Managerial Finance Assignment for MSc

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Managerial Finance – ACC7032

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OKORO ANAYO FESTUS

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18156728

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Course and Year

MSc Management

Module Code

ACC7032

Module Title

Managerial Finance

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JONATHAN MILLS

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ASJakhu

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ASJakhu

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13.2.2020

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ACC7032 Managerial Finance

Contents INTRODUCTION 5 VERTICAL ANALYSIS OF SAINSBURY 5 NARRATIVE VERTICAL ANALYSIS: 6 HORIZONTAL ANALYSIS SAINSBURY AND TESCO: 6 PROFITABILITY RATIO OF SAINSBURY AND TESC: 7 EFFICIENCY RATIO OF SAINSBURY AND TESCO 8 LIQUIDITY RATIO OF SAINSBURY AND TESCO: 10 GEARING RATIOS 11 CONCLUSION AND RECOMMENDATIONS: 12 Whether the company should stop making product z? 15 How and why marginal costing calculates contribution to pay overheads and why this is useful in evaluating product value to a firm? 15 How to increase profitability? 15 Appendixes Question 1 15 Question 2 Part A (Continued) 15 Net Present Value (NPV) 17 INTERNAL RATE OF RETURN IRR =IRR 17 PAY BACK PERIOD (PBP) 17 DISCOUNTED PAY BACK PERIOD (DPBP) 17 Recommendation regarding investment 18 Limitations of above mentioned techniques and recommendations 18 Question 3 Regulation Surrounding Csr Reporting 20 Drivers Of Csr Reporting 20 Motivators Of CSR Reporting 21 Analysis And Critique Of CSR Reporting 22 Conclusion 22 Bibliography 22

Question 1

Requirements

Prepare a business report, 6 pages long (+/- 10%), to the board of directors of Sainsburys Plc with tables and graphs that analyse the performance and financial position over at least 5 financial years and recommend actions that the board should take.

Utilise search data about the subject company and its competitor(s) from university databases (FAME, MINTEL) examined during seminars as well as the company financial reports and a range of other sources that you are to find for yourself.

Organise the ratios into the 4 categories (Profitability, Liquidity, Efficiency, and Gearing) and calculate horizontal and vertical analysis.

Apart from the graphs, put all the ratios, tables, and analysis in appendices.

Your 6-page business report must include in-depth critical discussion with appropriate academic references and graphs.

Marking guide

Financial analysis (using 4 categories of ratios and vertical and horizontal trend analysis)

Sainsbury Competitor Graphs

Vertical trend analysis 1 mark 1 mark 1 mark

Horizontal trend analysis 1 mark 1 mark 1 mark

Profitability ratio analysis 1 mark 1 mark 1 mark

Liquidity ratio analysis 1 mark 1 mark 1 mark

Efficiency ratio analysis 1 mark 1 mark 1 mark

Gearing ratio analysis 1 mark 1 mark 1 mark

Presentation marks 2 marks

________ ________ ________

Total for analysis 6 marks 6 marks 8 marks 20 marks

Interpretation (1-2 marks per relevant point, with academic references)

Vertical analysis narrative 2 marks

Horizontal analysis narrative 2 marks

Profitability narrative 4 marks

Liquidity narrative 4 marks

Efficiency narrative 4 marks

Gearing narrative 4 marks

________

Total for interpretation 20 marks 20 marks

Conclusions and recommendations 6 marks

INTRODUCTION

There we have vertical and horizontal analysis of Sainsbury and Tesco that is indicating performance and profitability trend in both of the companies. These trends are used for measuring changes in business efficiency level over the time. With the help of vertical and horizontal analysis, it will become easy to compare the resource allocation of Sainsbury Incorporation with its competitive firm, Tesco. Meanwhile, the profitability, efficiency, liquidity and gearing ratios of both firms are calculated and compared for understanding the existing financial position of Sainsbury as compared to its competitor. The profitability of an organization is always hard to analyze critically because profitability changes from time to time. However, profitability can be compared of two organizations working in the similar industry. In this way, the performance efficiency and effectiveness in resource utilization can effectively be measured. Vertical and horizontal analysis is used here for comparing the performances, profitability, liquidity and resource utilization capabilities of companies.

VERTICAL ANALYSIS OF SAINSBURY

NARRATIVE VERTICAL ANALYSIS:

The vertical analysis of Sainsbury and Tesco shows that their proportion of expense is almost same in last 5 years. Both companies’ major expense is cost of sales which is approximately 90%.

HORIZONTAL ANALYSIS SAINSBURY AND TESCO:

Narrative

There is high percentage change in expenses of Sainsbury while the revenue is almost same in last 5 years. The horizontal analysis of Tesco shows that there is no significant chances in revenue and expenses in last 5 years.

PROFITABILITY RATIO OF SAINSBURY AND TESCO:

Narrative:

Statistics are indicating that earning capability of Sainsbury has been increasing over the time. However, if we compare the performance with the competitors it can be said that performance has been undermined.

EFFICIENCY RATIO OF SAINSBURY AND TESCO

Narrative:

After considering the statistics, it is clear that performance efficiency has been static over the time. However, if we compare the performance with the competitors then it can be found excellent.

LIQUIDITY RATIO OF SAINSBURY AND TESCO:

Narrative:

Over the time, company is getting less liquidate. So, liquidity risk is increasing for the company over the time. It must manage its liquid assets in efficient way.

GEARING RATIOS

Narrative:

Gearing Ratio is indicating the escalation of Sainsbury toward equity financing. Similarly, if we consider the Tesco’s gearing ratio, the same thing can be observed both companies are inclining toward equity financing.

CONCLUSION AND RECOMMENDATIONS:

After considering financials of the company, it can be concluded that performance efficiency of Sainsbury is getting better. Although the liquidity position of the company is deteriorating and it is posing threats for the shareholders. Meanwhile, the earning capacity of the company is also getting better. However, the good thing is that the company is performing better in managing its assets. On the other hand, it really hard to find any change in revenue and expenses of Sainsbury. Most importantly, it is interesting to note the company is changing its capital structure and financing its assets through raising equity. Although equity financing is considered a safe mode of business financing as compare to debt financing but it is also a costly financing technique. That is the reason, after considering all the financials of the company, it can be recommended that company should focus on an appropriate capital structure and it should also improve its liquidity status.

REFERENCES:

AccountingTools. (2019, July 08). Gearing Ratio. Retrieved from AccountingTools: https://www.accountingtools.com/articles/2017/5/5/gearing-ratio Adedeji, E. A. (2014). A Tool for Measuring Organization Performance using Ratio Analysis. Research Journal of Finance and Accounting. Retrieved from https://www.iiste.org/Journals/index.php/RJFA/article/download/16837/17175 Investopedia. (2015, March 26). Why are efficiency ratios important to investors? Retrieved from Investopedia: https://www.investopedia.com/ask/answers/032615/why-are-efficiency-ratios-important-investors.asp Investopedia. (2019, August 28). Horizontal Analysis. Retrieved from Investopedia.com: https://www.investopedia.com/terms/h/horizontalanalysis.asp Maharani Nadia Lakda, e. a. (2012-2016). Analyzing The Financial Statement Using Horizontal – Vertical Analysis To Evaluating The Company Financial Performance Period. Jurnal EMBA, 3985. Shaftoe, R. (2017, July 17). Why Is Liquidity Ratio Important? Retrieved from PocketSense: https://pocketsense.com/liquidity-ratio-important-8506634.html Wiki Accounting. (2019, December 28). Importance and limitation of profitability ratios. Retrieved from Wiki Accounting: https://www.wikiaccounting.com/importance-and-limitation-of-profitability-ratios/

APPENDIX - A

J SAINSBURY PLC

Profit & Loss account
	3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
	th GBP	th GBP	th GBP	th GBP	th GBP
Turnover	29,007,000	28,456,000	26,224,000	23,506,000	23,775,000
Cost of Sales	-27,000,000	-26,574,000	-24,590,000	-22,050,000	-22,567,000
Gross Profit	2,007,000	1,882,000	1,634,000	1,456,000	1,208,000
Administration Expenses	-1,733,000	-1,415,000	-1,207,000	-850,000	-1,132,000
Other Operating Income/Costs pre OP	38,000	51,000	215,000	101,000	5,000
Operating Profit	312,000	518,000	642,000	707,000	81,000
Other Income	4,000	12,000	-37,000	-11,000	8,000
Total Other Income & Int. Received	26,000	31,000	-3,000	8,000	27,000
Profit (Loss) before Interest paid	338,000	549,000	639,000	715,000	108,000
Interest Received	22,000	19,000	34,000	19,000	19,000
Interest Paid	-99,000	-140,000	-136,000	-167,000	-180,000
∟ Paid to Bank
∟ Paid on Leasing	-7,000	-7,000	-8,000	-9,000
∟ Other Interest Paid	-92,000	-133,000	-128,000	-158,000	-180,000
Net Interest	-77,000	-121,000	-102,000	-148,000	-161,000
Profit (Loss) before Tax	239,000	409,000	503,000	548,000	-72,000
Taxation	-20,000	-100,000	-126,000	-77,000	-94,000
Profit (Loss) after Tax	219,000	309,000	377,000	471,000	-166,000
Profit (Loss) for period [=Net income]	219,000	309,000	377,000	471,000	-166,000
Dividends	-224,000	-212,000	-232,000	-234,000	-330,000
Retained Profit(Loss)	-5000	97000	145000	237000	-496000

Vertical analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%
100.00%	100.00%	100.00%	100.00%	100.00%
-93.08%	-93.39%	-93.77%	-93.81%	-94.92%
6.92%	6.61%	6.23%	6.19%	5.08%
-5.97%	-4.97%	-4.60%	-3.62%	-4.76%
0.13%	0.18%	0.82%	0.43%	0.02%
1.08%	1.82%	2.45%	3.01%	0.34%
0.01%	0.04%	-0.14%	-0.05%	0.03%
0.09%	0.11%	-0.01%	0.03%	0.11%
1.17%	1.93%	2.44%	3.04%	0.45%
0.08%	0.07%	0.13%	0.08%	0.08%
-0.34%	-0.49%	-0.52%	-0.71%	-0.76%
0.00%	0.00%	0.00%	0.00%	0.00%
-0.02%	-0.02%	-0.03%	-0.04%	0.00%
-0.32%	-0.47%	-0.49%	-0.67%	-0.76%
-0.27%	-0.43%	-0.39%	-0.63%	-0.68%
0.82%	1.44%	1.92%	2.33%	-0.30%
-0.07%	-0.35%	-0.48%	-0.33%	-0.40%
0.75%	1.09%	1.44%	2.00%	-0.70%
0.75%	1.09%	1.44%	2.00%	-0.70%
-0.77%	-0.75%	-0.88%	-1.00%	-1.39%
-0.02%	0.34%	0.55%	1.01%	-2.09%

Horizontal analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%
122.01%	119.69%	110.30%	98.87%	100.00%
119.64%	117.76%	108.96%	97.71%	100.00%
166.14%	155.79%	135.26%	120.53%	100.00%
153.09%	125.00%	106.63%	75.09%	100.00%
760.00%	1020.00%	4300.00%	2020.00%	100.00%
385.19%	639.51%	792.59%	872.84%	100.00%
50.00%	150.00%	-462.50%	-137.50%	100.00%
96.30%	114.81%	-11.11%	29.63%	100.00%
312.96%	508.33%	591.67%	662.04%	100.00%
115.79%	100.00%	178.95%	100.00%	100.00%
55.00%	77.78%	75.56%	92.78%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
51.11%	73.89%	71.11%	87.78%	100.00%
47.83%	75.16%	63.35%	91.93%	100.00%
-331.94%	-568.06%	-698.61%	-761.11%	100.00%
21.28%	106.38%	134.04%	81.91%	100.00%
-131.93%	-186.14%	-227.11%	-283.73%	100.00%
-131.93%	-186.14%	-227.11%	-283.73%	100.00%
67.88%	64.24%	70.30%	70.91%	100.00%
1.01%	-19.56%	-29.23%	-47.78%	100.00%

TESCO PLC

Profit & Loss account
	2/23/2019	2/24/2018	2/25/2017	2/27/2016	2/28/2015
	th GBP	th GBP	th GBP	th GBP	th GBP
Turnover	63,911,000	57,491,000	55,917,000	54,433,000	62,284,000
∟ National Turnover					42,939,000
∟ Overseas Turnover					19,345,000
Cost of Sales	-59,767,000	-54,141,000	-53,015,000	-51,579,000	-64,396,000
Gross Profit	4,144,000	3,350,000	2,902,000	2,854,000	-2,112,000
Administration Expenses	-2,010,000	-1,786,000	-1,995,000	-1,874,000	-3,680,000
Other Operating Income/Costs pre OP		31,000	110,000	14,000
Exceptional Items pre OP	19,000	242,000		52,000
Operating Profit	2,153,000	1,837,000	1,017,000	1,046,000	-5,792,000
Other Income	35,000	-6,000	-107,000	-21,000	-13,000
Total Other Income & Int. Received	57,000	92,000	2,000	8,000	77,000
Profit (Loss) before Interest paid	2,210,000	1,929,000	1,019,000	1,054,000	-5,715,000
Interest Received	22,000	98,000	109,000	29,000	90,000
Interest Paid	-536,000	-631,000	-874,000	-892,000	-661,000
∟ Paid to Bank
∟ Paid on Hire Purchase
∟ Other Interest Paid	-536,000	-631,000	-874,000	-892,000	-661,000
Net Interest	-514,000	-533,000	-765,000	-863,000	-571,000
Profit (Loss) before Tax	1,674,000	1,298,000	145,000	162,000	-6,376,000
Taxation	-354,000	-306,000	-87,000	54,000	657,000
Profit (Loss) after Tax	1,320,000	992,000	58,000	216,000	-5,719,000
Extraordinary Items		216,000	-112,000	-87,000	-47,000
Minority Interests	2,000	-2,000	14,000	9,000	25,000
Profit (Loss) for period [=Net income]	1,322,000	1,206,000	-40,000	138,000	-5,741,000
Dividends	-357,000	-80,000			-914,000
Retained Profit(Loss)	965,000	1,126,000	-40,000	138,000	-6,655,000

Vertical analysis

2019	2018	2017	2016	2015
%	%	%	%	%
100.00%	100.00%	100.00%	100.00%	100.00%
0.00%	0.00%	0.00%	0.00%	68.94%
0.00%	0.00%	0.00%	0.00%	31.06%
-93.52%	-94.17%	-94.81%	-94.76%	-103.39%
6.48%	5.83%	5.19%	5.24%	-3.39%
-3.14%	-3.11%	-3.57%	-3.44%	-5.91%
0.00%	0.05%	0.20%	0.03%	0.00%
0.03%	0.42%	0.00%	0.10%	0.00%
3.37%	3.20%	1.82%	1.92%	-9.30%
0.05%	-0.01%	-0.19%	-0.04%	-0.02%
0.09%	0.16%	0.00%	0.01%	0.12%
3.46%	3.36%	1.82%	1.94%	-9.18%
0.03%	0.17%	0.19%	0.05%	0.14%
-0.84%	-1.10%	-1.56%	-1.64%	-1.06%
0.00%	0.00%	0.00%	0.00%	0.00%
0.00%	0.00%	0.00%	0.00%	0.00%
-0.84%	-1.10%	-1.56%	-1.64%	-1.06%
-0.80%	-0.93%	-1.37%	-1.59%	-0.92%
2.62%	2.26%	0.26%	0.30%	-10.24%
-0.55%	-0.53%	-0.16%	0.10%	1.05%
2.07%	1.73%	0.10%	0.40%	-9.18%
0.00%	0.38%	-0.20%	-0.16%	-0.08%
0.00%	0.00%	0.03%	0.02%	0.04%
2.07%	2.10%	-0.07%	0.25%	-9.22%
-0.56%	-0.14%	0.00%	0.00%	-1.47%
1.51%	1.96%	-0.07%	0.25%	-10.68%

Horizontal analysis

2019	2018	2017	2016	2015
%	%	%	%	%
102.61%	92.30%	89.78%	87.39%	100.00%
0.00%	0.00%	0.00%	0.00%	100.00%
0.00%	0.00%	0.00%	0.00%	100.00%
92.81%	84.08%	82.33%	80.10%	100.00%
-196.21%	-158.62%	-137.41%	-135.13%	100.00%
54.62%	48.53%	54.21%	50.92%	100.00%
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#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
-37.17%	-31.72%	-17.56%	-18.06%	100.00%
-269.23%	46.15%	823.08%	161.54%	100.00%
74.03%	119.48%	2.60%	10.39%	100.00%
-38.67%	-33.75%	-17.83%	-18.44%	100.00%
24.44%	108.89%	121.11%	32.22%	100.00%
81.09%	95.46%	132.22%	134.95%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
81.09%	95.46%	132.22%	134.95%	100.00%
90.02%	93.35%	133.98%	151.14%	100.00%
-26.25%	-20.36%	-2.27%	-2.54%	100.00%
-53.88%	-46.58%	-13.24%	8.22%	100.00%
-23.08%	-17.35%	-1.01%	-3.78%	100.00%
0.00%	-459.57%	238.30%	185.11%	100.00%
8.00%	-8.00%	56.00%	36.00%	100.00%
-23.03%	-21.01%	0.70%	-2.40%	100.00%
39.06%	8.75%	0.00%	0.00%	100.00%
-14.50%	-16.92%	0.60%	-2.07%	100.00%

APPENDIX - B

J SAINSBURY PLC

Balance sheet
	3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
	th GBP	th GBP	th GBP	th GBP	th GBP
Fixed Assets
Tangible Assets	9,708,000	9,898,000	10,006,000	9,764,000	9,648,000
Land & Buildings	7,753,000	7,920,000	7,951,000	7,542,000	7,683,000
Fixtures & Fittings
Other Fixed Assets	1,955,000	1,978,000	2,055,000	2,222,000	1,965,000
Intangible Assets	1,044,000	1,072,000	742,000	329,000	325,000
Investments	4,241,000	3,165,000	2,667,000	2,436,000	2,059,000
Fixed Assets	14,993,000	14,135,000	13,415,000	12,529,000	12,032,000
Stock & W.I.P.	1,929,000	1,810,000	1,775,000	968,000	997,000
Stock			1,000		994,000
W.I.P.				1,000	3,000
Finished Goods	1,929,000	1,810,000	1,774,000	967,000
Trade Debtors	3,782,000	3,477,000	2,792,000	1,791,000	1,700,000
Bank & Deposits	1,121,000	1,730,000	1,083,000	1,143,000	1,285,000
Other Current Assets	517,000	627,000	468,000	412,000	370,000
Other Debtors	322,000	470,000	312,000	305,000	271,000
Prepayments	195,000	157,000	156,000	107,000	99,000
Investments	240,000	222,000	204,000	130,000	153,000
Current Assets	7,589,000	7,866,000	6,322,000	4,444,000	4,505,000
Total Assets	22,582,000	22,001,000	19,737,000	16,973,000	16,537,000
Current Liabilities
Trade Creditors	-8,558,000	-7,519,000	-6,570,000	-5,108,000	-5,484,000
Short Term Loans & Overdrafts	-948,000	-763,000	-293,000	-341,000	-260,000
Bank Overdrafts	-200,000	-2,000	-6,000	-42,000	-95,000
Hire Purch. & Leas. (short t.)	-16,000	-30,000	-23,000	-38,000	-30,000
∟ Leasing (short t.)	-16,000	-30,000	-23,000	-38,000	-30,000
Other Short Term Loans	-732,000	-731,000	-264,000	-261,000	-135,000
Total Other Current Liabilities	-1,911,000	-2,020,000	-1,710,000	-1,275,000	-1,179,000
Corporation Tax	-204,000	-247,000	-219,000	-158,000	-188,000
Accruals & Def. Inc. (short t.)	-839,000	-872,000	-485,000	-405,000	-292,000
Other Current Liabilities	-868,000	-901,000	-1,006,000	-712,000	-699,000
Current Liabilities	-11,417,000	-10,302,000	-8,573,000	-6,724,000	-6,923,000
Net Current Assets (Working Capital)	-3,828,000	-2,436,000	-2,251,000	-2,280,000	-2,418,000
Other Long Term Loans	-827,000	-1,692,000	-1,924,000	-2,053,000	-2,337,000
Total Other Long Term Liab.	-2,178,000	-1,835,000	-979,000	-920,000	-569,000
Accruals & Def. Inc. (long t.)	-330,000	-301,000	-285,000		-256,000
Other Long Term Liab.	-1,848,000	-1,534,000	-694,000	-920,000	-313,000
Provisions for Other Liab.	-557,000	-407,000	-300,000	-366,000	-292,000
Deferred Tax	-397,000	-241,000	-172,000	-237,000	-215,000
Other Provisions	-160,000	-166,000	-128,000	-129,000	-77,000
Pension Liabilities	959,000	-257,000	-974,000	-408,000	-708,000
Balance sheet Minorities
Long Term Liabilities	-2,709,000	-4,288,000	-4,292,000	-3,884,000	-4,075,000

Net assets	8,456,000	7,411,000	6,872,000	6,365,000	5,539,000
Issued Capital	630,000	627,000	625,000	550,000	548,000
Total Reserves	7,826,000	6,784,000	6,247,000	5,815,000	4,991,000
Share Premium Account	1,147,000	1,130,000	1,120,000	1,114,000	1,108,000
Revaluation Reserves
Profit (Loss) Account	4,763,000	3,789,000	3,190,000	3,370,000	3,057,000
Other Reserves	1,916,000	1,865,000	1,937,000	1,331,000	826,000
Shareholders Funds	8,456,000	7,411,000	6,872,000	6,365,000	5,539,000
Total equity and Liabiities	22,582,000	22,001,000	19,737,000	16,973,000	16,537,000

Vertical analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%

42.99%	44.99%	50.70%	57.53%	58.34%
34.33%	36.00%	40.28%	44.44%	46.46%
0.00%	0.00%	0.00%	0.00%	0.00%
8.66%	8.99%	10.41%	13.09%	11.88%
4.62%	4.87%	3.76%	1.94%	1.97%
18.78%	14.39%	13.51%	14.35%	12.45%
66.39%	64.25%	67.97%	73.82%	72.76%
8.54%	8.23%	8.99%	5.70%	6.03%
0.00%	0.00%	0.01%	0.00%	6.01%
0.00%	0.00%	0.00%	0.01%	0.02%
8.54%	8.23%	8.99%	5.70%	0.00%
16.75%	15.80%	14.15%	10.55%	10.28%
4.96%	7.86%	5.49%	6.73%	7.77%
2.29%	2.85%	2.37%	2.43%	2.24%
1.43%	2.14%	1.58%	1.80%	1.64%
0.86%	0.71%	0.79%	0.63%	0.60%
1.06%	1.01%	1.03%	0.77%	0.93%
33.61%	35.75%	32.03%	26.18%	27.24%
100.00%	100.00%	100.00%	100.00%	100.00%

-37.90%	-34.18%	-33.29%	-30.09%	-33.16%
-4.20%	-3.47%	-1.48%	-2.01%	-1.57%
-0.89%	-0.01%	-0.03%	-0.25%	-0.57%
-0.07%	-0.14%	-0.12%	-0.22%	-0.18%
-0.07%	-0.14%	-0.12%	-0.22%	-0.18%
-3.24%	-3.32%	-1.34%	-1.54%	-0.82%
-8.46%	-9.18%	-8.66%	-7.51%	-7.13%
-0.90%	-1.12%	-1.11%	-0.93%	-1.14%
-3.72%	-3.96%	-2.46%	-2.39%	-1.77%
-3.84%	-4.10%	-5.10%	-4.19%	-4.23%
-50.56%	-46.83%	-43.44%	-39.62%	-41.86%
-16.95%	-11.07%	-11.40%	-13.43%	-14.62%
-3.66%	-7.69%	-9.75%	-12.10%	-14.13%
-9.64%	-8.34%	-4.96%	-5.42%	-3.44%
-1.46%	-1.37%	-1.44%	0.00%	-1.55%
-8.18%	-6.97%	-3.52%	-5.42%	-1.89%
-2.47%	-1.85%	-1.52%	-2.16%	-1.77%
-1.76%	-1.10%	-0.87%	-1.40%	-1.30%
-0.71%	-0.75%	-0.65%	-0.76%	-0.47%
4.25%	-1.17%	-4.93%	-2.40%	-4.28%
0.00%	0.00%	0.00%	0.00%	0.00%
-12.00%	-19.49%	-21.75%	-22.88%	-24.64%

37.45%	33.68%	34.82%	37.50%	33.49%
2.79%	2.85%	3.17%	3.24%	3.31%
34.66%	30.83%	31.65%	34.26%	30.18%
5.08%	5.14%	5.67%	6.56%	6.70%
0.00%	0.00%	0.00%	0.00%	0.00%
21.09%	17.22%	16.16%	19.86%	18.49%
8.48%	8.48%	9.81%	7.84%	4.99%
37.45%	33.68%	34.82%	37.50%	33.49%
100.00%	100.00%	100.00%	100.00%	100.00%

Horizontol analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%

100.62%	102.59%	103.71%	101.20%	100.00%
100.91%	103.08%	103.49%	98.16%	100.00%
99.49%	100.66%	104.58%	113.08%	100.00%
321.23%	329.85%	228.31%	101.23%	100.00%
205.97%	153.72%	129.53%	118.31%	100.00%
124.61%	117.48%	111.49%	104.13%	100.00%
193.48%	181.54%	178.03%	97.09%	100.00%
0.00%	0.00%	0.10%	0.00%	100.00%
0.00%	0.00%	0.00%	33.33%	100.00%

222.47%	204.53%	164.24%	105.35%	100.00%
87.24%	134.63%	84.28%	88.95%	100.00%
139.73%	169.46%	126.49%	111.35%	100.00%
118.82%	173.43%	115.13%	112.55%	100.00%
196.97%	158.59%	157.58%	108.08%	100.00%
156.86%	145.10%	133.33%	84.97%	100.00%
168.46%	174.61%	140.33%	98.65%	100.00%
136.55%	133.04%	119.35%	102.64%	100.00%

156.05%	137.11%	119.80%	93.14%	100.00%
364.62%	293.46%	112.69%	131.15%	100.00%
210.53%	2.11%	6.32%	44.21%	100.00%
53.33%	100.00%	76.67%	126.67%	100.00%
53.33%	100.00%	76.67%	126.67%	100.00%
542.22%	541.48%	195.56%	193.33%	100.00%
162.09%	171.33%	145.04%	108.14%	100.00%
108.51%	131.38%	116.49%	84.04%	100.00%
287.33%	298.63%	166.10%	138.70%	100.00%
124.18%	128.90%	143.92%	101.86%	100.00%
164.91%	148.81%	123.83%	97.13%	100.00%
158.31%	100.74%	93.09%	94.29%	100.00%
35.39%	72.40%	82.33%	87.85%	100.00%
382.78%	322.50%	172.06%	161.69%	100.00%
128.91%	117.58%	111.33%	0.00%	100.00%
590.42%	490.10%	221.73%	293.93%	100.00%
190.75%	139.38%	102.74%	125.34%	100.00%
184.65%	112.09%	80.00%	110.23%	100.00%
207.79%	215.58%	166.23%	167.53%	100.00%
-135.45%	36.30%	137.57%	57.63%	100.00%
66.48%	105.23%	105.33%	95.31%	100.00%

152.66%	133.80%	124.07%	114.91%	100.00%
114.96%	114.42%	114.05%	100.36%	100.00%
156.80%	135.92%	125.17%	116.51%	100.00%
103.52%	101.99%	101.08%	100.54%	100.00%
155.81%	123.95%	104.35%	110.24%	100.00%
231.96%	225.79%	234.50%	161.14%	100.00%
152.66%	133.80%	124.07%	114.91%	100.00%
136.55%	133.04%	119.35%	102.64%	100.00%

TESCO PLC

Balance sheet
	2/23/2019	2/24/2018	2/25/2017	2/27/2016	2/28/2015
	th GBP	th GBP	th GBP	th GBP	th GBP
Tangible Assets	19,023,000	18,521,000	18,108,000	17,900,000	20,440,000
Land & Buildings	16,850,000	16,337,000	15,595,000	15,359,000	17,869,000
∟ Freehold Land				13,005,000	15,649,000
∟ Leasehold Land				2,354,000	2,220,000
Fixtures & Fittings		1,752,000		2,145,000
Plant & Vehicles		316,000		252,000
∟ Vehicles		316,000		252,000
Other Fixed Assets	2,173,000	116,000	2,513,000	144,000	2,571,000
Intangible Assets	6,264,000	2,661,000	2,717,000	2,874,000	3,771,000
Investments	11,092,000	9,954,000	9,611,000	8,302,000	8,045,000
Fixed Assets	36,379,000	31,136,000	30,436,000	29,076,000	32,256,000

Current Assets
Stock & W.I.P.	2,617,000	2,263,000	2,301,000	2,430,000	2,957,000
W.I.P.	6,000	4,000	25,000	40,000	132,000
Finished Goods	2,611,000	2,259,000	2,276,000	2,390,000	2,825,000
Trade Debtors	598,000	466,000	490,000	496,000
Bank & Deposits	2,916,000	4,059,000	3,821,000	3,082,000	2,165,000
Other Current Assets	5,930,000	5,665,000	5,164,000	4,945,000	5,951,000
Group Loans (asset)	170,000	165,000	153,000	180,000	250,000
Other Debtors	5,160,000	4,910,000	4,469,000	4,310,000	5,150,000
Prepayments	594,000	578,000	529,000	440,000	535,000
Deferred Taxation	6,000	12,000	13,000	15,000	16,000
Investments	607,000	1,273,000	3,641,000	3,875,000	885,000
Current Assets	12,668,000	13,726,000	15,417,000	14,828,000	11,958,000
Total Assets	49,047,000	44,862,000	45,853,000	43,904,000	44,214,000
Current Liabilities
Trade Creditors	-5,750,000	-5,416,000	-4,914,000	-4,545,000	-5,076,000
Short Term Loans & Overdrafts	-10,451,000	-9,311,000	-9,264,000	-2,840,000	-2,031,000
Bank Overdrafts	-387,000	-351,000	-912,000		-1,982,000
Group Loans (short t.)	-20,000	-26,000	-23,000	-20,000	-39,000
Director Loans (short t.)
Hire Purch. & Leas. (short t.)	-36,000	-12,000	-11,000	-11,000	-10,000
∟ Leasing (short t.)	-36,000	-12,000	-11,000	-11,000	-10,000
Other Short Term Loans	-10,008,000	-8,922,000	-8,318,000	-2,809,000
Total Other Current Liabilities	-4,479,000	-4,511,000	-5,227,000	-12,329,000	-12,703,000
Corporation Tax	-325,000	-335,000	-613,000	-419,000	-95,000
Accruals & Def. Inc. (short t.)	-1,230,000	-1,643,000	-1,536,000	-1,530,000	-1,759,000
Social Securities & V.A.T.	-521,000	-334,000	-310,000	-388,000	-366,000
Other Current Liabilities	-2,403,000	-2,199,000	-2,768,000	-9,992,000	-10,483,000
Current Liabilities	-20,680,000	-19,238,000	-19,405,000	-19,714,000	-19,810,000

Net Current Assets (Working Capital)	-8,012,000	-5,512,000	-3,988,000	-4,886,000	-7,852,000
Net Tangible Assets (Liab.)	22,103,000	22,963,000	23,731,000	21,316,000	20,633,000
Working Capital needs	-2,535,000	-2,687,000	-2,123,000	-1,619,000	-2,119,000
Total Assets	49,047,000	44,862,000	45,853,000	43,904,000	44,214,000
Total Assets less Cur. Liab.	28,367,000	25,624,000	26,448,000	24,190,000	24,404,000

Long Term Liabilities
Long Term Debt	-8,969,000	-10,114,000	-11,709,000	-10,711,000	-10,651,000
Hire Purch. & Leas. (long t.)	-93,000	-110,000	-103,000	-88,000	-131,000
∟ Leasing (long t.)	-93,000	-110,000	-103,000	-88,000	-131,000
Other Long Term Loans	-8,876,000	-10,004,000	-11,606,000	-10,623,000	-10,520,000
Total Other Long Term Liab.	-773,000	-958,000	-931,000	-889,000	-946,000
Other Long Term Liab.	-773,000	-958,000	-931,000	-889,000	-946,000
Provisions for Other Liab.	-983,000	-812,000	-773,000	-799,000	-894,000
Deferred Tax	-236,000	-91,000	-88,000	-135,000	-199,000
Other Provisions	-747,000	-721,000	-685,000	-664,000	-695,000
Pension Liabilities	-2,808,000	-3,282,000	-6,621,000	-3,175,000	-4,842,000
Balance sheet Minorities	24,000	22,000	24,000	10,000
Long Term Liabilities	-13,509,000	-15,144,000	-20,010,000	-15,564,000	-17,333,000

Net assets	14,858,000	10,480,000	6,438,000	8,626,000	7,071,000

Shareholders Funds
Issued Capital	490,000	410,000	409,000	407,000	406,000
Total Reserves	14,368,000	10,070,000	6,029,000	8,219,000	6,665,000
Share Premium Account	5,165,000	5,107,000	5,096,000	5,095,000	5,094,000
Revaluation Reserves
Profit (Loss) Account	5,405,000	4,228,000	332,000	3,265,000	1,985,000
Other Reserves	3,798,000	735,000	601,000	-141,000	-414,000
Shareholders Funds	14,858,000	10,480,000	6,438,000	8,626,000	7,071,000

Vertical analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%
38.79%	41.28%	39.49%	40.77%	46.23%
34.35%	36.42%	34.01%	34.98%	40.41%
0.00%	0.00%	0.00%	29.62%	35.39%
0.00%	0.00%	0.00%	5.36%	5.02%
0.00%	3.91%	0.00%	4.89%	0.00%
0.00%	0.70%	0.00%	0.57%	0.00%
0.00%	0.70%	0.00%	0.57%	0.00%
4.43%	0.26%	5.48%	0.33%	5.81%
12.77%	5.93%	5.93%	6.55%	8.53%
22.62%	22.19%	20.96%	18.91%	18.20%
74.17%	69.40%	66.38%	66.23%	72.95%


5.34%	5.04%	5.02%	5.53%	6.69%
0.01%	0.01%	0.05%	0.09%	0.30%
5.32%	5.04%	4.96%	5.44%	6.39%
1.22%	1.04%	1.07%	1.13%	0.00%
5.95%	9.05%	8.33%	7.02%	4.90%
12.09%	12.63%	11.26%	11.26%	13.46%
0.35%	0.37%	0.33%	0.41%	0.57%
10.52%	10.94%	9.75%	9.82%	11.65%
1.21%	1.29%	1.15%	1.00%	1.21%
0.01%	0.03%	0.03%	0.03%	0.04%
1.24%	2.84%	7.94%	8.83%	2.00%
25.83%	30.60%	33.62%	33.77%	27.05%
100.00%	100.00%	100.00%	100.00%	100.00%

-11.72%	-12.07%	-10.72%	-10.35%	-11.48%
-21.31%	-20.75%	-20.20%	-6.47%	-4.59%
-0.79%	-0.78%	-1.99%	0.00%	-4.48%
-0.04%	-0.06%	-0.05%	-0.05%	-0.09%
0.00%	0.00%	0.00%	0.00%	0.00%
-0.07%	-0.03%	-0.02%	-0.03%	-0.02%
-0.07%	-0.03%	-0.02%	-0.03%	-0.02%
-20.40%	-19.89%	-18.14%	-6.40%	0.00%
-9.13%	-10.06%	-11.40%	-28.08%	-28.73%
-0.66%	-0.75%	-1.34%	-0.95%	-0.21%
-2.51%	-3.66%	-3.35%	-3.48%	-3.98%
-1.06%	-0.74%	-0.68%	-0.88%	-0.83%
-4.90%	-4.90%	-6.04%	-22.76%	-23.71%
-42.16%	-42.88%	-42.32%	-44.90%	-44.80%

-16.34%	-12.29%	-8.70%	-11.13%	-17.76%
45.06%	51.19%	51.75%	48.55%	46.67%
-5.17%	-5.99%	-4.63%	-3.69%	-4.79%
100.00%	100.00%	100.00%	100.00%	100.00%
57.84%	57.12%	57.68%	55.10%	55.20%


-18.29%	-22.54%	-25.54%	-24.40%	-24.09%
-0.19%	-0.25%	-0.22%	-0.20%	-0.30%
-0.19%	-0.25%	-0.22%	-0.20%	-0.30%
-18.10%	-22.30%	-25.31%	-24.20%	-23.79%
-1.58%	-2.14%	-2.03%	-2.02%	-2.14%
-1.58%	-2.14%	-2.03%	-2.02%	-2.14%
-2.00%	-1.81%	-1.69%	-1.82%	-2.02%
-0.48%	-0.20%	-0.19%	-0.31%	-0.45%
-1.52%	-1.61%	-1.49%	-1.51%	-1.57%
-5.73%	-7.32%	-14.44%	-7.23%	-10.95%
0.05%	0.05%	0.05%	0.02%	0.00%
-27.54%	-33.76%	-43.64%	-35.45%	-39.20%

30.29%	23.36%	14.04%	19.65%	15.99%


1.00%	0.91%	0.89%	0.93%	0.92%
0.00%	0.00%	0.00%	0.00%	0.00%
0.00%	0.00%	0.00%	0.00%	0.00%
0.00%	0.00%	0.00%	0.00%	0.00%
29.29%	22.45%	13.15%	18.72%	15.07%
10.53%	11.38%	11.11%	11.60%	11.52%
0.00%	0.00%	0.00%	0.00%	0.00%
11.02%	9.42%	0.72%	7.44%	4.49%
7.74%	1.64%	1.31%	-0.32%	-0.94%
30.29%	23.36%	14.04%	19.65%	15.99%

Horizontol analysis

3/9/2019	3/10/2018	3/11/2017	3/12/2016	3/14/2015
%	%	%	%	%
93.07%	90.61%	88.59%	87.57%	100.00%
94.30%	91.43%	87.27%	85.95%	100.00%
0.00%	0.00%	0.00%	83.10%	100.00%
0.00%	0.00%	0.00%	106.04%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
84.52%	4.51%	97.74%	5.60%	100.00%
166.11%	70.56%	72.05%	76.21%	100.00%
137.87%	123.73%	119.47%	103.19%	100.00%
112.78%	96.53%	94.36%	90.14%	100.00%


88.50%	76.53%	77.82%	82.18%	100.00%
4.55%	3.03%	18.94%	30.30%	100.00%
92.42%	79.96%	80.57%	84.60%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
134.69%	187.48%	176.49%	142.36%	100.00%
99.65%	95.19%	86.78%	83.10%	100.00%
68.00%	66.00%	61.20%	72.00%	100.00%
100.19%	95.34%	86.78%	83.69%	100.00%
111.03%	108.04%	98.88%	82.24%	100.00%
37.50%	75.00%	81.25%	93.75%	100.00%
68.59%	143.84%	411.41%	437.85%	100.00%
105.94%	114.79%	128.93%	124.00%	100.00%
110.93%	101.47%	103.71%	99.30%	100.00%

113.28%	106.70%	96.81%	89.54%	100.00%
514.57%	458.44%	456.13%	139.83%	100.00%
19.53%	17.71%	46.01%	0.00%	100.00%
51.28%	66.67%	58.97%	51.28%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
360.00%	120.00%	110.00%	110.00%	100.00%
360.00%	120.00%	110.00%	110.00%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
35.26%	35.51%	41.15%	97.06%	100.00%
342.11%	352.63%	645.26%	441.05%	100.00%
69.93%	93.41%	87.32%	86.98%	100.00%
142.35%	91.26%	84.70%	106.01%	100.00%
22.92%	20.98%	26.40%	95.32%	100.00%
104.39%	97.11%	97.96%	99.52%	100.00%

102.04%	70.20%	50.79%	62.23%	100.00%
107.12%	111.29%	115.01%	103.31%	100.00%
119.63%	126.81%	100.19%	76.40%	100.00%
110.93%	101.47%	103.71%	99.30%	100.00%
116.24%	105.00%	108.38%	99.12%	100.00%


84.21%	94.96%	109.93%	100.56%	100.00%
70.99%	83.97%	78.63%	67.18%	100.00%
70.99%	83.97%	78.63%	67.18%	100.00%
84.37%	95.10%	110.32%	100.98%	100.00%
81.71%	101.27%	98.41%	93.97%	100.00%
81.71%	101.27%	98.41%	93.97%	100.00%
109.96%	90.83%	86.47%	89.37%	100.00%
118.59%	45.73%	44.22%	67.84%	100.00%
107.48%	103.74%	98.56%	95.54%	100.00%
57.99%	67.78%	136.74%	65.57%	100.00%
#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
77.94%	87.37%	115.44%	89.79%	100.00%

210.13%	148.21%	91.05%	121.99%	100.00%


120.69%	100.99%	100.74%	100.25%	100.00%
215.57%	151.09%	90.46%	123.32%	100.00%
101.39%	100.26%	100.04%	100.02%	100.00%
272.29%	213.00%	16.73%	164.48%	100.00%
-917.39%	-177.54%	-145.17%	34.06%	100.00%
210.13%	148.21%	91.05%	121.99%	100.00%

APPENDIX - C

J SAINSBURY PLC

Ratios
	3/9/2019	3/10/2018	3/11/2017	3/12/2016
	GBP	GBP	GBP	GBP
Profitability ratios
Return on Shareholders Funds (%)	3.08	5.52	7.32	8.61
Return on Capital Employed (%)	2.34	3.50	4.51	5.35
Return on Total Assets (%)	1.15	1.86	2.55	3.23
Profit margin (%)	0.82	1.44	1.92	2.33
Gross margin (%)	6.92	6.61	6.23	6.19
Berry ratio (x)	1.18	1.37	1.53	1.83
EBIT margin (%)	1.08	1.82	2.45	3.01
EBITDA margin (%)	3.82	4.39	5.05	5.45

Efficiency Ratio
Net Assets Turnover (x)	2.83	2.43	2.35	2.29
Fixed Assets Turnover (x)	2.11	2.01	1.95	1.88
Interest Cover (x)	3.41	3.92	4.70	4.28
Stock Turnover (x)	16.40	15.72	14.77	24.28
Debtors Turnover (x)	8.37	8.18	9.39	13.12
Debtor Collection (days)	43.62	44.60	38.86	27.81
Creditors Payment (days)	98.71	96.44	91.44	79.32

Liquidity Ratio
Current ratio (x)	0.66	0.76	0.74	0.66
Liquidity ratio (x)	0.50	0.59	0.53	0.52
Shareholders liquidity ratio (x)	3.12	1.73	1.60	1.64
Solvency ratio (Asset based) (%)	37.45	33.68	34.82	37.50
Solvency ratio (Liability based) (%)	59.86	50.80	53.42	60.00
Asset Cover (x)	24.20	12.30	9.68	7.75

Gearing Ratio
Gearing (%)	43.25	68.16	66.72	66.38

TESCO PLC

Ratios
	2/23/2019	2/24/2018	2/25/2017	2/27/2016
	GBP	GBP	GBP	GBP
Profitability ratios
Return on Shareholders Funds (%)	11.27	12.39	2.25	1.88
Return on Capital Employed (%)	5.90	5.07	0.55	0.67
Return on Total Assets (%)	3.41	2.89	0.32	0.37
Profit margin (%)	2.62	2.26	0.26	0.30
Gross margin (%)	6.48	5.83	5.19	5.24
Berry ratio (x)	2.08	2.19	1.51	1.57
EBIT margin (%)	3.37	3.20	1.82	1.92
EBITDA margin (%)	5.62	6.27	4.73	4.75

Efficiency ratios
Net Assets Turnover (x)	2.25	2.24	2.11	2.25
Fixed Assets Turnover (x)	1.76	1.85	1.84	1.87
Interest Cover (x)	4.12	3.06	1.17	1.18
Stock Turnover (x)	24.42	25.40	24.30	22.40
Debtors Turnover (x)	106.87	123.37	114.12	109.74
Debtor Collection (days)	3.42	2.96	3.20	3.33
Creditors Payment (days)	32.84	34.39	32.08	30.48

Liquidity Ratio
Current ratio (x)	0.61	0.71	0.79	0.75
Liquidity ratio (x)	0.49	0.60	0.68	0.63
Shareholders liquidity ratio (x)	1.10	0.69	0.32	0.55
Solvency ratio (Asset based) (%)	30.29	23.36	14.04	19.65
Solvency ratio (Liability based) (%)	43.46	30.48	16.33	24.45
Asset Cover (x)	5.47	4.44	3.92	4.10

Gearing Ratio
Gearing (%)	161.26	233.35	454.71	213.35

Question 2

You work as management consultant and have been approached by a client who is concerned about the future of their engineering business. The board of directors are considering halting the production of 2 of their products that appear to be making no profit.

As you can see from the table below the directors are considering closing production of Y and Z in an effort to improve overall profitability.

You establish that management accounting would show the results differently and may affect the directors’ decision.


		X	Y	Z	Total
		(£m)	(£m)	(£m)	(£m)
Sales	432	288	216	936

Cost of sales
	Materials	(144)	(96)	(96)	(336)
	Labour	(144)	(144)	(144)	(432)
	Overheads	(72)	(72)	(72)	(216)
Profit/(loss)	72	(24)	(96)	(48)

Requirements for Question 2 part (a)

1. Calculate the contribution of each product? 5 marks

1. Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Y 1 mark

1. Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Z 1 mark

1. Discuss how and why marginal costing calculates contribution to pay overheads and why this is useful in evaluating product value to a firm? 1 mark

1. Do you agree that profitability will improve by ceasing to make Products Y and Z? What do you suggest the company does to increase profitability? 2 marks

Question 2 (a) total 10 marks

Question 2 part a (continued)

The company board have approached you to get your professional advice opinion on their expansion plan, which entails opening another firm. Below are the figures for the first one that is planned for in the north of Birmingham location next year.

Company policy dictates that any decision should be based on the results of calculating Net Present Value (NPV) of 3 years cash flows using a cost of capital of 12%, Payback Period (PBP) must be less than 3 years, and the Internal Rate of Return (IRR) of the project should provide a 5% cushion in case of increases in inflation or interest rates.

The investment consists of £5,000 for the land, building costs of £9,480, and £2,196 for fittings and equipment.

The cash flows in year 1 are expected to be: total sales revenue £34,320; the cost of X products sold £8,004; Y stock sold £5,660; staff costs £1,416; light & heat £2,011; other overheads £7,708. The cash flows for the following years are the same, but are expected to increase by 2% inflation each year.

Requirements for Question 2 part (b)

Using the information above and in accord with the above stated company policy you are required to calculate:

1. Net Present Value (NPV) 5 marks

1. Payback period (PBP) and Discounted Payback Period (DPBP) 5 marks

1. Internal Rate of Return 1 marks

1. Based on your calculations do you recommend the investment is made and the opening of the new manufacturing unit? 2 marks

1. Critically discuss the limitations of the above project appraisal techniques used and any other recommendations to the board. 2 marks

Question 2 (b) total 15 marks

Solution:

			X	Y	Z	Total
			(£m)	(£m)	(£m)	(£m)
	Sales	432	288	216	936

	Cost of sales
		Materials	-144	-96	-96	-336
		Labour	-144	-144	-144	-432
		Overheads	-72	-72	-72	-216
	Profit/(loss)	72	-24	-96	-48

Sales			432	288	216	936
Less: Variable Cost		288	240	240	768
Contribution			144	48	-24	168

Do you agree that profitability will improve by ceasing to make Products Y and Z? What do you suggest the company does to increase profitability?

Because the product Y has comparatively lower contribution margin in comparison to X, then from this perspective, company should prefer product X. However, the company can continue with both product X and Y because both have positive contribution margin.

Whether the company should stop making product z?

The company should definitely stop making product Z because it has a negative contribution margin. That’s mean the product will never cover its production expenses. And it will result into complete loss.

How and why marginal costing calculates contribution to pay overheads and why this is useful in evaluating product value to a firm?

It is useful because, it tells the feasibility of making a particular product. If cost of sales increases from sales then company should never make such product. So, it can be said that the contribution margin calculated from marginal costs helps in rational decision making.

How to increase profitability?

After considering the contribution margin. It can be said that the company should cease producing product Z. Although the product Y is adding profit in the company product but the contribution margin of product X is maximum. Therefore, the profitability will be maximum if company goes with product X.

Question 2 Part A (Continued)

The investment consists of £5,000 for the land, building costs of £9,480, and £2,196 for fittings and equipment.

Requirements for Question 2 part (b)

Using the information above and in accord with the above stated company policy you are required to calculate:

1. Net Present Value (NPV) 5 marks

1. Payback period (PBP) and Discounted Payback Period (DPBP) 5 marks

1. Internal Rate of Return 1 marks

1. Based on your calculations do you recommend the investment is made and the opening of the new manufacturing unit? 2 marks

1. Critically discuss the limitations of the above project appraisal techniques used and any other recommendations to the board. 2 marks

Question 2 (b) total 15 marks

Question 2 Total 25 marks

Net Present Value (NPV)

Net present value
		year 0	year1	year2	year3	Total
		£	£	£	£	£
INVESTMENT
	Land	(5,000)				(5,000)
	Building costs	(9,480)				(9,480)
	fittings	(2,196)				(2,196)
						0
						0
Cash inflows						0
Sales			34,320	35,006	35,707	105,033

CASH OUTFLOWS
cost of sales:product X		(8,004)	(8,164)	(8,327)	(24,495)
cost of sales product Y		(5,660)	(5,773)	(5,889)	(17,322)
staff costs			(1,416)	(1,444)	(1,473)	(4,334)
light and heat			(2,011)	(2,051)	(2,092)	(6,154)
other overheads			(7,708)	(7,862)	(8,019)	(23,590)

NET INFLOW/OUTFLOW	(16,676)	9,521	9,711	9,906	12,462
discount factor	12%	1	0.893	0.797	0.712
NET PRESENT VALUE	(16,676)	8,501	7,742	7,051	6,617


INTERNAL RATE OF RETURN IRR =IRR	33.8%

PAY BACK PERIOD (PBP)
	Year0	-16676
	year1	9521	-7155	0.74
	year2	9711.42
	year3	9905.648



PBP=	1 YEAR , 9 MONTHS


DISCOUNTED PAY BACK PERIOD (DPBP)
		£
	YEAR 0	-16,676
	YEAR 1	8,501
	YEAR 2	7,742	-433	0.06141	1
	YEAR 3	7,051



DPBP =	2 YEARS & 1 MONTH

Recommendation regarding investment

Because the net present value of the product is positive and increasing gradually, So, investment on new unit can be made.

Limitations of above-mentioned techniques and recommendations

Therein the case, the IRR is around 33% whereas, the discounted rate is about 12%. So, this is good. It is an indication that the new project will add value to the firm. The limitation of this product is; the IRR should not be less than the discounted rate. Meanwhile, there should also not be adverse change in the industrial factors.

Question 3 – Essay question

Over the last two decades, companies across the world have been found to be increasingly engaging in corporate social responsibility (CSR) activities as well as sustainability of the environment. Companies are now increasingly publishing substantial amounts of CSR and environmental information within annual reports.

Required

Write an essay covering a critical discussion of the drivers and motivations of companies to disclose this type of financial and non-financial information about their interactions with wider society and the environment and evaluate the usefulness of doing so.

Word count: 1000

Mark allocation

Regulation surrounding CSR reporting	4
Drivers of CSR reporting	4
Motivators of CSR reporting	4
Analysis and critique of CSR reporting	5
Conclusion	3
Credible academic citations	3
Layout, structure and grammar	2
Total	25

Corporate Social Responsibility (CSR) is transforming into a common issue in both research and practice of the board. In any case, the fundamental techniques in the association between the degree of progress of CSR in associations and the drivers/obstacles that choose this headway are still at the point of convergence of a genuine debate. Corporate Social Responsibility (CSR) insinuates unshakable business, social, and natural exercises to successfully interface with the indigenous living space and accomplices. Ethics, biological thought, incredible corporate citizenship, social association, straightforwardness, and accomplice satisfaction are a part of the attributes commonly related and now and again compared with CSR.

In later quite a while, associations around the world have been progressing budgetary, social, and biological exercises endeavoring to combine these attributes as they comprehend the essentials of CSR in facing the overall test. This wonder has energized the excitement of scholastic, who have committed broad effort to describe the CSR thought, to delimiting its various estimations, and to proposing operational ways to deal with rout inconveniences inborn in its evaluation and assessment (Lo & Sheu, 2007).

Regulation Surrounding CSR Reporting

Nevertheless, it is significant for a corporate organization, whether open CSR rule powers fragile or hard criteria. Most CSR rules, for instance, non-money related disclosure powers delicate tests, and CSR programs are still regularly administered in lower-level assistance works that have compelled important organization incorporation. Strangely, clear rule with hard standards, for instance, charge straightforwardness is routinely the obligation of critical level authority managers, for example, the (CFO), who is typically also a person from the official board. CSR programs that are managed at the official board level will undoubtedly incite a certified change in corporate leadership.

Regardless, while leading organizations will undoubtedly watch hard CSR criteria, perhaps fragile CSR exercises can accept a vocation taking everything into account. The law has limits and is not commonly so reasonable in overseeing business as might be trusted. For example, the substance of the law is often an exchange off, and there may be issues in prerequisites. Along these lines, possibly CSR (as a fragile rule) can have 'an undertaking to do in enhancing law, by giving progressively broad excellent standards and forces of social duty, and by not merely making solicitations on business past those of formal law yet making natural law itself progressively convincing. There are a couple of clarifications behind the creating association between the corporate organization and CSR. Well-uncovered scenes of corporate humiliations, for instance, people have broadened the probability of corporate organization's past just overseeing association conflicts. Second, specialists have shown that accomplice responsibility can improve the estimation of the firm. Third, the extent of new social issues has risen that organization occasionally reluctantly has expected to perceive as critical determinants of firm worth (Harjoto & Jo, 2015).

Drivers of CSR Reporting

As demonstrated by this assessment, a bit of the driver that helps CSR headway is related to moral theories. Chiefs' moral quality, charity, reliability, and great feelings are a bit of the driver that legitimizes this interpretation of CSR. Starting here of view, firms are under the responsibility to be socially reliable because it is morally right, paying little respect to whether it incorporates some significant burdens. The head of firms who see CSR in this manner would be going about as demonstrated by gauges reliant on the achievement of a prevalent society, the headway of absolute rights, attainable improvement, or the "advantage of everybody" approach. These chiefs consider enthusiastic socio wealth as a star social and positive move up to CSR execution. National institutional structures containing express blends of political, money related, educational, and social systems impact CSR rehearses. Starting here of view, the authentic necessities and the solicitations of the distinctive accomplice get-togethers and secure society centrality as drivers for CSR. A couple of scholastics and chiefs furthermore consider the availability of the benefits (budgetary, human, and time-related resources) related to CSR progression. Like this, the drivers of and limits to association CSR improvement would be explained subject to resource theory (Fabrizi, Mallin, & Michelon, 2014).

Motivators of CSR Reporting

The underlying two right motivations are driven either by reactionary stress for the flitting commercial interests of the business, or reputational, driven by narcissistic weight to verify the affiliation's image.

The third careful motivation works from the back to the front. It attempts to embed social and characteristic stresses inside the affiliation's introduction the official's systems, and the fourth, an aggregate motivation, endeavors to bring the outside in and hopes to go past the breaking points of the firm to make a talk with the people who are exposed against the unintended aftereffects of corporate leaders (Govindasamy & Suresh, 2017).

The board practices subject to these different right motivations to CSR and sensibility achieve different operational activities for associations moving toward viability and subsequently have inside and out various effects on how the association's monetary introduction is influenced. Expecting that corporate executives are stressed over making business cases for their associations to suffer and flourish eventually, this paper raises the issue of how phenomenal right motivations for arranging CSR and corporate sensibility relate to the development of different business cases.

Analysis and Critique of CSR Reporting

Analysis of data/Outputs: The association coordinated and declared a data/yield examination on the interests in the system. This procedure should be taken for the different activities influencing its accomplices.

Risks: The examination coordinated shows that the association should indisputably express the threats procured by the association, yet moreover, the ones experienced by its accomplices. This will enable us to find possible results to compel or even empty these perils (Zientara, 2017).

CSR Communication: Based on the assessment performed, it isn't clear whether CSR methodology and activities are embedded with clarity in the regular activities of the association. The association should hence guide a yearly audit to fathom if the CR correspondence is adequately precise. The results should be conveyed in the report.

Conclusion

In this essay, by taking a gander at the complexities between sets of CSR drivers and blocks, we proposed a way of thinking that could be significant for research and business applications to formalize CSR methods. Through this system, we had the alternative to bunch them according to the impact of the drivers and obstructions saw by executives on an affiliation's progression of CSR, from passionate and target perspectives.

Bibliography

Fabrizi, M., Mallin, C., & Michelon, G. (2014). The role of CEO’s personal incentives in driving corporate social responsibility. J. Bus. Ethics , 311-326. Govindasamy, V., & Suresh, K. (2017). Exploring approaches to drivers and barriers of corporate social responsibility. EDP Sci. , 1-8. Harjoto, M., & Jo, H. (2015). Legal vs. Normative CSR: Differential impact on analyst dispersion, stock return. J. Bus. Ethics , 1-20. Lo, S.-F., & Sheu, H.-J. (2007). Is corporate sustainability a value-increasing strategy for business? Corp. Gov. Int. Rev. , 345-358. Zientara, P. (2017). Socioemotional wealth and corporate social responsibility: A critical analysis. J. Bus. Ethics , 185-199.

Vertical Analysis of Sainsbury

3/9/2019 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 -0.930809804529941 6.9190195470058946E-2 -5.9744199675940288E-2 1.31002861378288E-3 1.0756024407901542E-2 3/10/2018 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 -0.93386280573517011 6.6137194264829918E-2 -4.9725892606128759E-2 1.7922406522350295E-3 1.8203542310936183E-2 3/11/2017 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 -0.93769066503965837 6.2309334960341675E-2 -4.6026540573520437E-2 8.1985967053081147E-3 2.4481391092129347E-2 3/12/2016 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 -0.93805836807623588 6.1941631923764146E-2 -3.6160980175274401E-2 4.2967752914149582E-3 3.0077427039904705E-2 3/14/2015 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 -0.9491903259726604 5.0809674027339644E-2 -4.7613038906414301E-2 2.1030494216614089E-4 3.4069400630914828E-3

Vertical Analysis Tesco (Competitor)

Vertical analysis 2019 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 0 0 -0.93515983164087557 6.48401683591244E-2 -3.1449985135579166E-2 0 2.9728841670447967E-4 3.3687471640249725E-2 Vertical analysis 2018 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 0 0 -0.94173000991459532 5.826999008540467E-2 -3.1065732027621716E-2 5.3921483362613274E-4 4.2093545076620689E-3 3.1952827399071161E-2 Vertical analysis 2017 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 0 0 -0.94810165066080088 5.1898349339199172E-2 -3.5677879714576963E-2 1.9672013877711607E-3 0 1.818767101239337E-2 Vertical analysis 2016 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 0 0 -0.94756857053625554 5.2431429463744419E-2 -3.4427644994764209E-2 2.5719692098543164E-4 9.553028493744603E-4 1.9216284239340107E-2 Vertical analysis 2015 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 0.68940658917217901 0.31059341082782094 -1.0339091901611972 -3.3909190161197096E-2 -5.9084194977843424E-2 0 0 -9.2993385139040527E-2

Horizontal Analysis Sainsbury

3/9/2019 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1.2200630914826498 1.1964372756680108 1.6614238410596027 1.5309187279151943 7.6 3.8518518518518516 3/10/2018 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1.1968874868559412 1.1775601542074712 1.5579470198675496 1.25 10.199999999999999 6.3950617283950617 3/11/2017 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1.1030073606729758 1.0896441706917179 1.3526490066225165 1.0662544169611308 43 7.9259259259259256 3/12/2016 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 0.98868559411146162 0.97709044179554216 1.2052980132450331 0.75088339222614842 20.2 8.7283950617283956 3/14/2015 % Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Operating Profit 1 1 1 1 1 1

Horizontal Analysis Tesco (Competitor)

2019 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1.0261222785948236 0 0 0.92811665320827386 -1.9621212121212122 0.54619565217391308 0 0 -0.37171961325966851 2018 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 0.92304604713891203 0 0 0.84075097832163492 -1.5861742424242424 0.48532608695652174 0 0 -0.31716160220994477 2017 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 0.89777470939567139 0 0 0.82326542021243554 -1.3740530303030303 0.54211956521739135 0 0 -0.17558701657458564 2016 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 0.87394836555134547 0 0 0.80096589850301259 -1.3513257575757576 0.50923913043478264 0 0 -0.18059392265193369 2015 % Turnover ∟ National Turnover ∟ Overseas Turnover Cost of Sales Gross Profit Administration Expenses Other Operating Income/Costs pre OP Exceptional Items pre OP Operating Profit 1 1 1 1 1 1 0 0 1

Profitability Ratio of Sainsbury

3/9/2019 GBP Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 3.0833405009999999 2.335219639 1.154580076 0.82393904900000003 6.9190195470000004 1.180034622 1.075602441 3.8163201990000002 3/10/2018 GBP Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 5.5188233709999999 3.496025301 1.859006409 1.437306719 6.6137194260000003 1.3660777390000001 1.820354231 4.3892324990000002 3/11/2017 GBP Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 7.3195576249999998 4.5055535649999996 2.5485129450000001 1.9180902989999999 6.2309334959999996 1.5318972660000001 2.448139109 5.0526235509999999 3/12/2016 GBP Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 8.6095836610000003 5.3468631090000001 3.2286572790000001 2.3313196629999999 6.1941631920000004 1.831764706 3.007742704 5.4539266570000002

Profitability Ratio of Tesco (Competitor)

Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 11.266657693000001 5.9012232520000003 3.4130527860000002 2.6192674189999998 6.4840168360000003 2.0813661479999999 3.3687471640000002 5.6234451029999999 Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 12.385496183000001 5.0655635339999998 2.8933172840000001 2.25774469 5.8269990089999997 2.1897668389999998 3.1952827400000001 6.2653284859999996 Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 2.2522522519999999 0.54824561400000005 0.31622794599999998 0.25931291000000001 5.1898349340000003 1.5097744360000001 1.8187671009999999 4.7338018850000001 Return on Shareholders Funds (%) Return on Capital Employed (%) Return on Total Assets (%) Profit margin (%) Gross margin (%) Berry ratio (x) EBIT margin (%) EBITDA margin (%) 1.878043125 0.66969822199999995 0.36898688000000002 0.29761357999999999 5.2431429459999999 1.5740944020000001 1.9216284239999999 4.7452831919999996

Efficiency Ratio of Sainsbury

Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.834214062 2.1105849399999999 3.4141414139999999 16.404354588 8.3670015860000007 43.623751738000003 98.712868158000006 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.4323446450000001 2.0131588260000002 3.9214285709999999 15.721546961 8.1840667239999991 44.598854371999998 96.444862243000003 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.348978861 1.954826687 4.6985294120000001 14.774084507 9.3925501429999994 38.860585723 91.444859671000003 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.2934920480000001 1.8761273839999999 4.2814371260000001 24.283057850999999 13.124511446 27.810559005999998 79.316770185999999

Efficiency Ratio of Tesco (Competitor)

Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.253005253 1.7568102480000001 4.1231343279999999 24.421474970999999 106.87458194 3.4152180379999999 32.838634976999998 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.2436387760000001 1.8464478419999999 3.0570522979999999 25.404772426000001 123.371244635 2.9585500339999999 34.385208120000001 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.114224138 1.8371993689999999 1.1659038900000001 24.301173403 114.116326531 3.1984906199999998 32.076291646999998 Net Assets Turnover (x) Fixed Assets Turnover (x) Interest Cover (x) Stock Turnover (x) Debtors Turnover (x) Debtor Collection (days) Creditors Payment (days) 2.2502273669999999 1.8720938229999999 1.18161435 22.400411522999999 109.74395161299999 3.3259236130000001 30.476457296

Liquidity Ratio of Sainsbury

Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.664710519 0.49575194900000003 3.121447028 37.445753255 59.861248760999999 24.203644159 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.76354105999999999 0.58784702 1.728311567 33.684832508 50.795065113 12.297931804999999 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.73743147099999995 0.53038609599999997 1.6011183600000001 34.817854789999998 53.416245627999999 9.679744973 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.66091612099999997 0.51695419399999998 1.638774459 37.500736463999999 60.001885369999997 7.7502283109999999

Liquidity Ratio of Tesco (Competitor)

Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.612572534 0.48602514499999999 1.099859353 30.293392053000002 43.458422300000002 5.4685026199999998 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.71348372999999998 0.59585195999999996 0.69202324400000004 23.360527841 30.481065674 4.4356337750000003 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.79448595700000002 0.67590827099999995 0.32173912999999998 14.040520795000001 16.333883039 3.916047485 Current ratio (x) Liquidity ratio (x) Shareholders liquidity ratio (x) Solvency ratio (Asset based) (%) Solvency ratio (Liability based) (%) Asset Cover (x) 0.75215582800000003 0.62889317199999994 0.55422770499999996 19.647412536000001 24.451499517999999 4.0989636819999999

Gearing (%) 3/9/2019 3/10/2018 3/11/2017 3/12/2016 Average Benchmark Competitor Benchmark 43.247398296999997 68.155444609 66.720023283000003 66.378633149999999 61.125374834749991 265.66764196424998

Gearing (%) 2/23/2019 2/24/2018 2/25/2017 2/27/2016 Average Benchmark 161.259927312 233.349236641 454.70643056799997 213.354973336 265.66764196424998

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3/9/20193/10/20183/11/20173/12/2016Average BenchmarkCompetitor Benchmark

GBPGBPGBPGBP

Profitability ratios

Return on Shareholders Funds (%)3.085.527.328.616.136.95

Return on Capital Employed (%)2.343.504.515.353.923.05

Return on Total Assets (%)1.151.862.553.232.201.75

Profit margin (%)0.821.441.922.331.631.36

Gross margin (%)6.926.616.236.196.495.69

Berry ratio (x)1.181.371.531.831.481.84

EBIT margin (%)1.081.822.453.012.092.58

EBITDA margin (%)3.824.395.055.454.685.34

J SAINSBURY PLC

Ratios

2/23/20192/24/20182/25/20172/27/2016Average Benchmark

GBPGBPGBPGBP

Profitability ratios

Return on Shareholders Funds (%)11.2712.392.251.88

6.95

Return on Capital Employed (%)5.905.070.550.673.05

Return on Total Assets (%)3.412.890.320.371.75

Profit margin (%)2.622.260.260.301.36

Gross margin (%)6.485.835.195.245.69

Berry ratio (x)2.082.191.511.571.84

EBIT margin (%)3.373.201.821.922.58

EBITDA margin (%)5.626.274.734.755.34

TESCO PLC

Ratios

J SAINSBURY PLC

Efficiency Ratio3/9/20193/10/20183/11/20173/12/2016Average BenchmarkCompetitor Benchmark

Net Assets Turnover (x)2.832.432.352.292.482.22

Fixed Assets Turnover (x)2.112.011.951.881.991.83

Interest Cover (x)3.413.924.704.284.082.38

Stock Turnover (x)16.4015.7214.7724.2817.8024.13

Debtors Turnover (x)8.378.189.3913.129.77113.53

Debtor Collection (days)43.6244.6038.8627.8138.723.22

Creditors Payment (days)98.7196.4491.4479.3291.4832.44

TESCO PLC

Efficiency ratios2/23/20192/24/20182/25/20172/27/2016Average Benchmark

Net Assets Turnover (x)2.252.242.112.252.22

Fixed Assets Turnover (x)1.761.851.841.871.83

Interest Cover (x)4.123.061.171.182.38

Stock Turnover (x)24.4225.4024.3022.4024.13

Debtors Turnover (x)106.87123.37114.12109.74113.53

Debtor Collection (days)3.422.963.203.333.22

Creditors Payment (days)32.8434.3932.0830.4832.44

J SAINSBURY PLC

Liquidity Ratio3/9/20193/10/20183/11/20173/12/2016Average BenchmarkCompetitor Benchmark

Current ratio (x)0.660.760.740.660.710.72

Liquidity ratio (x)0.500.590.530.520.530.60

Shareholders liquidity ratio (x)3.121.731.601.642.020.67

Solvency ratio (Asset based) (%)37.4533.6834.8237.5035.8621.84

Solvency ratio (Liability based) (%)59.8650.8053.4260.0056.0228.68

Asset Cover (x)24.2012.309.687.7513.484.48

TESCO PLC

Liquidity Ratio2/23/20192/24/20182/25/20172/27/2016Average Benchmark

Current ratio (x)0.610.710.790.750.72

Liquidity ratio (x)0.490.600.680.630.60

Shareholders liquidity ratio (x)1.100.690.320.550.67

Solvency ratio (Asset based) (%)30.2923.3614.0419.6521.84

Solvency ratio (Liability based) (%)43.4630.4816.3324.4528.68

Asset Cover (x)5.474.443.924.104.48

J SAINSBURY PLC

Gearing Ratio3/9/20193/10/20183/11/20173/12/2016Average BenchmarkCompetitor Benchmark

Gearing (%)43.2568.1666.7266.3861.13265.67

TESCO PLC

Gearing Ratio2/23/20192/24/20182/25/20172/27/2016Average Benchmark

Gearing (%)161.26233.35454.71213.35265.67

Student Name	OKORO ANAYO FESTUS	Reasonable Adjustments
Student Number	18156728	Check this box [x] if the Faculty has notified you that you are eligible for a Reasonable Adjustment (including additional time) in relation to the marking of this assessment. Please note that action may be taken under the University’s Student Disciplinary Procedure against any student making a false claim for Reasonable Adjustments.
Course and Year	MSc Management
Module Code	ACC7032
Module Title	Managerial Finance
Personal Tutor	JONATHAN MILLS

First Marker Name:	ASJakhu	First Marker Signature:	ASJakhu	Date:	13.2.2020
Feedback: General comments on the quality of the work, its successes and where it could be improved
Q1. Limited financial analysis techniques used, no analysis or critical commentary of any substance. Data and tables with no explanations submitted. Poor academic writing and grammatical and spelling errors. Q2. Correct calculations but explanations need improving, no use of academic references. Q3. Displays some understanding of the topic, but elements of the question not commented on or analysed	Provisional Uncapped Mark Marks will be capped if this was a late submission or resit assessment and may be moderated up or down by the examination board.
	37 %
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