Break even comparison of J Sainsbury and Tesco.

The first 200 words of this essay...

BREAK-EVEN OF J SAINSBURY AND TESCO

1. The graph below shows the profit on the left hand vertical axis and the turnover on the right hand vertical axis. As we can see whilst turnover has increased over the five years until the final year, profits have tended to fall: they have recovered slightly in the final year, however.

2. The ratio values, first of all, for the profitability measures are:

Sainsbury's Profitability ratios

1991

1992

2000

2001

2002

Total operating profit margin

5.10%

4.85%

3.74%

3.41%

3.72%

Group profit before tax margin

4.70%

4.62%

3.33%

2.98%

3.44%

Interest payable as a percentage of turnover

0.50%

0.31%

0.41%

0.41%

0.27%

In general, we can see that Sainsbury managed to hold its profitability rates steady for the period 2000 to 2002. However, profitability was better over the period 1998 - 1999. Clearly, profit margins have suffered at Sainsbury, this could possibly be as a result of competition in the supermarket business (their largest segment) or as a result of management problems. Our analysis of the