Financial Ratio Analysis - Advanced Profitability - Additional Question 6

Advanced Profitability - Additional Question 6

J Sainsbury plc's published accounts contain the following historical information. Use both ratios and graphs to highlight Sainsbury's performance over these five years.

  1. You should prepare a graph or graphs that show:
    1. Turnover trends
    2. Operating profit trends
    3. Group profit before tax trends
  2. You should also identify:
    1. Operating profit margin in total
    2. Group profit before tax margin
    3. Interest payable as a percentage of turnover
    4. Operating profit trend segment by segment
  3. Advanced - Estimate Sainsbury's total costs from the group turnover and profit before taxation data and then prepare a break-even chart that will help you to estimate Sainsbury's break even point.

    Five year review (£m) 1991 1992 2000 2001 2002
    Group turnover 15,496 16,378 17,414 18,441 18,206
    Operating profit 790 794 651 628 677
    Source of operating profit by segment          
    Sainsbury's Supermarkets 751 711 518 470 515
    Sainsbury's Bank -15 -5 3 13 22
    Shaw's Supermarkets 37 52 79 115 137
    Other operating activities 10 12 16 25 15
    Profit sharing -39 -40 -9 -8 -10
    Discontinued operations 46 64 44 13 -2
    Interest payable -78 -50 -72 -76 -49
    Profit/(Loss) from joint ventures 16 12 1 -3 -1
    Group profit before taxation 728 756 580 549 627


  4. Advanced - Estimate Tesco's total costs from the data that follows and then prepare a break-even chart that will help you to estimate its break-even point. Contrast this chart with the break even chart you prepared for Sainsbury plc

    Tesco Data for break even analysis 1998 1999 2000 2001 2002
    Turnover 16,452 17,158 18,796 20,988 23,653
    Profit for the financial year 532 606 674 722 830
    Total Costs (Turnover - Profit for the year) 15,920 16,552 18,122 20,266 22,823

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