Morrisons supermarket - financial report - page 8
Keywords: Morrisons,Finanial report,supermarket,performance of morrisons
By maya on 02/05/2008
Level: Master's degree (MA, MBA, MSc, MEng, MRes, MPhil etc)
Page Number: 8 of 14 pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14
the business much prefers equity funding to debt funding. This minimizes the interest payment problems and the control problems of having a dangerously high level of long-term debt on the balance sheet.
Interest cover ratio describes how many times greater the profit is than the interest charges. It gives creditors an indication of how secure these repayments are. Comparing with historical data, Morrison’s interest cover fluctuates acutely, some year high interest covers are because the substantial part of the long-term loan are required to be repaid. And this indicates it is hard for Morrison’s to over commit itself in its borrowing because the profit generated before interest and tax is sufficient to give high cover for the interest charges. This has had an effect on reducing the relative contribution of long-term lenders to the financing of the company and reducing the amount of interest payable.
3.2.5. Investment
Morrison’s five-year and one-year share performance against S&P are shown in Figure 4, which shows that Morrison’s keeps a steady flow following the S&P trend. Morrison’s share price fluctuates at a stationary range around the percentage of change at 20%. This implies a healthy investment condition that an upward tendency is predicted in a long term. From the view of short term, Morrison’s share price declines in the second hard year of 2005, and touches its lowest point 161.5 pence on the date of 27th October 2005 (please refer Appendix 1 for share price detail). However, with the Group’s adjustment and Christmas fall, a raise is expected in the next few months.
Source: www.finance.yahoo.com
3.3. Financial Comparison
3.3.1. Competitors overview
The 'Big Five' supermarkets, namely Tesco Plc., Tesco Stores Ltd., J. Sainsbury Plc., Sainsbury’s Supermarkets Ltd. and WM Morrison’s Supermarkets Plc. now account for nearly 80% of the UK market in terms of value. A peer group financial comparison based on key figures and ratios in the following section will facilitate better understanding of Morrison’s financial state.
Source: FAME
Tesco Plc.
Tesco’s turnover increased by 10.2% in the FY2004, up from £30,814m in FY2003 to £33,974m, while pre-tax profit rose by 22.6%. Turnover increases by 10.2% to £33,974m largely because of the rise in non-food sales. In FY2004, total asset in the UK stores goes up by 9.96% to £20,410m. While shareholder funds rises by 13.3% from £7,845m in FY2003 to £9.006m in FY2004.
J Sainsbury Plc.
According to the J Sainsbury Plc annual report, turnover for FY2004 drops
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