Financial Analysis of Sobeys Inc. - 1604 Words

Financial Analysis of Sobeys Inc. This report is based on the consolidated financial statements of Sobeys Inc. for the years 2011 and 2012 with some reference and calculations from 2010 as well. The audit was performed by Grant Thorton chartered accountants. Office location is Suite 1100, 2000 Barrington Street, Halifax, NS. Calculations are based on GAPP numbers provided in these statements. IFRS standards have been adjusted at the end of the financial statements if reference is needed for those standards. Short term Liquidity Sobeys Inc. current ratio drops from an acceptable 1.59 in 2011 to .963 in 2012. Being in the grocery industry this is not uncommon as inventories are higher because of the high inventory turnover rate which†¦show more content†¦Long-Term Credit Risk Sobeys Inc. Debt Ratio in 2012 was 54.2%, meaning that 54.2% of assets have been financed by debt and has a slightly higher degree of leverage than what is considered comfortable. It could prove slightly harder if a recession happened than a company who is only leveraged at 30% to 40%, However, this ratio does not provide any indication of the asset quality being taken into consideration. The ratio did drop from the 2011 value of 55.1% The firm shows positive health for the Shareholders Equity with an equity ratio of 44.2% in 2011 and increasing to 45.2% in 2012. Calculating the percent of total assets that shareholders would receive in the event of company liquidation looks positive and very healthy for any investors or shareholders of this firm. The interest coverage ratio is also at a value that is significantly positive 14.0% in 2011 and 12.8% in 2012. Although 2021 shows a decrease, the company is still very capable of generating sufficient revenues to cover their interest payments on any debt they have incurred. Measures of profitability Profit Margin (Return on sales) is a steady 24% for both 2011 and 2012. This value is above the average, typical or normal ratio for the grocery industry of 20%. This average value comes from a study by Paul Weyland, communications strategist (Weyland, 2009, PDF file). Competition keeps prices at aShow MoreRelatedLoblaws Case Study Essay3205 Words   |  13 PagesNicosia 500198044 TABLE OF CONTENTS Strategic Recommendations 3 Appendix A: Industrial Analysis 6 B: PEST Analysis 6 C: Key Driving Forces 7 D: Porter’s Five Forces Analysis 7 E: Strategic Group Map 7 F: Key Strategic Factors 8 G: Competitor Analysis 8 H: Attractiveness of Industry 8 I: Mission and Vision Statement 8 J: Value Chain 9 K: Financial Analysis 9 L: SWOT Analysis 10 M: Issues 10 N: Rationale for Issues 10 O: Execution Strategies 10 Strategic RecommendationsRead MoreThe Canadian Market And The American Market2233 Words   |  9 Pagesmoves towards its share increase. 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