Tesco vs Sainsbury's Comparative Financial Analysis

2027 words 9 pages

The financial report that follows sets out to analyse and compare the current financial and
Market position of Sainsbury’s against Tesco.

The report covers five areas of financial and market review, namely;
• Situation Analysis
• Proposed Recovery Plan
• Investment Appraisal of recommended Investment Projects
• Risk Assessment
• Sources of Finance

Recommendations made within this report are made with the intention of increasing Sainsbury’s market share over the next 5 years.

Executive Summary Format / Template
 Company needed to move from a Task focused to a Customer Service focused organisation and prepare for substantial future growth
 Training Department established in
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In 2007 Sainsbury’s reported a net profit margin of 2.05% as opposed to 1.54% in 2006, an overall increase of 33%, this would suggest an improvement in operational performance, perhaps through the reduction of overheads etc.

In comparison, whilst Tesco’s net profit margin was much higher at the end of each financial year, 5.69% and 5.18% in 2007 and 2006 respectively, the increase was more modest at 9.8%. this could be representative in the differentiation of strategic direction, that is, we can see from the financial reports of Tesco, that expansion is ostensibly part of their strategic direction with an increase of some 1.9 million sq ft of sales area from opening 91 new stores as opposed to Sainsbury’s 36 additional stores.

In 2007 Sainsbury’s Current Ratio was .71:1 in comparison to .80:1 in 2006 this reflects the amount of assets:liabilities and can also be expressed as the company having 71p of assets per £1.00 liabilities if looking at this ratio in