MORRISON PLC

Ratio Analysis of Morrison Plc

Ratio Analysis of Morrison Plc

Introduction

Morrison is the UK's fourth largest food retailer by sales, with an annual sale of 17 billion in 2012. The company own around 475 stores throughout the Britain and owns around 11.8 percent of market share in retail store industry. Morrison is listed on the FTSE 100 index. It was started by Wm Morrison in 1899, with the passage of time Morrison came up with its own thousand of products, under its own brand. Currently company strategy is to create differentiation in its product range, and for last few year Morrison is capitalizing on the fresh food as its unique selling point and in addition to this fact, company also come up with new promotion scheme like Morrison Millionaire and Pay Day Price Church, that enable the Morrison to attract new customer towards its retail space and last year company was successful in attracting more than 11 million customer every week.

Ratio Analysis of Morrison Plc

Table of ratio Analysis

Profitability measures

2010-01

2011-01

2012-01

Return on Equity %

12.63

12.19

12.76

Return on Invested Capital %

12.63

12.19

12.76

Gross Profit Margin %

6.9

7

6.9

Operating Expense Margin

5.89

5.49

5.51

Net Profit Margin %

3.88

3.84

3.91

 

 

 

 

Efficiency Ratios

 

 

 

Fixed asset turnover

2.13

2.13

2.21

current assets turnover

8.01

7.79

9.03

Total asset turnover

1.81

1.84

1.86

 

 

 

 

Working capital ratios

 

 

 

Inventory days

 

 

15.07

Creditors days

35.53

32.74

31.17

 

 

 

 

Short term liquidity

 

 

 

Current Ratio

0.51

0.55

0.57

Acid Test

0.39

0.44

0.46

 

 

 

 

Long Term solvency

 

 

 

Interest cover

1.77

1.69

1.83

Gearing

 

 

0.37

 

 

 

 

Shareholder

 

 

 

Dividend payout ratio

 0.403

0.4188

0.4168

No of shares issues

2,674

2,697

2,651

Dividend yield

 

0.01

0.12

Earnings per share

0.22

0.23

0.26

P/E ratio

0.1

0.4

0.8

Profitability Measures

Return on Equity

ROE figure improved by more than 1 percent, this is the result of recent successful promotion activity under taken by the management of the Morrison. ROE is also increased because of Morrison share buyback program, through which around 368 million worth of share will be redeem by the Morrison during the FY 2012-13, which buyback program will have favorable impact on the ROE in the future.

Return on the Capital Employed (ROCE)

ROCE is better measure as compare to the ROE, because takes operating earning as compared to net profit. Morrison ROCE improved from 12.90 percent in 2011 as compare to 12.70 percent; this improvement in the ROCE is mainly contributed by the share retirement program conducted by the Morrison.

Gross Profit Margin

Overall profit margin from all the Morrison operation decreased in 2012. Much of the sale figure was affected from inflationary pressure, but not from the volume metric growth. Profit margin has decreased from 7% in 2011 to 6.9% in 2012. This decrease in the profit margin can effect Morrison's potential to look for long term investment and make good use of shareholder's money.

Operating Margins

Morrison's operating margin from its core operation improved form the last year, mainly due to innovating promotion strategy adopted by the Morrison like Morrison Millionaire and Pay Day Price Church, which enable business to serve around 11 Million customer every week, despite of though economic condition around the global. Operation margin jumped from 5.47 percent in 2011 to 5.54 percent in 2012. In addition to this fact, a higher price for commodities also reduces the customer spending, which further gives a dent in the Morrison's sales.

Net Profit Margin

Net Profit Margin has improved in 2012 as a result of successful promotion campaign ...