Boots Plc and Sainsbury Plc Essay Example | Topics and Well Written Essays - 2000 words

Boots Plc and Sainsbury Plc - Essay ExampleAt the end of the report, the monetary and non-financial factors that be critical to the future performance of both the companies are presented. Both the companies, Boots and Sainsbury are well-known names in retail industry. United Kingdom is the centre of the companies major subscriber line operations and although both the companies run their business outside the country also, but most of the companies sales are from the UK segment.The Boots Plc Groups major activities include retailing of chemists merchandise, the provision of opticians and other healthcare services, the development, fabrication and marketing of healthcare and consumer products. The groups major business segments include Boots The druggists, Boots Opticians, Boots Healthcare International and Boots Retail International (Boots Plc Annual Reports, accessed 23/11/2005) Boots the Chemist operates oer 1,400 stores, where in nearly every store there is a pharmacist to offe r guidance and help on healthcare matters. J Sainsbury Plc is a leading UK food retailer with interests in financial services. It consists of Sainsburys Supermarkets, Sainsburys Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsburys to You and Sainsburys Bank. It employs 153,000 people A large Sainsburys Supermarket offers around 30,000 products, 50% of these are Sainsburys own brand including fresh produce. In addition to a wide range of quality food and grocery products, many stores offer delicatessen, meat and fish counters, pharmacies, coffee shops, restaurants and petrol stations (Company Overview, accessed 24/11/2005)The semblance and analysis of these two companies financial performance and position has been broken down into sections so as to be useful for various users of the familiaritys financial statements. It will be of assistance to the companies management in assessing their performance over the recent year and making plans to overcome any future risks and failures. The companies investors would find this comparison beneficial in order to decide on which company to choose for investment and which company offers better investment potential. The lenders would benefit from this report in cost of being aware of the companies solvency and liquidity position. PART BFINANCIAL ANALYSISAnalysis From Managements ViewpointA companys management is concerned with the financial results of its performance over the year that shows the managements capability and efficiency to generate sales and profit for the business effectively. The following ratios would be helpful in analysing both the companies from the managements viewpointReturn on Capital EmployedBoots PlcSainsbury Plc18.83%1.64%The Return on Capital Employed ratio shows how much a company earns on the investment made in the assets. Boots Plcs deliver on capital employed ratio reveals a much profitable snapshot of the companys performance whereas Sainsbury Plcs financial results exhibit a m uch weaker position of the company in utilising its assets towards profit generation as compared to Boots Plc.Gross Profit RatioBoots PlcSainsbury Plc46.13%4.12%The Gross Profit ratio analyses the companys profit margin before accounting for various operating costs. Therefore, it represents the profit margin after(prenominal) accounting for cost of sales. Here, Boots Plcs financial results show that company is getting more profit on its sales after accounting