Managerial Finance Research Paper Example | Topics and Well Written Essays - 1500 words

Managerial Finance - Research Paper Example 19964 million. J Sainsbury plc consists of Sainsbury’s - a chain of 547 supermarkets and 343 convenience stores and the Sainsbury’s Bank (Jsainsburys, 2011). One of the most innovative services offered by the company is its online servicing and delivery system. Customers can make their purchases online and Sainsbury will deliver to 90% of the UK households. The system generates over 100,000 orders per week. The firm has a division called Sainsbury Property that has a portfolio that includes 297 freehold and long leasehold properties and 43 joint venture properties (Jsainsburys). The retail operation of the company generates 19 million customers transaction every week. Five Business Ratios (2009-2010) 2009 2010 Net margin 289 / 18911 = 1.53% 585 / 19994 = 2.93% Current ratio 1268 / 4511 = 0.28 1797 / 2793 = 0.64 Return on capital 289 / 4157 = 6.95% 585 / 4966 = 11.78% Debt ratio 9836 / 5679 = 1.73 10855 / 5889 = 1.84 Earnings per share 16.6 32.1 Sainsbury vs. FTSE100 ind ex This part of the paper will demonstrate a comparison between the market price of the Sainsbury common stock and the FTSE 100 index. The graph that show the movement in the price of the stock and the index are illustrated in appendix A and appendix B. In order to evaluate the results further qualitative information based on company news is going to be used to attempt to interpret the results of the graph. The FTSE graph shows many fluctuations in up and down with the steepest downward in July 2011. Overall the general trend of the index prices was that the price of the index went up during the last year. During the first quartile of the graph the trend in prices of the Sainsbury was very similar to the movement in the FTSE 100 graph. The price of the Sainsbury stock peak in September 2010 and it bottom out during April of 2011. A piece of news that always shakes the price of common stocks is the release of quarterly results. The latest quarterly results of the company were release d in March 23, 2011. The graph illustrates that after the release of this piece of news the price of the stock after being the lowest point during the last year it began to steadily go up until May of this year. Analysis of Sainsbury financial performance In order to determine the viability of Sainsbury (J) as possible stock investment alternative this paper will analyze the company’s overall financial performance. The analysis includes their operations and how Sainsbury (J) compares with other similar stocks and its industry sector. By comparing key financial ratios we can visualize the overall financial position of the company and how the company compares to its overall industry sector in order to determine its attractiveness as a stock investment in a personal investment portfolio. Sainsbury (J) has become a leader in the grocery foods sector with a 16.9% market share in the UK. The company has made a number of fundamental changes in recent years in order to enhance overal l competitiveness and fuel future growth. Sainsbury is known to be the world leader in Fair Trade Products with around 25% of all Fair trade Products in the UK. The company was also named Supermarket of the Year at the 2009 Retail Industry Awards for their efforts to innovate and adapt to changing customer needs over the last year. Sainsbury’s operational focus is centered accelerating future growth and sustainability. The five key operational areas the company focuses on in order to further increase its market