed international ventures and their risk taking practice of land banking – buying property during the boom times which has subsequently been devalued. Tesco have taken the brave decision to write this off over the short term instead of devaluing the assets over a longer …show more content…
Tesco see the biggest reduction – with decreasing Trade Payables and a significant reduction in short term borrowings between 2012 and 2013.
Tesco’s Non-Current Liabilities have decreased by £535 million from 2009–2013. This supports comments in the Tesco’s 2013 financial report in which the financial director highlighted his aim to reduce net debt significantly over the medium term. However closer inspection shows a rising trend from a low in 2011. Sainsbury’s Non-Current Liabilities on the other hand shows a relatively steady but manageable increase. Both can attribute the majority of these rising trends to increases in ‘post employment benefit obligations’ (pensions) and