The financial statements show the business transactions of the company. The research focuses on the income statement of J. Sansbury Plc. Similarly, the research focuses on the statement of financial position of J. Sansbury Plc. The financial statements prove J. Sansbury Plc is doing financially well during 2009 and 2010.
J. Sansbury Plc is a publicly listed United Kingdom company. The company had been doing profitably well from 2009 to 2010. However, The company’s 2009 revenue had increased from $ 18,911,000 to $19,964,000 in 2010. The company’s gross profit (sales less cost of revenue) amounted to $1,036,000 in 2007. The amount increased to $ 1,082,000 during 2010.
In terms of expenses, the company generated a total operating expense of $18,214,000 for 2009. The amount increased to only $ 19,278,000 during the 2010 accounting period. The operating expenses of the company include the selling expenses, research and development expenses and the administration expenses. The research and development expenses are incurred in the search for new products and processes. The development expenses are incurred in the development of the company’s new products as well as current products (Horngren, 2009).
In addition, the marketing expenses are incurred to increase the current and prospective clients’ demands for the company’s products and services. The marketing expenses include cash outflows to advertise the countless benefits of the products. The advertisements are normally done in the newspaper, radio, television, and internet websites. Advertising increases the current and prospective clients’ awareness of the company’s product benefits.
Further, the marketing expense includes the entertainment expenses. The sales personnel often visit and invite current and prospective clients to dine in restaurants and other private places. The meetings are done to thresh out the finer points of the marketing contracts.
Lastly, the marketing expenses include the commission paid to the sales personnel. An increase in revenues translates to an increase in commission.
The companies operating income for 2009 is $697,000. The amount decreased to $686,000 during 2010. The company’s net income reached $289,000 in 2009. The amount increased to $585,000 during 2010. The income statements show that the company improved its income performance from 2009 to 2010 (Stolowy, 2006).
In terms of the statement of financial position, the company’s total assets amount was $10,033,000 during 2009. The amount had increased significantly to $10,855,000 during the 2010 accounting period. The total assets include cash, cash equivalents, inventories, short term investments, goodwill, and other current assets. Goodwill represents the amount received for good name of the company. In addition, the total assets include the long term investments. The long term investments for 2009 amounted to only $ 385,000. The amount favorably increased to $599,000 in 2010.
The company’s current liabilities for 2009 total $2,919,000. The amount decreased to only $2,793,000 during the 2010 accounting period. The current liabilities include the accounts payable, short term and current portion of the long term debts, and other current liabilities. The current liabilities are estimated to be paid within one year after the end of the financial statement date.
The total liabilities for 2009 totaled $5,657,000. The amount increased to $5,889,000 during 2010. The total liabilities’ long term debt portion include the payables estimated to be paid more than one year after the end of the balance sheet date
The stockholders’ equity for 2009 is $3,744,000. The amount increased to $4, 345,000 during the 2010 accounting period. The stockholders’ equity portion of the balance sheet includes common stock, retained earnings, treasury stock, and capital surplus accounts. The accounting formula is:
Total assets = total Liabilities + stockholders’ equity.
Based on the above information, the financial statements indicate the business transactions of the company. The income statement of J. Sansbury Plc proves its favorable profitability status. Similarly, the statement of financial position shows the viability of J. Sansbury Plc assets in relation to its combined liabilities and stockholders’ equity amounts. Indeed, the financial statement information prove J. Sansbury Plc is performing financially well during 2009 and 2010.
References
Horngren, C., (2009). Accounting. London, Prentice Hall.
Stolowy, H. (2006) Financial Accounting and Reporting. Sydney, Thompson Press. Web.