Financial Accounting Project
Corporations have to provide information that stakeholders need in order to make rational, informed decisions in a free market system and to protect themselves from negative consequences of corporate actions. Disclosure must be complete, accurate, timely, objective, & understandable. Shareholder “right to know” takes precedence over cost, inconvenience, or risk to the corporation. There are various potential users of financial reports like shareholders, lenders, employees, business contact groups like customers, suppliers and competitors, Government including tax authorities, and the public. The financial statements should provide the true and fair view of the organization and its financial position. Financial analysis refers to an assessment of the viability, stability and profitability of a , sub-business or . Financial analysis is performed by professionals who prepare reports using ratios that make use of information taken from and other reports. These reports are usually presented to top management as one of their basis in making business decisions. Based on these reports, management may:
- Continue or discontinue its main operation or part of its business;
- Make or purchase certain materials in the manufacture of its product;
- Acquire or lease certain machineries and equipments in the production of its goods;
- Issue or negotiate for a bank to increase its .
- Take other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.
J. Sainsbury:
J Sainsbury plc consists of Sainsbury’s, a chain of 490 supermarkets and 298 convenience stores, and Sainsbury’s Bank. Sainsbury’s Supermarkets is the UK’s longest standing major food retailing chain and the Sainsbury’s brand is built upon a heritage of providing customers with healthy, safe, fresh and tasty food. Today the company differentiates itself by offering a broad range of great products at fair prices with particular emphasis on fresh food. Products are improved and developed continually to ensure the company leads in terms of the ingredients used and the integrity of sourcing. A large Sainsbury’s store offers around 30,000 products and many stores also offer complementary non-food products and services. 114 stores provide an internet-based home delivery shopping service.
Sainsbury’s Bank is jointly owned by J Sainsbury plc and HBOS plc. With access to over 16 million Sainsbury’s customers each week, operating costs are low, enabling Sainsbury’s Bank to offer excellent value products with extra benefits, all delivered in a simple, and accessible manner.
W.M. Morrison
W.M. Morrison is one of UK’s largest supermarket chains, offering a range of goods including both branded and own label products. Its aim is to provide all its customers with the very best value for money wherever they live and uniquely. The Company has the practice to charge the same prices in every one of its large stores. The strategy of the Company is to manage almost every aspect of its commercial operation in-house, including fresh fruit and vegetables, fresh food, meat processing and transport. It buys packs and distributes all the fruit and vegetables sold in its stores. Fresh produce is delivered into its temperature controlled warehouses and packing plants both in the UK and abroad, ready for onward dispatch to the various stores nationwide. The products of Morrison are currently marketed under two slogans, “More reasons to shop at Morrisons” and “The very best for less”. In addition there are a large range of special offers in each store. In 2003, Morrison has initiated a take over of Safeway, which was the UK’s fourth larges supermarket retailer and the take over was completed in 2004.
J. Sainsbury:-
To analyze the standard of financial reporting achieved by the company the Financial Statements of the Company and significant accounting policies are monitored and it can be seen that the Balance Sheet & related statements of income provide fairly in all material respects the financial position of J. Sainsbury and its subsidiaries as at March 24, 2007. Cash Flow statement is also prepared in accordance with the accounting principles accepted by the accountants of respective country concerned. The material charges in accounting policies like acquisition of fixed assets, change in method of depreciation, change in accounting policies etc. are disclosed in the notes attached to the Balance Sheet and Profit & Loss Account. Further the Management ensures internal control over financial reporting. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The processes used to assess the effectiveness of the internal control systems are ongoing, enabling a cumulative assessment to be made, and include discussion and approval by the Board of the Company’s strategic direction, plans and objectives and the risks to achieving them. It also includes review and approval by the Board of budgets and forecasts, including both revenue and capital expenditure along with regular operational and financial reviews of performance against budgets and forecasts by management and the Board. The company keep full track of transactions relating to acquisition and disposal of assets and funds and ensures that all expenditures are incurred with the authorization of management and directors of the company. To help the various users of accounts seven year financial summary of the accounts consisting of balance sheet and profit and loss account is made available at the company’s website. Besides the financial statements, the management of company has given due emphasis on fulfilling its Corporate Governance Commitment and Social responsibility. For this purpose, the independent directors are expected to be free of any relationship with Sainsbury or its senior management. There is a clear division of responsibilities between the Chairman and the Chief Executive which is set out in writing and has been approved by the board of directors.
