This is a pass task P5 – Interpret the contents of a trading and profit and loss account and balance sheet for a selected company, from UNIT 2 - Business Resources.
P5 – Interpret the contents of a trading and profit and loss account and balance sheet for a
selected company
Various financial contents of a company
Profit and loss – The profit and loss of a business is one of the most important financial
documents that a company will produce; this is because a profit and loss document reveals
how much profit or loss a business has generated over a particular time. Depending on the
business, they may produce these documents weekly, monthly or even annually. The
companies that produce the documents annually, mainly for their shareholders do not rely
on the end of year accounts before they react to the contents. They use other financial
forecasts throughout the year to enable them to act accordingly.
With Sainsbury’s being a PLC, means
that they must publish their profit and
loss sheets as this is a legal
requirement.
From interpreting the data on
Sainsbury’s profit and loss sheet, I am
able to analyse how well the company
did financially over a period of time. I
believe that the following reasons are
responsible, competition from low cost
rivals (such as Aldi and Lidl) and price
wars. Sainsbury’s has had to cut prices
to compete with their rivals and
increased the number of offers that are
available to their customers. They are
using personalised marketing to their
customer base, offering money off
coupons, and money off petrol. This
encourages people to visit the store to
use the coupons, they have a limited
life span to ensure its sooner than later.
, Sainsbury’s Profit and Loss (2014-2016)
Its normal practice for companies to separate their profit and loss sheets, and their balance
sheets however, the report I am using has compiled both the profit/loss sheet and the
balance sheet together into one document. The company that have put the two documents
together is a company called ‘REDMAYNE’. The next page shows the merged document of
the balance sheet with the profit and loss section on the financial document as well.
This is the balance sheet section of the
document, which includes the Assets,
Liabilities, Net Assets as well as the Equity
figures for Sainsbury’s.
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