1920 Seminar 1 questions PDF

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IB233 Financial Reporting 1 Seminar 1 Sainsbury Annual Report and Financial Statements Familiarisation Exercise

One of the aims of this module is to enable you to prepare, read, critically evaluate and interpret published financial statements. This exercise has the following objectives:  To increase your familiarity with the contents of annual reports and financial statements  To improve your understanding of the basis on which they are prepared  To enhance your ability to locate pertinent data for financial analysis purposes  To introduce topics covered later in the module (and in FR2) The questions are based on Sainsbury’s annual report and financial statements 2019 available from my.wbs or from Sainsbury’s website: https://www.about.sainsburys.co.uk/~/media/Files/S/Sainsburys/documents/reports-andpresentations/annual-reports/sainsburys-ar2019.pdf Most of the questions only require the identification of specific figures or information in Sainsbury’s annual report and financial statements; others need some evaluation.

Although there won’t be enough time available in the seminars to go through all the questions, it is important that you do so, to achieve the objectives of the exercise, and because reference to Sainsbury’s financial statements will be made as the module progresses.

1.

What are the major sections in the annual report and financial statements? What is the purpose of the different sections?

2.

What is Sainsbury’s business strategy? What are Sainsbury’s KPIs?

3.

What is the key measure of profit that Sainsbury uses to evaluate its performance, and why is this measure used? What issues does the use of this measure profit raise? What do you observe about this measure of profit compared to other measures?

4.

Who runs the company (i.e. who are the executive directors of Sainsbury)? What are the key elements of the Sainsbury directors’ remuneration package? What is the total directors’ remuneration for 2019?

5.

What accounting framework has been used by Sainsbury’s in the preparation of its financial statements?

6.

Who is Sainsbury’s auditor? What is the auditor’s opinion on Sainsbury’s 2019 financial statements? How much did Sainsbury pay its auditor in 2019?

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7.

Particularly in what areas have judgements and estimates been used in the preparation of the financial statements?

8.

What does Sainsbury’s revenue comprise and when is it recognised?

9.

What are Sainsbury’s largest assets and liabilities at 9 March 2019? Are you concerned about the liquidity position of Sainsbury at 9 March 2019?

10. What are the depreciation methods and rates applied by Sainsbury for the different classes of property, plant and equipment? 11. What is the basis of measurement of Sainsbury’s land and buildings, and what is their carrying amount (book value)? What is the market value? Comment on this difference. 12. What categories of intangible assets does the Sainsbury group have? What is meant by “goodwill”? 13. How much debt does Sainsbury have on its group balance sheet at 9 March 2019? What is the total of shareholders’ funds on the group balance sheet? What does this tell you about how Sainsbury is financed? 14. How many shares has Sainsbury in issue at 9 March 2019? What is Sainsbury’s market capitalisation? What dividend did Sainsbury pay to its shareholders in 2019? 15. What is your overall impression of the information contained in the annual report and

financial statements?

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