Sainsbury's Balance Sheet Analysis

The counterbalance tab does not show what the party worth. It is essentially a snapshot of a confede symmetryns financial condition at a single point in so it is an univocal conside balancen about that society (Sutton, 2000). The strength of a companys balance sheet can be evaluated by three important symmetrys on a lower floor: Current and quick ratios Current ratio illustrates a companys energy to grant its short-term obligations from its current assets. diligent ratio deducts stocktaking from current assets because bloodline 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 kindred in 2008 and 2010. In 2009 and 2011, it dropped to 0.55 and 0.60 respectively. This is due to a line of blood in current assets and an increase in current liabil ities of the company in both 2009 and 2011. Similar pattern happened to the quick ratio as inventory increased from year to year. Both ratios push aside than 1 could indicate that the company may have pain in the neck meeting current liabilities (Sander & Haley, 2008). Nevertheless, it is not a critical problem to Sainsbury because it has few receivables.

It also receives bullion instantly from hoggish sales so it has no need to deposit numerous cash at the bank to pay creditors (Walton & Aerts, 2009). Moreover, its inventory turns over much more speedily than accounts payable move around remiss (University of Notre Dame, 2011) train ! caravan shows the companys major power to pay its debt by using its equity. The lower this ratio the fail 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, set up it on our website: BestEssayCheap.com

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