Ratio Analysis of Morrisons
Table of content
Introduction 2 Financial Analysis of Morrisons 3 Critical Assessment of the ratio analysis of William Jackson Food Group 8 Limitations and recommendations References
Introduction
This paper deals with the question of how a ratio analysis can help in determining the true value of a company. Therefore a critical ratio analysis of Morrisons, a supermarket which is listed on the London Stock Exchange will be done and then compared with the William Jackson Food Group, another supermarket but a private company in order to figure out if there are any differences or similarities which can help to measure the performance of the companies. At least recommendations of the usefulness of this research will be given and which limitations it might have.
Morrisons is with over 400 stores the fourth largest food retailer in the United Kingdom and has a market share of approximately 12% (Morrison plc.; 2011). It was founded in 1899 by William Morrison in Bradford. Milestone in the development of Morrisons were the opening of the first town centre shop in 1958, the opening of the first supermarket in 1961in Bradford. Nowadays their main business is food and grocery. Uniquely they source and process most of the fresh food through their own manufacturing facilities what gives them close control over the quality of the goods. The company has more than 132,000 employees and approximately 9 million customers every week.
Financial Analysis of Morrisons
Table 1 Sales, market share, gross and operating profit of Morrisons (2009-2011) and Sainbury (2011) Morrisons | 2009 | 2010 | 2011 | Sainsbury 2011 | Sales (excl. VAT) £m | 14,50 | 15,40 | 16,48 | 21,10 | Market share (%) | 12,3 | 12,6 | 12,8 | 16,3 | Gross Profit | 913 | 1,062 | 1,148 | 1,160 | Operating Profit | 671 | 907 | 904 | 851 |
Source: Financial annual reports of Morrisons and Sainsbury
Over the last three years there has been a steady growth in sales. Due to a rising
Introduction 2 Financial Analysis of Morrisons 3 Critical Assessment of the ratio analysis of William Jackson Food Group 8 Limitations and recommendations References
Introduction
This paper deals with the question of how a ratio analysis can help in determining the true value of a company. Therefore a critical ratio analysis of Morrisons, a supermarket which is listed on the London Stock Exchange will be done and then compared with the William Jackson Food Group, another supermarket but a private company in order to figure out if there are any differences or similarities which can help to measure the performance of the companies. At least recommendations of the usefulness of this research will be given and which limitations it might have.
Morrisons is with over 400 stores the fourth largest food retailer in the United Kingdom and has a market share of approximately 12% (Morrison plc.; 2011). It was founded in 1899 by William Morrison in Bradford. Milestone in the development of Morrisons were the opening of the first town centre shop in 1958, the opening of the first supermarket in 1961in Bradford. Nowadays their main business is food and grocery. Uniquely they source and process most of the fresh food through their own manufacturing facilities what gives them close control over the quality of the goods. The company has more than 132,000 employees and approximately 9 million customers every week.
Financial Analysis of Morrisons
Table 1 Sales, market share, gross and operating profit of Morrisons (2009-2011) and Sainbury (2011) Morrisons | 2009 | 2010 | 2011 | Sainsbury 2011 | Sales (excl. VAT) £m | 14,50 | 15,40 | 16,48 | 21,10 | Market share (%) | 12,3 | 12,6 | 12,8 | 16,3 | Gross Profit | 913 | 1,062 | 1,148 | 1,160 | Operating Profit | 671 | 907 | 904 | 851 |
Source: Financial annual reports of Morrisons and Sainsbury
Over the last three years there has been a steady growth in sales. Due to a rising
References: Atrill, P. (2009) Financial Management for Decision Makers, 5th ed. Harlow: Financial Times Prentice Hall. Atrill, P. (2000) Financial Management for Non-specialists, 2nd ed. Harlow: Pearson Education Limited. Atrill, P. & McLaney, E. J. (2011) Accounting and finance for non-specialists, 7th ed. Harlow: Financial Times Prentice Hall. Collier, P.M. (2009) Accounting for Managers, 3rd ed. London: John Wiley & Sons Ltd.v J Sainsbury plc (2011) Annual Report and Financial Statements 2011. [Internet] J Sainsbury plc Available from http://www.j-sainsbury.co.uk/investor-centre/reports/?&page=0 #for m_filter_media (accessed 13th February 2013). J Sainsbury plc (2010) Annual Report and Financial Statements 2010. [Internet] J Sainsbury plc. Available from http://www.j-sainsbury.co.uk/investor-entre/reports/?&page=0#for m_filter_media (accessed 13th February 2013). J Sainsbury plc (2009) Annual Report and Financial Statements 2009. [Internet] J Sainsbury plc. Available from http://www.j-sainsbury.co.uk/investor-entre/reports/?&page=0#for m_filter_media (accessed 13th February 2013). Morrisons (2011) Annual Report and Financial Statements 2011. [Internet] J Sainsbury plc. Available from http://www.morrisons.co.uk/Corporate/Investor-centre/Financial-reports/# (accessed 13th February 2013). Morrisons (2010) Annual Report and Financial Statements 2010. [Internet] J Sainsbury plc. Available from http://www.morrisons.co.uk/Corporate/Investor-centre/Financial-reports/# (accessed 13th February 2013).