A financial investigation of Sainsburys Plc.

Essay by thanh0408University, Master'sA+, December 2004

download word file, 9 pages 5.0


The company, which is being investigated, is Sainsburys Plc, which along with Tescos & Asda is one of the 3 main supermarkets in the U.K Currently Sainsburys are 3rd and are ever closing the gap between themselves and their competitors ahead.

The purpose of this report is to analyze the financial accounts of this company, comparing in detail the past two years. A detailed evaluation of the performance over the past 5 years will be made, using relevant ratios and profitability figures to highlight any possible trends. A general performance evaluation of the company's use of cash will be made. Any Financial Reporting Standards (FRS) which the company adhere to will be highlighted and an evaluation of how these FRS affect the company's accounts will be looked at.

Financial reporting standards (FRS)

Due to the factual nature of the accounting world, the need for stringent provisions is apparent.

The provisions of the Companies Act 1985 were amended by the Companies Act 1989. This legislation also made possible the voluntary revision of accounts. Therefore Sainsburys, as with it's competitors, are subject to the requirements of this act, which demand strict legislation regarding a company's accounts. They therefore have to adhere to the FRS they deem necessary and they have to show evidence of this in their accounts.

The company values it's tangible fixed assets i.e. buildings & land at historic costs. Choosing to provide depreciation on a straight-line basis over the anticipated useful economic lives of the assets. By doing so they are following the transitional provisions in the FRS 15 regarding total fixed assets. The Reporting Standard recognizes that due to macro-economical forces prices may increase or decrease over time, which may result in a change in the purchasing power of money. By stating...