Business analysis of J Sainsbury and Morrisons

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BS 3106 Advanced Financial Accounting Dr Bala Balachandran Autumn Term Coursework Topic: Business analysis of J Sainsbury and Morrisons Group 11: Malaly Zaheer BIF3 070013399 Jiayao Zhou BIF3 080014469 Elaine Yap BIF3 080047892 Fei Wang IFRM3 090035262 Table of Content: 1. Objective……………………………………………………………………………………………………1 2. Introduction………………………………………………………………………………………………1 3. Financial performance analysis………………………………………………………………….2 4. Operating model analysis…………………………………………………………………………..5 5. Industry analysis……………………………………………………………………………………….6 6. Potential future developments………………………………………………………………….7 7. Conclusion …………………………………………………………………………………………………9 8. Reference…show more content…
And the quick ratio3 indicates the company’s ability to repay immediate commitments using cash or near-cash assets4. From the trend analysis5, the short-term liquidity level as measured in current ratio of Sainsbury has decreased significantly amid the financial crisis, resulting 0.66(2008) and 0.54(2009) respectively. It may be because those current liabilities are rising faster than current assets, or the firms investing substantial amount of its liquid assets (e.g. cash) into long-term investment, resulting a decrease in the above two liquidity ratios continuously from 2008 to 2009. Moreover, adverse trading conditions in recession may cause inventory becoming obsolete or introduction of new models by competitors. Nevertheless, as the UK economy has dragged out from recession steadily from 2010, current ratio has improved, reaching at 0.66 and is closed to the industrial benchmark Tesco at 0.69. Present quick ratio of Sainsbury is 0.38, which has improved from
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