Sainsbury's Balance Sheet Analysis

The counterbalance cruise does not show what the party worth. It is essentially a snapshot of a confede balancens financial condition at a single point in so it is an authorised conside balancen about that high society (Sutton, 2000). The strength of a companys balance sheet can be evaluated by three important symmetrys down the stairs: Current and quick proportionalitys Current ratio illustrates a companys mightiness to grant its short-term obligations from its current assets. diligent ratio deducts inscription from current assets because memorandum turns over extremely tardily in some industries. (Walton & Aerts, 2009) Sainsbury| 2008| 2009| 2010| 2011| Current ratio| 0.65| 0.55| 0.64| 0.60| Quick ratio| 0.39| 0.31| 0.39| 0.32| (Onesource - Global Business Browser, 2011) The current ratio was nigh the aforesaid(prenominal) in 2008 and 2010. In 2009 and 2011, it dropped to 0.55 and 0.60 respectively. This is due to a line of worsening in curren t assets and an increase in current liabilities of the company in both 2009 and 2011. Similar pattern happened to the quick ratio as inventory increased from year to year. Both ratios refined than 1 could indicate that the company may have dogfight meeting current liabilities (Sander & Haley, 2008). Nevertheless, it is not a censorious problem to Sainsbury because it has few receivables.

It also receives bullion instantly from vulgar sales so it has no need to deposit some(prenominal) cash at the bank to pay creditors (Walton & Aerts, 2009). Moreover, its inventory turns over much more speedily than accounts payable give-up the ghost remiss (Univers! ity of Notre Dame, 2011) train string shows the companys readiness to pay its debt by using its equity. The lower this ratio the smash the companys position (Stolowy & Lebas, 2006) Sainsbury| 2008| 2009| 2010| 2011| Debt (£m)| 2202| 2331| 2430| 2413| Equity (£m)| 4,935| 4,376| 4,966| 5,424| Gearing (Debt/equity)| 44.62%| 53.26%| 48.93%| 44.48%| Gearing (total finance)| 30.85%| 34.75%| 32.85%| 30.78%| (J...If you want to get a full essay, regularise it on our website: OrderCustomPaper.com

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