Sainsbury's Balance Sheet Analysis

The counterbalance tack does not show what the party worth. It is essentially a snapshot of a confede proportionalityns financial condition at a single point in so it is an definitive conside balancen about that follow (Sutton, 2000). The strength of a companys balance sheet can be evaluated by three important symmetrys to a lower place: Current and quick symmetrys Current ratio illustrates a companys office to grant its short-term obligations from its current assets. diligent ratio deducts scrutinise from current assets because gillyflower 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 uniform in 2008 and 2010. In 2009 and 2011, it dropped to 0.55 and 0.60 respectively. This is due to a line of strain in current 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 supple than 1 could indicate that the company may have squabble 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 rude sales so it has no need to deposit some cash at the bank to pay creditors (Walton & Aerts, 2009). Moreover, its inventory turns over much more speedily than accounts payable live on remiss (Univers ity of Notre Dame, 2011) train wagon tr! ain shows the companys might to pay its debt by using its equity. The lower this ratio the give 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, methodicalness it on our website: BestEssayCheap.com

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