“Prepare a research report assessing the performance of Sainsbury’s from fiscal year 2017 to 2022 (from 10 March 2018 to 4 March 2023). Prepare your assessment based on the 5-factor DuPont model of return on equity (ROE) over the period.”

You are assessed based partly on your technical skills, but more importantly the extent to which you understand the materials covered in the module. Good discussions should include relevant academic and practitioner-oriented journal readings, sector reports, as well as refer tightly to your own analysis to support your arguments and discussions. The overall word count is 2,500 words excluding appendix which contains full disclosure of the required calculations. Your assignment contains two parts. Do not exceed the word count.

This assignment requires you to show progress from your Group Assignment Presentation in the following ways:

•   Writing skills and ability to conduct independent research individually

•   Ability to persuade readers of your ideas that are supported by data/information (evidence)

•   Ability to search legitimate sources of information and  relevant academic readings to enhance the quality of the report

•    Demonstrating advanced analytical skills in applying DuPont model as a framework

•    Integrating financial information provided by the financial statements taught in the module

The assessment criteria for each part of the assignment are included below.  The overall Marking criteria that will be applied are the WBS generic PG Marking criteria detailed in your Student Handbook:  Comprehension,  Analysis, Critical Evaluation, Academic Writing, and Technical Capability.

Part I - Technical skills (30% of this assessment) .

This part should be adequately designed and well-presented and clearly illustrate the required indicators/figures. You must calculate your own indicators/figures. Clearly demonstrate all required indicators and figures.

1.   Income statements

a.   Full Common-size income statements,

b.   Segment sales contribution to total sales, segment sales growth rates, and segment operating profit.

2.   Statements of cash flows

a.   Free cash flows

b.   Annual net capital expenditure. Clearly define annual net capital expenditure.

3.   Balance sheets

a.   Full Common-size balance sheets

b.   The  effectiveness  of  Capital  expenditure  portfolio.  Define  capital  expenditure portfolio carefully

c.    Effectiveness of working capital  management through operating cycle and cash conversion cycle

4.   5 factor DuPont model of ROE and its components (ROCE, leverage, interest burden, and tax burden). The ratios should be based on the average balance sheet amounts when ratios involve balance sheet items.

Assessment criteria: 1) ability to compute the required indicators and figures and understand what they mean in measuring performance of a firm in holistic views. 2) presentation and readability of data in the assignment.

Part II - Critical evaluation skills (70% of this assessment).

This part of the report should include the following content:

i)    A brief overview of the company strategy, and macroeconomic and sector conditions (15%)

Assessment criteria: description of the key strategy that includes (but is not restricted to) the choice of product segment (choice of sectors), competitor identification, intensity of competition, capital expenditure for growth, and financing choice

ii)   Critical evaluation of the company’s recent financial performance based on 5 factor DuPont analysis and free cash flow (50%).

Assessment criteria: critical and analytical skills on how you make sense of the detailed DuPont  ratios  in  interpreting  the  company’s  strategic  initiatives.  The  analysis  should include the evaluation of:

a.   Operating  management from the  income  statement information:  it should  include sales and margin analysis.

b.   Investment management from the balance sheet information:  it should include the generic working capital management  of the sector, the effectiveness of working capital  management to support operations and to maintain liquidity position,  and effectiveness of key capital investments (i.e. the effectiveness of capex investments in generating sales)

c.   Financial risk: this part should include the management’s financing decisions. What are the characteristics of the sector’s or rivals’ leverage choice? Does the firm have persistently healthy cash flows and profit from operations to support its financing choice? Does the firm have good quality of assets to back its financing decisions?

d.   Shareholders’ perspective: in general, does the firm pay dividends or buyback shares? Has the firm ever borrowed to pay dividends?

iii)  The  use of AI is permitted.  Use any generative AI to generate performance assessment of Sainsbury’s  and  critically  compare  and  contrast AI generated comments with your own analysis.  The  AI statements should cover  ii)  a-d,  taking care of necessary citations  and referencing. Please see the ‘Use of Artificial Intelligence’ guidance below (30%).

iv)  Presentation, use of references, and properly styled references and in-text citations (5%).

Assessment note: Do not place the resources that are not cited in the main body of the assignment in the reference list. It is prohibited to use Investopedia and Wikipedia. All  relevant  concepts  and   ratios  should   reference  the  textbooks,  academic  and practitioners’ journals, news articles, and the reports from databases provided by the University library.