Interpretation of Financial Report of Sainsbury Company

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Abstract

This assessment is mainly focused on the major important area of the financial report of a company and its main ingredients. The financial report interpretation went through a variety of stages all stages is also mentioned in this assessment the major area like taxation and financial statements and ratio many more. The effect of these financial elements on the overall financial position of Sainsbury company is discussed below. The activities and steps that have been taken by Sansbury company in ascertaining and determining the true financial report of the company and details of these methods are also been discussed in this assessment.

The activities carried on by the Sainsbury company and all the different types of strategies they have taken to convince the customer and to fight in this competitive market are also explained in this topic. This topic has also helped to gather knowledge of year by year revenue and profit earning capacity of the company and many market changes that affect the market. Sales are one of the prime income-generating activities of the company and the sales of the Sainsbury company recorded record amount of sales in last free years by using latest business trends all these techniques is also clarified in the below assessment.

Table of Contents

Introduction. 4

Discussion. 4

Conclusion. 7

References. 8

Introduction

The financial report gives quick details about the financial condition of a company by disclosing its true financial position. The interpretation of the financial report also describes the profit earned by the companies the assets and liabilities condition of a company and many more. Sainsbury Company is a UK based company and also interprets its financial report.

Discussion

The financial report of any company discloses many business trends of a company and makes decision-making tools of the company from time to time. After the proper analysis of the Financial report of Sainsbury company it can be said that it helps in analyzing all the current market trends of both the past and future. The process of analyzing financial reports went through many stages the financial ratio analysis is one of them. The analysis of financial ratios is very important to improve the understanding of financial results and to derive profitability. The ratio is of many parts like solvency ratio liquidity ratio and profitability ratio and they are used and applied in different contexts.

The users of financial statements are banker’s employees and mainly the general public so it is also necessary that there is no conflict of interest between any of them. The financial statements are one of the biggest integrants of the overall financial report and by the financial statements; the financial reports are assessed quickly. Since the activity of Sainsbury’s is non-food items and retail grocery so the revenue earned by the company in the recent years from the retail business is also needed to disclose.

The company earns revenue from various activities representing the cost of sales returns and sales made as samples. Sainsbury’s financial statements have also shown the last 5 years revenue earning capacity and it has also proven that the company has a modest level of revenue growth. The earnings of the majority of firms reflect enterprise performance (Lev, 2018). The growth of the company is a good indicator for the company The interpretations of the financial report also discloses that the major sources of growth earning in revenue are supermarkets and sale from, the new stores and many more.

Figure 1: Financial report of Sainsbury

Source: (Lev, 2018)

The selling process of the company also includes much cost that arises from such sales such costs like warehouse costs and transportation costs and many more. The Sainsbury company cost has been increasing rapidly as compared to other years this may contain many reasons. This represents changes in the prices of primary goods and increases in the operations this may affect the financial effectiveness of a company.

A financial report is also essential to determine the profit earning capacity of a company, the profit earning capacity getting affected in almost all the years due to different reasons and implications. Like in the year 2013 the increased revenue of fuel has created a huge effect in 2013 on the profitability of the company.

After the proper study of the financial report of the company, the effect in the financial statements is also shown for taxation. Taxation is one of the major areas for every company to look forward to like the corporate tax rate is reduced from the last few years.

The financial report gives much valuable information to the company. Some different techniques and procedures are needed to follow to analyze the financial report of the company like the balance sheet is a statement that helps in evaluating the assets and liabilities of the company and if any depreciation is also there or not. If a company has one or more subsidiaries it is also necessary that the company should also provide the details in consolidated financial statements.

Sainsbury company has also evaluated their consolidated financial statements regarding the performance of the company and also its associate company subsidy company as a whole. If the company assets are more than the liabilities then it will be a good signal for the company but if not it will not be a good situation financial ratio is an important indicator of the trends of the business (Guo & Wang, 2019). This evaluation done by Sainsbury company of the consolidated financial statements helps in measuring the financial strength of the company’s assets and liabilities

Another aspect that the company has to look forward that is a proper examination of cash flow objectives and the different activities of cash flow. The cash flow is form part of 3 types operating activities financing activities and investing activities. The Sainsbury company discloses all these activities in their statement. Cash flow also form parts of inflow activities and outflow activities it has shows the cash position of the company. This company has taken every possible step to properly report the financial report analysis of the overall customer base is one of those

Many retailing companies says Corporate social responsibility also affects the financial report of a company. (Jones & Comfort, 2018) Different strategies have been adapted in analyzing the customer base of a company. The aggressive strategy is necessary to follow for many expansions of new convenience stores in the country to increase the level of selling in the last few years.

As per different data and plans, it is proven that the company has increased its sales in the year 2013. The Sainsbury company recorded more than 190000 sales per week because the management of the company has succeeded in developing a great customer base. Individual investor has been equally effected for the financial report of the company (Pascual-Ezama & de Liaño, 2018). This type of record sales and achievements created its impact on the overall financial report of the company. This kind of valuable information from the financial report of the company is required to be delivered to the appropriate authorities like the potential investors, government-related agencies and guests. This financial report of Sainsbury company is true and contains every disclosure of material events with proper descriptions and clarifications. If any element of the financial report has remained blank the reasons are also given in support.

Conclusion

So after considering all the above it can be concluded that the financial report of the company is adequately checked and structured The financial report also gives many details regarding various aspects and their effect in the overall financial report of Sainsbury company. It is also proven that the management has a positive vision to increase the shareholders’ profit and dividends.

References

Guo, L., & Wang, Z. (2019). Ratio analysis of J Sainsbury plc financial performance between 2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial and Business Management, 9(2), 325-341. DOI: https://doi.org/10.4236/ajibm.2019.92022

Jones, P., & Comfort, D. (2018). Storytelling and corporate social responsibility reporting: A case study of leading UK retailers. European Journal of Sustainable Development Research, 2(4), 1-11. DOI: https://doi.org/10.20897/ejosdr/3916

Lev, B. (2018). The deteriorating usefulness of financial report information and how to reverse it. Accounting and Business Research, 48(5), 465-493. DOI: https://doi.org/10.1080/00014788.2018.1470138

Mukoffi, A., & Sulistiyowati, Y. (2019). The Role of financial accounting standards for small and medium micro economic sectors: case studies in lowokwaru district, Malang. International Journal of Research in Business and Social Science (2147-4478), 8(3), 17-23. DOI: https://doi.org/10.20525/ijrbs.v8i3.202

Pascual-Ezama, D., Paredes, M. R., & de Liaño, B. G. G. (2018). Shorter and easier is more useful: A longitudinal analysis of how financial report enforcement affects individual investors. Journal of Behavioral and Experimental Economics, 74, 29-37. DOI: https://doi.org/10.1016/j.socec.2018.03.002