Morrison’s
Evaluate the usefulness of the income statement and balance sheet to Morrison’s when they made the decision to acquire (takeover) Safeway.
There is no doubt that the income statement and balance sheet are the most fundamental components of financial statement, which can provide much information. As for the former, it summarizes the company’s operating performance, which records the revenues, expenses and shows the flows of the company over the reporting period, while the balance sheet gives a snapshot of a firm’s assets and liabilities at a precise point time. Taking the specific companies as an example, both items can be argued as the evidence for Morrison’s and Safeway to illustrate its current financial position and the trend of profit performance. The Morrison’s supermarket, which is the fourth largest chain of supermarkets in the United Kingdom. Before 2004, locations of Morrison’s store primarily focused in the northern England, while Safeway supermarkets chain was mainly located in Scotland and the South of England, which owned over 480 stores. As one of the leading retailers in the UK, Morrison’s acquired Safeway in 2004 and now has over 420 superstores across the UK. This essay will evaluate the income statement and balance sheet particularly by analyzing the case of Morrison’s including the acquisition of Safeway, then I will demonstrate my recommendations in the conclusion.
There exists several strengths obtained by using the income statement within the company. Firstly, either the trend of sales turnover or the profits during the period can perform the financial position of a company. Specifically, it can measure the success of a business by analyzing the figures of turnover and operating profit, which can be used to compare with previous years or other business. As is shown in the income statement of Morrison’s, it is clear that the operating profit has increased by 602￡m and the turnover also rose from 4,954￡m to 15,410 ￡between the year 2004
There is no doubt that the income statement and balance sheet are the most fundamental components of financial statement, which can provide much information. As for the former, it summarizes the company’s operating performance, which records the revenues, expenses and shows the flows of the company over the reporting period, while the balance sheet gives a snapshot of a firm’s assets and liabilities at a precise point time. Taking the specific companies as an example, both items can be argued as the evidence for Morrison’s and Safeway to illustrate its current financial position and the trend of profit performance. The Morrison’s supermarket, which is the fourth largest chain of supermarkets in the United Kingdom. Before 2004, locations of Morrison’s store primarily focused in the northern England, while Safeway supermarkets chain was mainly located in Scotland and the South of England, which owned over 480 stores. As one of the leading retailers in the UK, Morrison’s acquired Safeway in 2004 and now has over 420 superstores across the UK. This essay will evaluate the income statement and balance sheet particularly by analyzing the case of Morrison’s including the acquisition of Safeway, then I will demonstrate my recommendations in the conclusion.
There exists several strengths obtained by using the income statement within the company. Firstly, either the trend of sales turnover or the profits during the period can perform the financial position of a company. Specifically, it can measure the success of a business by analyzing the figures of turnover and operating profit, which can be used to compare with previous years or other business. As is shown in the income statement of Morrison’s, it is clear that the operating profit has increased by 602￡m and the turnover also rose from 4,954￡m to 15,410 ￡between the year 2004
Bibliography: Ian Marcouse(2008), Business Studies for A-level, 3rd EdItion, Hodder Education. Tjia, John S.. Building Financial Models : A Guide to Creating and Interpreting Financial Statements. Temte, Andrew, (1998)financial statement analysis: financial statements Singh,Y.P(2007) accounting and financial management: balance sheet and income statement