Sainsbury and Marks & Spencer Limited Financial Analysis - Assignment Example

Executive Summary Sainsbury and Marks & Spencer Limited have been performing on similar business model and have been successful as retail players. Their market has grown which is reflected by the growth in sales. There is even scope for the company to move further as this sector is showing improvement. CSL Limited and Baxter International are players in the drug field and has been able to create a market for themselves due to increase in disease and need for different medicine to cure them. The company has banked on research and development and has been successful as drug manufacturers. The financial analysis also highlights some important fact related to liquidity and capital structure. The findings shows the positives and negatives of the four companies based on financial analysis. The ratios like liquidity ensures to find liquidity and the capital financed by the company are demonstrated by capital structure ratios. The efficiency ratio indicates the area where CSL Limited needs to work to stay ahead of Baxter International. The capital market ratio indicates the companies which are favoured by shareholders and also help to look into the future prospects of the company. An industry wise analysis has also been conducted for both the industry highlighting some demarcating facts between the industries. The recommendations highlights areas where all the companies need to improve which will help them face competition and help in proper strategy execution. Content Introduction 3 Financial Analysis 4 Liquidity ratio 4 Long Term Solvency ratio 6 Profitability Ratios 9 Asset Efficiency Ratios 11 Market Performance Ratio 13 Findings 15 Conclusion 17 Recommendations 17 Limitations 18 References 19 Appendix 21 Introduction Sainsbury is a retail giant. The company has a huge presence in UK and deals in “toiletries, stationery, non food items, clothing, furniture and similar other items”. (Sainsbury Website, 2010) The fact that the company deals in so many products and huge reach has given a wide market. The company has a presence in supermarkets, malls, departmental stores and provide the basic necessities for people thereby enabling them to grow. Marks & Spencer is also a retail giant. The company deals in “clothing, food items, furniture, toiletries and other household items”. (Marks & Spencer Website, 2010) The wide range of product and dispersion has made it a huge success. The company with their policy to satisfy customers has grown and is able to capture a good market. CSL Limited is a drug manufacturer. The company has a huge presence and deals in “medicines, blood plasma derivatives, anti venom and other similar products”. (CSL Limited Website, 2010) The fact that the company deals in so many products and huge reach has given a wide market. The company has a presence in many countries due to the need served by the medicine manufactured by them which is used widely. Baxter International is also a drug manufacturer. The company deals in “products to treat haemophilia, kidney, and other chronic and acute disease”. (Baxter International Website, 2010) The wide range of medicines and the ease with it relieves the patients from the pain has made it a huge success. The financial statement of all the four companies reveals so. Even the share prices shows improvement. With more consumers moving towards supermarkets and growth in patients suffering from different disease gives an opportunity to expand in overseas market. Financial Analysis Financial analysis is very important for all business. Analyzing the statement helps in “planning, budgeting, monitoring, forecasting and improving the financial performance by taking vital decision”. (Micro Strategy, 2010) Proper analysing helps a long way to “understand the financial health”. (Micro Strategy, 2010) It helps to identify trends and compare with competitors and industry to gain advantage. The following is the ratios for Sainsbury, Marks & Spencer, CSL Limited and Baxter International Liquidity Ratios This ratio plays an important part and helps “to identify the firms ability to meet its short term obligations and plays a huge role in the performance”. (Financial Modelling Guide, 2010) The ratios for Sainsbury, Marks & Spencer, CSL Limited and Baxter International are as Current Ratio: “It measures the ability to pay the short term liabilities out of short term assets”. (Financial Modelling Guide, 2010) This ratio helps creditors, suppliers and investor to identify the liquid position. It is calculated as “Current Assets / Current Liabilities”. The current ratios for all the four companies are as follows Comparing the retail giants we see that Marks & Spencer has a better liquidity position as compared to Sainsbury both in 2010 and 2009. Both the companies still need to improve the ratio as it is a concern as the short term obligations are higher. This might make investors and suppliers stay away. When we consider the two companies together it shows that Marks & Spencer has better policies and strategies as compared to Sainsbury. Comparing the drug manufacturer we see that CSL Limited has a better liquidity position as compared to Baxter International. CSL Limited need to bring down the ratio as it is a concern as the short term assets are more than warranted. This might lead to parking of idle cash. Baxter International on the other hand is in a better position but still needs to take it slightly up. When we consider the two companies together it shows that Baxter International has better policies and strategies as compared to CSL Limited. While comparing both the industry i.e. drug industry and retail giant we see that all the companies need to work more and ensure that it comes to around 2. The industry comparison shows soundness but there is room for improvement. Quick Ratio: It is also known as acid test ratio. “It measures the ability of the firm to meet its short term obligation when inventories are removed as inventories take some time to be converted into cash”. (Financial Modelling Guide, 2010) It is calculated as “(Current Assets – Inventories) / Current Liabilities”. The ratios for all the four companies are as Comparing the ration of retail players we see that Marks & Spencer is better positioned as compared to Sainsbury both in 2010 and 2009. Sainsbury and Marks & Spencer still need to improve this as it is a concern and presenting a bleak picture. Comparing the performance of the drug manufacturers we see that CSL Limited is better positioned as compared to Baxter International. The ratio indicates the efficiency of the company to meet its immediate debt. CSL Limited need to bring down this as it is a concern and presenting a bleak picture as more short term assets have been acquired. An industry comparison between the drug and retail player shows that both the industry has huge inventories. The ratio when compared to current ratio also indicates huge inventories. Since, both the industry deal in products where the inventory has to be high so having a low ratio is predictable. Long Term Solvency Ratio This ratio is of prime importance and provides relevant information about the company. “It identifies how much of the firm’s assets are financed through debt and includes long term debt”. (Transtutor, 2010) The ratios which help to determine it are as Debt to Equity Ratio: “It determines the proportion of long term debt in relation to the shareholders fund and long term debt”. (Transtutor, 2010) This ratio helps to identify the financial soundness. It is calculated as “Long Term Debts / Equity X 100”. The ratios for all the four companies are as Comparing the retail players we see that the ratio indicates soundness on the part of both the companies. It shows that the company has a scope for more investment through debts. This is a good sign and shows the company has a space for future projects. Sainsbury needs to raise it further so that it can save on taxes. Sainsbury need to ensure that it keeps with the industry standard. Marks & Spencer on the other hand has an equal mix of debt and equity highlighting proper policies. Comparing the performance of the drug player we see that the ratio indicates soundness on the part of Baxter International. It shows that the company has a scope for more investment through debts. This is a good sign and shows the company has a space for future projects. CSL Limited has reduced its debt a lot by paying off is a worry and needs to raise it so that it can save on taxes. CSL Limited needs to ensure that it keeps with the industry standard. Comparing both the retail and drug industry we see that both the industry needs large debts to ensure growth. It is important that they continue similarly and have a mix of both debt and equity thereby helping in future projects. Debt Coverage Ratio: It is defined as “the ability to pay the monthly debt on the loan taken on the mortgage of property”. (Financial Modelling Guide, 2010) It is widely used by banks. It is calculated as “Non Current Liabilities / Net Cash Flow from Operating Activities”. The ratios for all the four companies are as Comparing the performance of retail players we see that Sainsbury shows better performance in 2010 compared to 2009. It indicates that the company is lowly moving towards its competitor i.e. Marks & Spencer. Marks & Spencer on the other hand has shown consistency though there is a slight change in this ratio. Sainsbury and Marks & Spencer need to continuously work and ensure that the debt coverage ratio improves further so that growth is better. Comparing the performance of drug manufacturers reveals that Baxter International has a better debt coverage ratio as compared to CSL Limited in both the years i.e. 2010 and 2009. It shows that Baxter has better chances of paying the interest as compared to CSL. CSL Limited needs to improve the ratio so that it is able to attract more investors. Comparing the industry performance highlights that both the retail and drug players lays stress on debt coverage ratio as it helps to identify the future potential in terms of long term investments and helps to identify the areas that the sector needs to work upon to ensure that interest and debt can be easily paid. Profitability Ratios Profitability ratios form a very vital part of financial analysis. This ratios help to understand the profit which can be attributed to the different factors which work in tandem to achieve the desired results. Comparing it with the previous years and the competitors’ helps to evaluate the shortcomings, and shows area which needs to be improved. The profitability ratios are as follows Net Profit Margin: “It is defined as the profit generated per dollar of sales and is calculated after all the direct and indirect expense has been considered”. (Kennon, 2010) Organisations prefer this to be high. It is calculated as “Earning before Interest and taxes (EBIT) / Sales X 100”. The ratios for all the four companies are as Comparing the performance of the drug manufacturer indicates similarity between Sainsbury and Marks & Spencer. It is seen that the net profit has increased for Sainsbury and Marks & Spencer in 2010 as compared to 2009. This is a good factor and reflects efficiency to maintain the indirect expense. The ratio for Sainsbury has improved signifying better management and control of cost. When we look at the broader picture it shows that Sainsbury and Marks & Spencer Comparing the performance of the drug manufacturer indicates similarity between CSL Limited and Baxter International. It is seen that the net profit has grown for both the companies in 2010 as compared to 2009. This is a good sign and shows efficiency in maintaining the indirect expense. The ratio for Baxter International has improved slightly as compared to CSL Limited signifying better management and control of cost by CSL Limited. When we look at the broader picture, it shows that CSL Limited have ensured better management policies and reduced expenses to earn a higher return. A comparison of the performance of the retail and drug manufacturers shows that the companies have been able to generate profits but the return in less. Companies in this type of business rely more on volume to ensure a growth in profits. Return on Assets: “It is defined as the amount of profit generated for per dollar of asset”. (Joseph, 2010) It helps to identify whether the assets are utilized properly or underutilized. It is calculated as “Earning before Interest and Taxes (EBIT) / Average assets X 100). The ratios for all the four companies are as Comparing the performance of the retail giants shows that the return on assets for both Sainsbury and Marks & Spencer have improved in 2010 as compared to 2009. This has resulted in better utilization having of the assets. Marks & Spencer on the other hand has a better return showing proper utilization of assets. Comparing the performance of the drug manufacturers shows that return on assets for CSL Limited has improved in 2010 as compared to 2009 as compared to CSL Limited. The good sign for CSL Limited and Baxter International is that their assets are utilized efficiently. This has resulted in having a correct mix of assets. CSL Limited when compared to Baxter International has a better return showing proper utilization of assets. Comparing the drug and retail industry we see that the players have huge assets which results in the ratio being lower. Still, on an overall basis we see that their return is good signifying proper management and sound policies. Asset Efficiency Ratios Operating ratios forms a very important part as it helps to “show the efficiency of the management and also indicates the company’s efficiency to manage its capital”. (Joseph, 2010) this ratios help to find the efficiency when it comes to turnover. The following ratio helps to calculate the operating efficiency. They are as Asset Turnover Ratio: It is defined as “the total sales generated per revenue of assets”. (Joseph, 2010) It is calculated as “Sales Revenue / Average Total Assets”. The ratios for all the four companies are as follows Comparing the performance of the retail players shows improvement for Marks & Spencer in 2010 as compared to 2009. Marks & Spencer has been able to use its assets better compared to Sainsbury. This has made the ratio to improve. Marks & Spencer on the other hand shows soundness in the use of assets. It needs to continue similarly. Sainsbury on the other hand needs to improve this ratio and look towards matching Marks & Spencer. Comparing the performance of the drug manufacturer indicates decrease in turnover for both CSL Limited and Baxter International in 2009. Baxter International has been able to use its assets better in 2009 as compared to CSL Limited. CSL and Baxter both needs to improve their turnover. It is a concern for CSL Limited as their turnover ratio has fallen continuously over a period of time and is a concern. Comparing the performance of the drug industry and retail industry shows that players from both industries have huge assets and rely on volume through sales to improve their performance as reflected by the turnover ratio. Inventory Turnover Ratio: “It is defined as the number of times inventory is rolled over during a year”. (Joseph, 2010) Companies prefer it to be high. It is calculated as “Cost of Goods Sold / Average Inventory”. The ratios for all four the companies are as Comparing the ratio for retail players highlights that both Marks & Spencer and Sainsbury has shown improvement in inventory in 2010 as compared to 2009. It shows the efficiency on the part of the players to revolve inventory quickly. This thereby shows that both Marks and Spencer and Sainsbury is able to revolve their inventory properly. Comparing the performance of the drug players indicates that Baxter International has revolved its inventory more compared to CSL Limited. CSL Limited has also been consistent and shows proper management but needs to improve. Baxter International on the other hand has decreased their turnover ratio in 2009 as compared to 2008. Both the companies need to improve it but still the ratio seems sound and consistent. This will ensure less money in inventory and help to ensure that the funds are not blocked. CSL Limited needs to improve it and match Baxter International. Comparing the retail and drug industry we see that the inventory turnover is better for retail players as compared to the drug manufacturers. This signifies that retail players relies more on sales to achieve their volume of profits and ensure that they are able to maximize sales. Drug manufacturing on the other hand needs to ensure that steps are taken to improve the inventory turnover. Market Performance Ratio This ratios help to find the shareholders confidence in the company. This ratio helps to find the prediction the shareholders have and company’s performance is also reflected here. A company having sound capital market ratios ensures that people prefer this companies and this is seen by the growth in share prices. The ratios which will help to find the capital market are as follows Earnings per Share: “It is defined as the profit attributed to the equity shareholders”. (Joseph, 2010) It is calculated as “Net profit available to ordinary shareholders / weighted number of ordinary shares on issue”. The ratios for all the four companies are as follows Comparing the performance of retail players indicates soundness on the part of both the companies. Marks & Spencer has a higher earning per share indicating that the shareholders are getting a good return. The return for Sainsbury has increased in 2010 as compared to 2009 which shows that the profit has increased. Marks & Spencer on the other hand has improved their earnings in 2010 as compared to 2009 and it reflected on the well being of the shareholders. The overall result for both the giants seems sound and is a good prospect to invest. Comparing the ratio of the drug manufacturers shows soundness on the part of both the companies. CSL Limited has higher earnings per share indicating that the shareholders are getting a good return. The return for CSL Limited and Baxter International has increased in 2009 as compared to 2008 which shows that the profit has grown. CSL Limited on the other hand has improved their earnings and it reflected on the well being of the shareholders. The overall result for both the giants seems sound and is a good prospect to invest. Baxter International needs to further improve their return so that more people invest in the company. Comparing the performance for both the drug and retail player shows soundness as the earnings per share has grown showing the growth in the performance of the industry and increase in return for the shareholder making both the industry a good destination to invest in. P/E Ratio: “It is defined as the earning the shareholders get for every dollar of earning”. (Kennon, 2010) The ratios for the companies are as Comparing the ratio for the retail players signifies that both the giants have similarity in the P/E ratio for 2010. The ratio for Marks and Spencer has improved tremendously in 2010 as compared to 2009 and for Sainsbury it has decreased in 2010 in comparison to 2009 which is a worrying sign. Both the players need to take step so that the ratio grows. Comparing the ratio for the drug players shows that the P/E ratio has improved for both CSL Limited and Baxter International for 2010 in comparison to 2009. Both the drug manufacturer needs to continue similarly as it presents a good sign to the investor and will see investor investing in the stocks of the company. Comparing the performance of the retail giants with drug manufacturer shows that both the industry has a healthy P/E ratio and looks forward to further improve it thereby ensuring that more investments flow into the company. Findings The liquidity position especially the current ratio is sound for Marks & Spencer and Sainsbury needs to improve it. For the drug players it is important that CSL reduces the ratio further as it is resulting in lot of investment in inventories. All the companies due to the nature of business have a huge inventory which is affecting the quick ratio. The long term debt ratios is sound for all the companies except CSL Limited and have the scope to take loan for further development. CSL needs to raise it further to save on taxes. The companies have used their short term debt to finance long term assets is a worrying factor and steps needs to be taken. Sainsbury and Marks & Spencer profit has improved in 2010 as compared to 2000 but it needs to reduce its indirect expenses so that it stays ahead of competition. On the other hand CSL limited and Baxter International has shown sound profits. The operating ratio especially the inventory and asset turnover ratio for Marks & Spencer has shown tremendous improvement. Sainsbury needs to look to match to its competitor. The drug players have a very low ratio and require urgent measures to improve the ratio. The capital market analysis ratio shows wide improvement for Marks & Spencer in 2010 and when we compare it to Sainsbury it shows better performance highlighting that Marks & Spencer have better projects and this can help them. This is the same for Baxter International and CSL needs to catch up to it. The financial analysis shows that Sainsbury, Marks & Spencer, CSL Limited, and Baxter International performance has improved in 2010 as compared to 2009. Conclusion Sainsbury and Marks & Spencer both have been performing on similar lines and have been successful. The financial statement even highlights similar facts. Similarly CSL Limited and Baxter International work in the drug arena and have been growing which is reflected through their financials. All the companies can improve with better strategy. The financial ratios of all the four companies show some demarcating things and also highlight the different strategies taken by each. This even highlights that companies similar in nature use different strategies and improve their performance. All this companies have room for improvement and with the growth this sector is showing it gives them opportunity to capture a good market and grow. Recommendations Sainsbury and Marks & Spencer needs to improve its current ratio so that it reflects soundness in its policies and strategies. CSL Limited needs to reduce the investment in inventories as the ratio is very high CSL Limited need to take more debt especially long term so that they are able to save on the taxes Sainsbury needs to improve its operating ratios so that it can match its competitor Sainsbury and Marks & Spencer needs to reduce its indirect cost, improve efficiency, bring down assets and improve their management CSL Limited and Baxter International need to improve the inventory turnover ratio Limitations Inflation and changes in price has not been accounted for which might be misleading Historical cost has been considered which might not be true in the present scenario as value changes with time References Baxter International Website, 2010, retrieved on December 5, 2010 from CSL Limited Website, 2010, retrieved on December 5, 2010 from Financial Modelling Guide, 2010, “Liquidity ratios”, retrieved on December 4, 2010 from http://www.financialmodelingguide.com/financial-ratios/liquidity-ratios/ Joseph K, 2010, “Analyzing an income statement: Return on Assets”, about.com guide, The New York Times Company Joseph K, 2010, “Analyzing an income statement: Inventory Turnover”, about.com guide, The New York Times Company Kennon J, 2010, “Analyzing an income statement: Net Profit Margin”, about.com guide, The New York Times Company Micro Strategy, 2010, “Financial Analysis”, retrieved on December 4, 2010 from http://www.microstrategy.com/financial-analysis/ Marks & Spencer Website, 2010, retrieved on December 5, 2010 from http://www.marksandspencer.com/ Transtutor, 2010, “Capital Structure Ratios”, retrieved on December 4, 2010 from http://www.transtutors.com/finance-homework-help/dividend-decisions-and-tools-of-financial-planning/Capital-Structure-Ratios.aspx Sainsbury Website, 2010, retrieved on December 5, 2010 from http://www.sainsburys.co.uk/sol/index.jsp Appendix 1. Calculation of Current Ratio for Sainsbury Current Ratio for 2010 = Current Assets / Current Liabilities = 1797 / 2793 = 0.64 Current Ratio for 2009 = Current Assets / Current Liabilities = 1570 / 2919 = 0.54 2. Calculation of Current Ratio for Marks & Spencer Current Ratio for 2010 = Current Assets / Current Liabilities = 1520.2 / 1890.5 = 0.80 Current Ratio for 2009 = Current Assets / Current Liabilities = 1398.8 / 2306.9 = 0.61 3. Calculation of Current Ratio for CSL Limited Current Ratio for 2010 = Current Assets / Current Liabilities = 3339156 / 786879 = 4.24 Current Ratio for 2009 = Current Assets / Current Liabilities = 4949048 / 1225650 = 4.03 4. Calculation of Current Ratio for Baxter International Current Ratio for 2010 = Current Assets / Current Liabilities = 8271 / 4464 = 1.85 Current Ratio for 2009 = Current Assets / Current Liabilities = 7148 / 3635 = 1.97 5. Calculation of Quick Ratio for Sainsbury Quick ratio for 2010 = (Current Assets – Inventories) / Current Liabilities = (1797 – 702) / 2793 = 0.39 Quick ratio for 2009 = (Current Assets – Inventories) / Current Liabilities = (1570 – 689) / 2919 = 0.30 6. Calculation of Quick Ratio for Marks & Spencer Quick ratio for 2010 = (Current Assets – Inventories) / Current Liabilities = (1520.2 – 613.2) / 1890.5 = 0.48 Quick ratio for 2009 = (Current Assets – Inventories) / Current Liabilities = (1398.8 – 536) / 2306.9 = 0.37 7. Calculation of Quick Ratio for CSL Limited Quick ratio for 2010 = (Current Assets – Inventories) / Current Liabilities = (3339156 - 1454616) / 786879 = 2.4 Quick ratio for 2009 = (Current Assets – Inventories) / Current Liabilities = (4949048 – 1522039) / 1225650 = 2.8 8. Calculation of Quick Ratio for Baxter International Quick ratio for 2010 = (Current Assets – Inventories) / Current Liabilities = (8271 - 2557) / 4464 = 1.28 Quick ratio for 2009 = (Current Assets – Inventories) / Current Liabilities = (7148 – 2361) / 3635 = 1.32 9. Calculation of Debt to Equity for Sainsbury Debt to Equity Ratio for 2010 = Long Term Debts / Equity = 2357 / 4966 = 0.48 Debt to Equity Ratio for 2009 = Long Term Debts / Equity = 2177 / 4376 = 0.50 10. Calculation of Debt to Equity for Marks & Spencer Debt to Equity Ratio for 2010 = Long Term Debts / Equity = 2278 / 2185.9 = 1.04 Debt to Equity Ratio for 2009 = Long Term Debts / Equity = 2117.9 / 2100.6 = 1 11. Calculation of Debt to Equity for CSL Limited Debt to Equity Ratio for 2010 = Long Term Debts / Equity = 436219 / 4215194 = 0.10 Debt to Equity Ratio for 2009 = Long Term Debts / Equity = 678270 / 5462895 = 0.13 12. Calculation of Debt to Equity for Baxter International Debt to Equity Ratio for 2010 = Long Term Debts / Equity = 3340 / 7191 = 0.46 Debt to Equity Ratio for 2009 = Long Term Debts / Equity = 3362 / 6229 = 0.54 13. Calculation of Net Profit Margin for Sainsbury Net Profit Margin for 2010 = Net Profit / Sales * 100 = 733 / 19964 *100 = 3.67% Net Profit Margin for 2009 = Net Profit / Sales * 100 = 466 / 18911 * 100 = 2.46% 14. Calculation of Net Profit Margin for Marks & Spencer Net Profit Margin for 2010 = Net Profit / Sales * 100 = 523 / 9536.6 *100 = 5.48% Net Profit Margin for 2009 = Net Profit / Sales * 100 = 506.8 / 9062.1 * 100 = 5.59% 15. Calculation of Net Profit Margin for CSL Limited Net Profit Margin for 2010 = Net Profit / Sales * 100 = 1052901 / 4455821 *100 = 23.63% Net Profit Margin for 2009 = Net Profit / Sales * 100 = 1145932 / 4622387 * 100 = 24.79% 16. Calculation of Net Profit Margin for Baxter International Net Profit Margin for 2010 = Net Profit / Sales * 100 = 2205 / 12562 * 100 = 17.55% Net Profit Margin for 2009 = Net Profit / Sales * 100 = 2014 / 12348 * 100 = 16.31% 17. Calculation of Return on Assets for Sainsbury Return on Assets for 2010 = Net Income / Total Assets * 100 = 733 / 10855 * 100 = 6.75% Return on Assets for 2009 = Net Income / Total Assets * 100 = 466 / 10033 * 100 = 4.65% 18. Calculation of Return on Assets for Marks & Spencer Return on Assets for 2010 = Net Income / Total Assets * 100 = 523 / 7153.2 * 100 = 7.31% Return on Assets for 2009 = Net Income / Total Assets * 100 = 506.8 / 7258.1 * 100 = 6.98% 19. Calculation of Return on Assets for CSL Limited Return on Assets for 2010 = Net Income / Total Assets * 100 = 1052901 / 5711044 * 100 = 18.44% Return on Assets for 2009 = Net Income / Total Assets * 100 = 1145932 / 7366815 * 100 = 15.55% 20. Calculation of Return on Assets for Baxter International Return on Assets for 2010 = Net Income / Total Assets * 100 = 2205 / 17354 * 100 = 12.7% Return on Assets for 2009 = Net Income / Total Assets * 100 = 2014 / 15405 * 100 = 13.07% 21. Calculation of Earnings Per Share for Sainsbury Earning per Share for 2010 = Net Income / Outstanding shares = 32.1 (given in financial statement) Earning per Share for 2009 = Net Income / Outstanding shares = 16.6 (given in financial statement) 22. Calculation of Earnings Per Share for Marks & Spencer Earning per Share for 2010 = Net Income / Outstanding shares = 33.5 (given in financial statement) Earning per Share for 2009 = Net Income / Outstanding shares = 32.3 (given in financial statement) 23. Calculation of Earnings Per Share for CSL Limited Earnings per Share for 2010 = Net Income / Outstanding shares = 185.77 (given in financial statement) Earnings per Share for 2009 = Net Income / Outstanding shares = 192.51 (given in financial statement) 24. Calculation of Earnings Per Share for Baxter International Earnings per Share for 2010 = Net Income / Outstanding shares = 363 (given in financial statement) Earnings per Share for 2009 = Net Income / Outstanding shares = 352 (given in financial statement) 25. Calculation of Debt Coverage ratio for Sainsbury Debt Coverage Ratio for 2010 = Non Current Liabilities / Net Cash Flow from Operating Activities = 3096 / 1006 = 3.08 Debt Coverage Ratio for 2009 = Non Current Liabilities / Net Cash Flow from Operating Activities = 2738 / 918 = 2.98 26. Calculation of Debt Coverage ratio for Marks & Spencer Debt Coverage Ratio for 2010 = Non Current Liabilities / Net Cash Flow from Operating Activities = 3076.8 / 1229 = 2.50 Debt Coverage Ratio for 2009 = Non Current Liabilities / Net Cash Flow from Operating Activities = 2850.6 / 1290.6 = 2.21 27. Calculation of Debt Coverage ratio for CSL Limited Debt Coverage Ratio for 2010 = Non Current Liabilities / Net Cash Flow from Operating Activities = 708971 / 1168492 = 0.61 Debt Coverage Ratio for 2009 = Non Current Liabilities / Net Cash Flow from Operating Activities = 678270 / 1024824 = 0.66 28. Calculation of Debt Coverage ratio for Baxter International Debt Coverage Ratio for 2010 = Non Current Liabilities / Net Cash Flow from Operating Activities = 5699 / 2909 = 1.96 Debt Coverage Ratio for 2009 = Non Current Liabilities / Net Cash Flow from Operating Activities = 5541 / 2515 = 2.20 29. Calculation of Asset Turnover Ratio for Sainsbury Asset Turnover Ratio for 2010 = Sales Revenue / Average Total Assets = 19964 / 10855 = 1.84 Asset Turnover Ratio for 2009 = Sales Revenue / Average Total Assets = 18911 / 10033 = 1.89 30. Calculation of Asset Turnover Ratio for Marks & Spencer Asset Turnover Ratio for 2010 = Sales Revenue / Average Total Assets = 9536.6 / 2185.9 = 4.36 Asset Turnover Ratio for 2009 = Sales Revenue / Average Total Assets = 9062.1 / 2100.6 = 4.31 31. Calculation of Asset Turnover Ratio for CSL Limited Asset Turnover Ratio for 2010 = Sales Revenue / Average Total Assets = 4455821 / 5711044 = 0.78 Asset Turnover Ratio for 2009 = Sales Revenue / Average Total Assets = 4622387 / 7366815 = 0.63 32. Calculation of Asset Turnover Ratio for Baxter International Asset Turnover Ratio for 2010 = Sales Revenue / Average Total Assets = 12562 / 17354 = 0.72 Asset Turnover Ratio for 2009 = Sales Revenue / Average Total Assets = 12348 / 15405 = 0.80 33. Calculation of Inventory Turnover Ratio for Sainsbury Inventory Turnover Ratio for 2010 = Cost of Goods Sold / Average Inventory = 18882 / 702 = 26.9 Inventory Turnover Ratio for 2009 = Cost of Goods Sold / Average Inventory = 17875 / 689 = 25.93 34. Calculation of Inventory Turnover Ratio for Marks & Spencer Inventory Turnover Ratio for 2010 = Cost of Goods Sold / Average Inventory = 8684.6 / 613.2 = 14.16 Inventory Turnover Ratio for 2009 = Cost of Goods Sold / Average Inventory = 8191.4 / 536 = 15.28 35. Calculation of Inventory Turnover Ratio for CSL Limited Inventory Turnover Ratio for 2010 = Cost of Goods Sold / Average Inventory = 2184850 / 1454616 = 1.50 Inventory Turnover Ratio for 2009 = Cost of Goods Sold / Average Inventory = 2399720 / 1522039 = 1.58 36. Calculation of Inventory Turnover Ratio for Baxter International Inventory Turnover Ratio for 2010 = Cost of Goods Sold / Average Inventory = 6037 / 2557 = 2.36 Inventory Turnover Ratio for 2009 = Cost of Goods Sold / Average Inventory = 6218 / 2361 = 2.63 37. Calculation of Price-Earnings ratio for Sainsbury P/E ratio for 2010 = Price per Share / Earnings per share = 329.4 (April 1) / 32.1 = 10.26 P/E ratio for 2009 = Price per Share / Earnings per share = 315 (April 1) / 16.6 = 18.98 38. Calculation of Price-Earnings ratio for Marks & Spencer P/E ratio for 2010 = Price per Share / Earnings per share = 371.9 (April 1) / 33.5 = 11.10 P/E ratio for 2009 = Price per Share / Earnings per share = 309.25 (April 1) / 32.3 = 9.57 39. Calculation of Price-Earnings ratio for CSL Limited P/E ratio for 2010 = Price per Share / Earnings per share = 36.15 / 185.77 = 19.5 P/E ratio for 2009 = Price per Share / Earnings per share = 32.50 / 192.51 = 16.88 40. Calculation of Price-Earnings ratio for Baxter International P/E ratio for 2010 = Price per Share / Earnings per share = 58.23 / 363 = 16.04 P/E ratio for 2009 = Price per Share / Earnings per share = 50.67 / 352 = 14.40 Read More