Evaluate Sainsbury plc's financial strategy Essay - 2

Evaluate Sainsbury plcs financial strategy - Essay ExampleSainsburys is headquartered in Holborn Circus. To ensure that its products are effectively distributed in the topical anesthetic and neighboring markets, the supermarket has established a weigh of subsidiaries in the UK market. Under the leadership of David Tyler and Justin King the company chairman and chief executive respectively, Sainsburys has more than 150,000 employees. This has resulted to a significant increment on the company revenue that stood at ?21.102billion in 2011. This paper, evaluate Sainsbury plcs financial strategy by analyzing its financial motion in the last few years. To expand its customers base and generate more revenue that is needed to undertake its operations, Sainsburys has opened a number of stores, supermarkets and a significant number of hypermarkets. To ensure that the supermarket is financial strong to cater for its short- end point and long-term liabilities, Sainsburys operates Sainsburys B ank whose key objectives is to sell financial products. One of the major factors that Sainsburys has adopted to enhance its financial performance was the formation of a joint venture with Lloyds Banking Company among other firms. Major strategies that Sainsburys has adopted to strengthen its financial mental attitude is merger and acquisitions (Adizes 35). As depicted earlier, the supermarket generated total revenue of ?21.102billion in 2011. ... ncial Statement 2012 indicate that as a result of the increase in the investment, the terminal debt of the company increased from ?1,814 million in 2011 to ?1,980 million in 2012. This was however, offset by reasonable exchange that was generated from leasebacks and sales. Table indicating cash generated from operations and net cash from operating activities by Sainsburys in 2011 and in 2012 financial years. Figures are in ? million. Cash generated from operations 1291 1388 Interest stipendiary (142) (126) Corporation tax pay (82) (15 8) Net cash from operating activities 1067 854 Net cash used in investing activities (883) (902) Issue of shares proceeds 14 17 New debt 391 45 Borrowings repayments (65) (79) Dividends paid (285) (269) Source- Sainsburys Annual Report and Financial Statement 2012 Financing of Sainsbury operations According to the board of the directors, Sainsburys is focused at effectively managing its finances by maintaining appropriate stand-by liquidity, reducing the risks of refinancing and diversifying the sources of funds. Two of the major long-term loans that are vital in the operations of Sainsburys include loans of ?1,036 million and ?843 million that are delinquent on 2018 and 2031 respectively. The company has provided its property assets as the security for the loans. Other key sources of funds includes unsecured loans of ?499 million, finances leases of ?143 million, and convertible bonds issued to the public amounting to ?190 million. Based on the profitability of the company, the bo ard is focused at repaying the loans in the next five years. In order to have adequate cash to cater for short term and urgent liabilities, Sainsburys maintains a revolving credit facility amounting to ?690 millions (Modigliani and Miller 263). According to the 2012