How To Evaluate Sainsbury's Cash Flow Statement

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An evaluation of the financial management of J Sainsbury plc since 2011 based on an analysis of its Cash Flow Statements. Introduction Sainsbury’s is one of the UK’s largest chain grocery/supermarkets. Now a large group of companies, Sainsbury’s was founded in 1869 by John James Sainsbury and his wife Mary Ann Sainsbury in London as a small grocery store. They started with one of their specialties i.e., butter, working in coordination farmers, which is continued still. The organization works on their core value, #ValueforValue and one of the core values that they work on is ‘Supporting Our People’. Today, they operate in diversified fields like supermarkets and convenience stores, Sainsbury's Bank, Mobile by Sainsbury's phone network, Sainsbury's…show more content…
Information Content of the Cash Flow Statement A cash flow statement, when used in conjunction with the other financial statements, provides information that enables users to evaluate the changes in net assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities. Cash flow information is useful in assessing the ability of the enterprise to generate cash and cash equivalents and enables users to develop models to assess and compare the present value of the future cash flows of different enterprises. • Cash comprises cash on hand and demand deposits with banks. • Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. • Cash flows are inflows and outflows of cash and cash…show more content…
Analyzing cash flow changes in working capital is very important but important for the organizations with seasonal cash flow. J Sainsbury’s is into regular inflow and outflow of cash and cash equivalents. Cash flow from operating activities has improved due to in 2012 in comparison to 2011, due to cost control, tax has also been saved and increase in sales. However, it didn’t last till 2015, as a decline in cash flow can be seen due to higher operating cost and decreased revenue from operations. Cash Flow from Investing Activities It can be noted that cash flow from investing activities in negative throughout which is a sign of expansion. This simply means that company is investing majorly in fixed long term assets. As mentioned in the company’s business strategy as well, the organization is investing in buying new spaces and inventories, which is a good sign of growth and expansion. A noticeable change can be seen in 2014, that’s when the organization acquired Sainsbury’s Bank, investing in a major amount of money and becoming Sainsbury

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