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Loblaws Annual Report Analysis - Term Paper Example

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Loblaws Annual Report Analysis

Such misstatements can arise from either an error or fraud. according to the auditor’s opinion, the consolidated financial statements presented fairly, in all material respects, the consolidated financial position of Loblaw Companies Limited as at January 1, 2011 and were in accordance with the Canadian generally accepted accounting principles. 3. Loblaw is Canada’s largest grocery retailer and has taken several initiatives to ensure it sustains the environment. They practice sustainable seafood and have set up salmon farms. In order to prevent the detrimental impacts of excessive fishing, Loblaw is committed to sourcing 100% of their sold seafood from sustainable sources by the end of 2013. In addition to this, they have a campaign against the plastic bag consumption in their stores and were successful in reducing 2.5 billion plastic bags since 2007. Moreover, Loblaw gave a gift of $3 million to invest in researching sustainable means of food production. They also have initiated solar energy projects in partnership with Northland Power Inc. to help reduce their carbon footprint. Consequently, they have been awarded accolades and are ranked in top 50 Canadian sustainable companies list. 4. A) According to the matching principle, the company recognizes its revenue at its VIE and corporate stores at the time the sale is made to its customers and also at the time of delivery of its inventory to the associated and franchised stores B) When it comes to fixed assets they are recorded at cost which includes capitalized interest while depreciation starts once the asset has been put into use. The depreciation is recognized on a straight-line basis and is depreciated over the estimated useful life of the asset which ranges from 20-40 years for buildings, up to 10 years for building improvements and from 3 to 10 years for equipment and fixtures. C) Goodwill at Loblaw is assessed for impairment at a minimum on an annual basis. It is done by comparing the fair value of a reporting unit to its carrying value. A goodwill impairment charge is recognized to the extent that the carrying value of goodwill exceeds the impaired fair value in operating income. D) The company assesses intangible assets to determine if their useful life is definite and in cases where it is they are amortized over their useful lives up to a maximum of 17 years. The intangible assets with indefinite useful lives are annually assessed for impairment. 5. Loblaw generated a higher profit per dollar of sales in the fiscal year 2010 compared to 2009. This is visible by two ratios namely Gross Profit per sales and Operating Margin. Operating Margin is calculated by dividing the Net Operating Income for a period with the Sales. The Operating Margin increased in 2010 to 4.1% from 3.9% in 2009. This is primarily attributed to the subsequent increase in gross profit and the impact the acquisition of T & T. Likewise, the Gross Profit as a percentage of Sales went up from 23.4% in 2009 to 24.5% in 2010 and was caused by factors such as strong Canadian dollars, improved control label, continued buying synergies and more disciplined vendor management. 6. The interest coverage ratio measures the interest payment of the company compared to its Earnings before Income and Taxes. The greater the Interest coverage ratio the better the chances of the company in paying its debt ...Show more

Summary

LOBLAW Analysis 1. The 2010 and 2009 show the sales and other expenses that have occurred during the entire year starting from 1st January 2010 to 1st January 2011 and likewise for 2009. It encompasses the 52 weeks that make up one complete year. 2. The company’s auditors are the Licensed Public accountants firm, KPMG…
Author : donavonemard
Loblaws Annual Report Analysis essay example
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