This report analyses the accounting policies and financial statements of the following six companies: Tesco PLC, J Sainsbury PLC, Wm Morrison Supermarkets PLC, Booker Group PLC, Ocado Group PLC, and Greggs PLC.They are all amongst the leading companies in the food industry of the United Kingdom (UK). The latest information is used to evaluate the companies’ performance during the accounting years 2012/13 and 2016/17 (last five years). Some financial information was adjusted in order to ensure a fair comparison between the companies, this will be explained later on.
Table of Contents
1 Introduction
1.1 Outline
1.2 Introduction of companies
1.3 Industry Analysis
2 Chosen Company: Greggs PLC
2.1 Investor Profile
2.2 S.W.O.T. Analysis
3 Accounting Analysis
3.1 Accounting Policies
Going Concern
Change in Accounting Policies
Accounting Terminology
3.2 Adjustments
3.3 Red Flag
4 Financial Analysis
4.1 Profitability
Gross Profit Margin
Operating Margin
Net Profit Margin
Return on Capital Employed (ROCE)
Return on Shareholders’ Funds (ROSF)
4.2 Liquidity
Current Ratio
4.3 Working Capital
Inventory Turnover
Receivables Days
Payables Days
Cash Conversion Cycle
4.4 Financial Structure
Gearing Ratio
Interest Cover
4.5 Investment
Earnings per Share (EPS)
Price/Earnings Ratio (P/E)
5 Conclusion and recommendations
Research Objectives and Themes
This report evaluates the financial performance and accounting policies of leading UK supermarket chains, focusing specifically on Greggs PLC in comparison to Tesco, Sainsbury’s, Morrisons, Booker Group, and Ocado over the period 2012/13 to 2016/17.
- Comparative financial statement analysis of six major UK food retailers.
- Evaluation of accounting policies and their impact on reported financial data.
- Assessment of operational efficiency and profitability through ratio analysis.
- Strategic review of market position using S.W.O.T. analysis.
- Investment recommendation based on liquidity, structure, and profitability trends.
Excerpt from the Book
Strengths
Being the UK's leading bakery store with over 1,800 shops, Greggs serves millions of customers each week (Greggs SWOT Analysis, 2017). It can be found in various locations. This year, Greggs expanded its business to include drive-thru options. Thus, Greggs’ existing distribution and sales network is one of its major strengths. Besides that, Greggs is a brand with universal appeal and a solid market strategy. The company has been working very hard to make sure that shops are open when customers need them and that they are modern with attractive shopping environments. A third strength is the taste and quality of Greggs’ products. The company aims to improve the nutritional value of their products, using no artificial colours or trans-fats. The firm’s Balanced Choice range was recognized by the Institute of Grocery Distribution as having a positive impact on the health and wellness of customers (Greggs PLC, 2013).
Summary of Chapters
1 Introduction: Provides an overview of the six companies analyzed and the scope of the study regarding their performance between 2012/13 and 2016/17.
2 Chosen Company: Greggs PLC: Outlines the business model of Greggs and performs a S.W.O.T. analysis to determine internal strengths and weaknesses and external opportunities and threats.
3 Accounting Analysis: Examines the accounting policies across the companies, addressing the going concern basis, accounting terminology, and necessary financial adjustments for comparability.
4 Financial Analysis: Presents a detailed evaluation of profitability, liquidity, working capital, financial structure, and investment ratios to assess company performance.
5 Conclusion and recommendations: Synthesizes the findings to identify Greggs as the top-performing company and provides a final investment recommendation.
Keywords
Financial Analysis, Greggs PLC, UK Supermarkets, Profitability Ratios, Liquidity, Accounting Policies, Earnings per Share, ROCE, Gearing Ratio, Working Capital, S.W.O.T. Analysis, Investment Strategy, Retail Industry, Cash Conversion Cycle.
Frequently Asked Questions
What is the primary focus of this research report?
This report focuses on the financial performance, accounting policies, and market position of Greggs PLC compared to five other major UK food industry competitors between 2012 and 2017.
Which key companies are analyzed alongside Greggs PLC?
The analysis includes Tesco PLC, J Sainsbury PLC, Wm Morrison Supermarkets PLC, Booker Group PLC, and Ocado Group PLC.
What is the main objective of the financial analysis?
The objective is to evaluate which of these companies offers the best investment potential based on normalized financial data and key performance indicators.
What methodology is used to ensure accurate comparisons?
The report adjusts the original financial data—such as removing discontinued operations and accounting for exceptional items—to allow for a fair comparison across the different firms.
What topics are covered in the main section of the document?
The report covers accounting policies, adjustments, S.W.O.T. analysis, and a comprehensive quantitative evaluation of profitability, liquidity, financial structure, and investment ratios.
What are the characterizing keywords of this analysis?
The key themes include financial ratios (ROCE, EPS, P/E), working capital management, liquidity, and strategic industry positioning within the UK retail food sector.
Why is the cash conversion cycle significant for Greggs?
Greggs is identified as the best performer in this category with an average cash conversion cycle of -80 days, indicating superior liquidity and operational efficiency compared to industry peers.
How does the merger between Tesco and Booker impact the analysis?
The report highlights the Tesco-Booker merger as a "red flag" or market threat, particularly for competitors like Greggs, as it potentially alters competitive dynamics and financial leverage metrics.
What conclusion does the author reach regarding Greggs PLC?
The author concludes that Greggs is the best-performing company in the group, showing consistent growth, strong profitability, and stability, leading to a recommendation to invest in the company.
- Quote paper
- Sabrina Schleimer (Author), 2017, Accounting and Financial Analysis of UK Supermarkets, Munich, GRIN Verlag, https://www.grin.com/document/437644
