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Essay / Research Paper Abstract
This 8 page paper undertakes a ratio analysis of Sainsbury and compares it to Tesco, and the parent company of Asda; Wal-Mart. The paper shows the calculations for the gross and net profit, the return on capital employed, the current and quick ratio as well as stock turnover, debtor and creditor periods and the gearing ratio. The analysis is for the years ending 2005 and 2006, all calculations are shown. The bibliography cites 4 sources
Page Count:
8 pages (~225 words per page)
File: TS14_TEsainstesco.rtf
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Unformatted sample text from the term paper:
and the industry. In the UK Sainsbury is a major supermarket, but has been relegated to third place behind Tesco and Asda. IN order to assess the financial position
of Sainsbury we can undertake a range of financial ratio calculation to can help to compare performance. WE will look at a range of ratios for Sainsbury and compare them
to Tesco, if we want to compare them to Asda then we need to look to Wal-Mart which owns Asda, meaning Asda do not issue their own financial accounts. To
ensure we are getting a good idea of the position of the company we will also look at the current industry averages, as taken from MSN Money. The years considered
are years ending 2005 and 2006, figures are taken from the relevant annual group accounts. Tesco and Sainsbury figures are in sterling whereas Wal-Mart are in dollars, all figures are
in million s unless otherwise specified. Gross Profit Margin The gross margin is expressed as a percentage. This is the level of
revenue that remains when all of the direct costs for producing the goods or services are deducted form the revenue. This indicates the level at which direct costs account take
up revenue. Sainsbury Tesco Wal-Mart Gross profit 2006 2005 2006 2005 2006 2005 Revenue (a) 16,061.0 15,202.0 39,454.0 33,866.0 312,427.0 285,222.0 Cost of goods sold (b) 14,994.0 14,544.0
36,426.0 31,231.0 240,391.0 219,793.0 Gross profit (c) (a-b) 1,067.0 658.0 3,028.0 2,635.0 72,036.0 65,429.0 Gross profit margin (%) (c/a x 100) 6.64% 4.33% 7.67% 7.78% 23.06% 22.94% Here we see
that Sainsbury is the lowest and Wal-Mart is the highest, they are also the most likely company to have the economies of scale. In terms of comparing this to the
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