The Accounting Policy Is A Part Of This Is A Financial Reporting Standard Accounting Essay

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A Business Report of the Evaluation and Compare the Financial Positions of Two Large Supermarket Companies At UK : Sainsbury Plc and Wm Morrison supermarkets Plc

This business report is evaluation of the two companies which is J. Sainsbury Plc and WM Morrison Supermarket Plc in United Kingdom. These two companies are a largest public limited supermarket companies and the name list of the position are in top 5. The annual report of both companies has given their business review, accounting policy, financial review, governance, board of director and etc. Through the annual report, it can show the financial stated of the companies and it also can be use for evaluation the ratios analysis, summarize statement for board of director, accounting policy and the performance for both of the companies from 2006 to 2010. The ratios analysis is a technique that uses to analyze and to clear about the accounting statement of the both companies business accounts. Besides that, it uses to compare with the competitor in same industries such as J. Sainsbury Plc and WM Morrison Supermarket Plc and can also to use for planning and predict the stabilize of the companies by using liquidity, profitability, efficiency, and stability ratios. The purpose of this business report is to look over the annual report of each company to know or understands the stated or goals of the company, the objective, strategies and structure of the company by using evaluation the ratios analysis, summarize statement for board of director, accounting policy and the performance for both of the companies.

Sainsbury Plc

J. Sainsbury Plc is a public limited company, the first store open at United Kingdom is in 1869 and it is a main company of the Sainsbury's Supermarkets Ltd. The J. Sainsbury is the third biggest supermarket in United Kingdom. The J. Sainsbury plc also had invested in different sector such as bank and the name of bank is Sainsbury's Bank. The Sainsbury's Supermarket Ltd is consisting with many chain of store, which has 537supermarkets and 335 convenience stores and the rate of share for J. Sainsbury Plc is 16% in year 2010.

The strategy plan of the company is refers to the online services and delivery services. To improve the sales and the profit, Sainsbury always care about the quality of product. If the product is drinks and foods, they always put the heart of the matter such as fresh, good quality, taste, healthy to serve to their customer. The objective of the company also can increase or growth their level of the profitability and the level of customer are with five areas of focus such as:

The first areas are Great food at fair prices. Sainsbury always provide a taste, fresh and healthy food for their customer. With this quality of the product, the company will give a fair or impartial price.

A second area is Accelerating the growth of complementary non-food ranges. The company everydays continue to increase the range of electrical, clothes, and IT product in their store by weighing the price, quality, and innovation for the product.

Reaching more customers through additional channels is an objective to attract more customer's purchases their product by extend more convenience stores in the country, and always upgrading their online services and delivery services. And increase standard of the Sainsbury's Bank.

Growing supermarket space areas is a one of the objective of the company to upgraded their business such as open a new stores in United Kingdom and provide a widely or differential product for customers especially increase the non-food product. For the last areas is active property management. This objective is to maximize the value of the property assets and the potential development.

The top for board of director at Sainsbury is David Tyler, Chairman. The chairman is the top of executive, always act to become a leadership of the company, who are bear to lead the board and manage of company as well. For the executive directors and the chief executive in Sainsbury have 4 people taking the seat. The responsible for these executive directors to ensure the corporate is effectiveness and the direction going correctly. However, the chief executive is being in charge the management of the company strategy, objectives and organisation with the agreements by the Boards.

For the non-executive directors in Sainsbury have 5 people attend the positions. The role of the non-executive directors is to handle or verify to the strategy, company performance and the risk taking of the corporate.

Sainsbury is a company who are take care of the environmental. It have organise different programme such as Eco-stores to reduce the energy, packaging, food waste and waste. By doing this green management, Sainsbury had won a lot of award and they continue this management of environmental programme to change the community.

Wm Morrison supermarkets Plc

Wm Morrison supermarkets Plc have established since 1899. The Morrison supermarket plc is fourth largest food retailer with the sales turnover of £15.6 billion and 9.1% of market shares growth in 2010 .Wm Morrison supermarkets Plc have 382 stores and 42 new stores in the United Kingdom.

Wm Morrison supermarkets Plc focus the strategy on freshness, great value, and outstanding services. The objectives is to attach more and more customer by offering the more fresh product thought personal manufacturing facilities and ready food preparation in the store.

The.great value by keeping low cost to ensure the price are competitive and offer the high quality product by promotion. The objective is to boost sales and increase the market rate growth. Wm Morrison supermarkets Plc is also assured the quality and save customers money .

Wm Morrison supermarkets Plc also will expand supply chain into the neighbour area from the nearest store. In future will take about 15 minute drive from the household to supermarkets. The objective is to increase the customers and accessible to more people in the stores.

The board of directors at Wm Morrison supermarkets Plc is Sir Ian Gibson, Chairman , 4 executive directors (include Dalton Philips, Chief Executive Directors), and 6 non executive directors (include Paul Manduca ,Senior Independent Directors). The chairman is responsible for running the board to make sure the committee is function. The chief executive is responsible all the aspect in strategic development, commercial and operational of the companies. The non executives is to make evaluation review on financial performance, risk management, and business strategy.

Wm Morrison supermarkets Plc is also concern the changes on environment, it also have planned program called as 'Great Taste Less waste' to reduce carbon by emissions reductions and waste prevention.

Accounting Policies

The accounting policy is a part of this is a financial reporting standard for the both company, such as income statement, balance sheet, and cash flow. It also is a note of the financial statement which can affect the income statement of the profit such as depreciation, disposal, valuation of inventory and etc. Normally, the main of effect the profit is the method of depreciation and the basis of valuation the inventory. Different company use different method. So, the director is responsible to do decisions on the accounting policies.

Depreciation Basis

Sainsbury Plc

The intangible assets are using the cost less accumulated depreciation to calculate the impairment loss and to get the amount receivable for the assets, such as fixtures, equipment, vehicles, land and building. This amount receivable is normally refers to the residual value or scrap value of an assets.

Wm Morrison supermarkets Plc

All property, plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment loses. For freehold buildings, leasehold buildings, and plant equipment fixtures and vehicles, they are using depreciated on straight line method .

Inventory Valuation Basis

Sainsbury Plc

The inventory is presented the net realizable or at cost of the company and value the lower cost of the inventory. This company counts their inventory at the warehouses by using the first-in, first-out basis.

Wm Morrison supermarkets Plc

The inventory is measured at the lower cost and net realisable value. This company have used a weighted average basis to count the inventory at the warehouse.

Performance Indicator

Graph to show the sales of the Sainsbury Plc and Wm Morrison supermarkets Plc

Sainsbury Plc

Wm Morrison supermarkets Plc

2006

16061

12115

2007

17151

12462

2008

17837

12969

2009

18911

14528

2010

19964

15410

Graph to show the profit of the Sainsbury Plc and Wm Morrison supermarkets Plc

Year

Sainsbury Plc

Wm Morrison supermarkets Plc

2006

58

(250)

2007

324

248

2008

329

554

2009

289

460

2010

585

598

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