Sainsbury Ratio Analysis Essay

3784 Words Apr 19th, 2012 16 Pages
FIN4501
FINANCIAL REPORTING
COURSEWORK

GROUP MEMBERS MISIS
SYED ALI AOUSAJA M00190925
MOHD OVASE BUDA M00380435
SYED ZAIN HASSAN M00375419
ZOHAIB KAMRAN M00384153

TUTORS NAME: FIROOZEH GHAFFARI
SUBMISSION DATE: 19TH JANUARY 2012
WORDS COUNT:

J Sainsbury PLC

List of content
Introduction ------------------------------------------------------------------------ 3
Justification for the selection -------------------------------------------------- 4
Review ------------------------------------------------------------------------------- 5 * Strengths ------------------------------------------------------------------- 5 *
…show more content…
The results of the analysis provide the leverage to the investor and helps in taking the decision for the suitability of the company for investment point of view.
The ratios in the following calculations represent the performance of the company for the year of 2008, 2009, 2010 and 2011.

* Profitability ratio
Profitability ratio is used to compare the components of income and sales of the company. It gives the idea about company’s income and it is usually expressed in a fraction of each unit of sale. It also shows how well the performance in a particular year is. Year | 2008 | 2009 | 2010 | 2011 | ROE | 6.67% | 6.60% | 11.7% | 11.8% | GPM | 5.6 % | 5.74% | 5.41% | 5.49% | NPM | 1.84% | 1.52% | 2.9% | 3.03% | ROCE | 6.41% | 6.5% | 9.09% | 9.7% |
Table 1
Note: refer to appendix A1
Return on equity:
Return on equity is the ratio of net income and average shareholders’ equity. It shows how much a share holder earned on each unit of share. It is the measure of the profit of the company after interest and taxation

=Net incomeAverage shareholders equity
From table 1, it is visible that ROE is consistent during 2008 and 2009. It increases considerably in 2010 and 2011 as compared to 2008 and 2009. This increase shows high increase in profit which makes investors more interested in investing in the

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