Ivestment Analysis Tesco vs. Sainsbury

Abstract

The purpose of this assignment is to critically examine the performance of two companies using Ratio analysis over the a period of five years (2008-2012), in order to recommend the best company for investment, justified by the data collected, analysed using ratio analysis and interpreted

The assignment, will compare two of the largest retail outlets in th UK in sainbury and Tesco. It will show that Tesco has higher Profitability, Liquidity and Gearing ratios than Sainsbury, While in investment ratios Sainsbury exceeds Tesco. However it will also show that over the five year period Sainsbury as more consistent ratio outputs than Tesco, whom go into a steep declines in various ratios during the 2012 period.

This assignment will show that Sainsbury on the basis of consistence is a better investment option, while highlighting that the ratio cannot be the only tool used in analysing comparatively the two companies.

Table of Contents

Introduction1

Selection of companies2

3. Ratio Analysis3

3.1 Profitability Ratios4

3.1.1Return On Capital Employed4

3.1.2 Gross Profit Margin6

3.1.3 Profit Margin7

3.2 Liquidity Ratios8

3.2.1 Current8

3.2.2 Liquidity9

3.3 Gearing Ratio10

3.4 Investment Ratios12

3.4.1Dividen Yield12

3.4.2Pric to Earning13

4.0 Critical Analysis15

5.0 Conclusion16

APPENDIX17

Bibliography

Table of Tables

Table 1.1……………………………………………………………..4

Table 1.2……………………………………………………………..6

Table 1.3……………………………………………………………..7

Table 2.1……………………………………………………………..8

Table 2.2……………………………………………………………..9

Table 3.1……………………………………………………………..10

Table 4.1……………………………………………………………..12

Table 4.2……………………………………………………………..13

Table of figures

Figure 1.1……………………………………………………………..4

Figure 1.2……………………………………………………………..6

Figure 1.3……………………………………………………………..7

Figure 2.1……………………………………………………………..8

Figure 2.2……………………………………………………………..9

Figure 3.1……………………………………………………………..10

Figure 4.1……………………………………………………………..12

Figure 4.2……………………………………………………………..13...