An analysis of the information contained in J Sainsbury Annual Report and Financial Statements commenting on the following specific aspects:
Profitability
Liquidity & Efficiency
Long-term Financial Stability
To help you conduct a detailed analysis of the aspects above and any trends, you should use the information contained in the Annual Report & Financial Statements 2019 though to 2022 to prepare the following ratio calculations for each of the past four financial years:
Profitability:
Gross profit margin; operating profit margin and return on capital employed.
Liquidity & Efficiency:
Current ratio; quick ratio; inventory turnover; trade receivables collection period and trade payables payment period.
Long-term Financial Stability:
Gearing (debt as a percentage of total CE) and interest cover.
Once you have calculated the ratios listed above you need to conduct an analysis of the ratios and the trends over the four year period. Your analysis should provide possible explanations for the movements in the trends. You therefore need to conduct appropriate research to understand the main factors affecting company’s financial performance and position with the focus on the last two financial years. For this purpose a variety of sources could be used, such as company annual report, and various industry/company reports you can access through Bloomberg and/or Library databases.
Throughout your ratio analysis you are also expected to make relevant reference to a main competitor as a basis for comparison.
To enhance your report you may also consider using elements of horizontal and/or verical analysis. Furthermore, remember your audience and think about using other relevant financial ratios to support your main analysis.
NOTE: Graphs & tables are an effective way to present data and would be included within the main body of the report and do form part of the word count. You must not copy and paste graphs and tables as pictures.
You are required to include an executive summary (this does not form part of the wordcount) and your report should include a brief introduction. Your report should end with conclusions for existing and potential investors which summarises the comments and information contained in the main body of the report.
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