Strategic And Financial Objectives Of Sainsbury

1621 WordsAug 8, 20147 Pages
Investment Ratios: Sainsbury’s 2013 report states that maintaining a strong / efficient capital base will be key to fulfilling their strategic and financial objectives. This is basically the shareholder’s initial equity / monies used to buy shares in the business plus any retained earnings. The capital base is a useful a benchmark for measuring returns relative to initial outlay investment (Investopedia, 2014). Sainsbury’s manages its capital structure by buying/selling capital, issuing additional shares or buying back shares, varying its debt portfolio, adapting dividend payment schedules and leasing capital (land/property). Earning targets involve covering the underlying earnings for the ordinary dividend at a minimum of 1.5 times and increasing cover in the medium term to 2 times. The Dividend Payout Ratio shows Sainsbury’s holding quite a consistent return for shareholders. Indeed citing a 5.27% increase on 2012/2013 to 50.16 (2013). These were reduced by 10.91% by the 2013/2014 trading period, closing at 44.69. Similarly Tesco Dividend Payout Ratio figures suggest a level period from 2009 – 2012 at 41.93. The ratio figure rose exponentially, by 2253.11% to 986.66 by 2013, due largely to the huge 95.74% reduction in profit for the year of just £120M. Evidence that the situation is recovering somewhat is the published increase in profit of 708.33% to close at £970M in 2013. Further subsequent reductions in the 2013/2014 period of 87.58% closes with the ratio specified

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