Introduction to Accounting - AAS3 Coursework Example | Topics and Well Written Essays - 1500 words

Introduction to Accounting - AAS3 - Coursework mannequin(Morrisons Annual Report, 2012) Moreover, it has 475 stores throughout U.K, while the radical CEO, Dalton Phillips has quoted to have said to acquire 100 new stores in London and Southeast. (Morby, 2013) According to their latest annual report, Morrisons employ 131 thousand persons who serve 11 million customers any week. (Morrisons Annual Report, 2012) The current class has brought some positives for the chain of stores in form of two major achievements. Firstly, it has been up to(p) to strike a very important deal with Ocado to market its food online, and secondly, it has been able to add 200,000 sq feet of post in only 3 months to cop up with the fierce competition that has prevailed within the manufacturing. (The Guardian, 2013) At present, Morrisons is stand up tall due to its good practices in supply chain management, which kept it safe from the latest horseflesh s green goddessdal that adversely impacted Tesco. (BBC News, 2013) Today, it is growing at a rapid pace as can be seen by their decision to adopt cash management systems, online food business and the opening of new convenient stores. (Neville, 2013) TABLE OF RATIOS Ratio FY2008 FY2009 FY2010 FY2011 FY2012 Industry 2012 Liquidity Quick Ratio 0.25 0.28 0.22 0.21 0.21 0.77 Current Ratio 0.49 0.53 0.51 0.55 0.57 0.95 expertness Asset turnover 1.70 1.77 1.76 1.80 1.79 1.49 Inventory turnover 27.43 27.56 24.87 24.03 21.67 17.95 Debtors Collection 5.5 6.1 3.4 4.3 3.9 2.5 Capital Structure Debt to Equity 74.4% 82.0% 77.0% 68.8% 82.7% 100.0% Debt to Asset 42.7% 45.1% 43.5% 40.8% 45.3% plug into 10.2 11.2 18.0 26.0 25.3 Profitability GPM 6.3% 6.3% 6.9% 7.0% 6.9% 29.3% OPM 4.7% 4.6% 5.2% 5.5% 5.6% 6.1% NPM 4.3% 3.2% 3.9% 3.8% 3.9% 3.8% ROCE 10.6% 10.8% 12.2% 12.9% 13.1% RATIO ANALYSIS The very objective of any business is to earn profits, thus financial strength plays a key role in its success. However, profit is not the only measure to p rise the strength of the organization as many factors such as its ability to meet its obligations, its growth, its leverage and its ability of operations are some important factors in the process. (Brigham, 1998) Thus in order to better examine the Morrisons, not only the trend of the ratios will be considered but its current performance with respect to its industry will be considered as well. Liquidity The ratios of Morrisons indicate its lesser liquid position with a fast(a) ratio that has hovered around 25% only since FY2008. Despite the assumption that Morrisons deals in an industry that prefers keeping large(p) amount of stocks, even then the industrial average of 77% is 3.7 times larger than the 21% of Morrisons. Moreover, the current ratio which ignores the impact of inventory also suggests the same story which increased to 57% from the sound years 55%, and still has remained considerably below the industrys average of 95%. However, unmatchable may interpret such inform ation in a positive manner as retail sector prefers low amount of cash to ensure minimum cash lying idle. Moreover, the size of Morrisons cannot be denied that allows it to stock large amounts of inventory on credit which only depicts the strength of the Morrisons than any liquidity crunch. (Brigham, 1998) capability The efficiency ratios of Morrisons suggest an efficient system of operations. While asset turnover remained stable at 1.8 since last year, the inventory turnover posted a significant decline from 24 to 21.7, which was still better than