Accounting And Finance For Managers in UK Discussion 2022

RUNNING HEAD: ACCOUNTING AND FINANCE FOR MANAGERS 0
Accounting And Finance For Managers

Accounting and Finance for Managers
1
Ratio Analysis Morrisons
Morrison is amongst the largest supermarket in the UK. The core purpose of the company is to
offer quality food with everyone’s efforts so that more people can afford to enjoy eating well
(Morrison,2018). In order to understand the financial performance and position of the company
in past years ratio analysis is done and results are discussed below.
Results and Discussion
1. Liquidity ratio: Liquidity ratio describes how well a company is able to pay its short
term liabilities (Bamber and Parry, 2014). For that current ratio is calculated, in 2017 the
current ratio was 0.41 and in 2018 was 0.42. This is quite not a good indicator as current
assets with Morrison are less than its current liabilities. This indicates that the company
will struggle in the future to pay its short term obligations as ideal ratio is 2:1. Further,
the quick ratio indicates how quick assets help to pay short term obligations. Morrison's
quick ratio has not shown any worthy changes as in 2017 was 0.20 and decreased to 0.19
in 2018 (Morrison,2018).
Liquidity 2017 2018
Current Ratio 0.41:1 0.42:1
Quick Ratio 0.20:1 0.19:1
2. Profitability ratio: This ratio helps in to know the profit-making ability of the company
(Lev, and Gu, 2016). For that return on assets, Gross profit and net profit margin are
calculated. The net profit margin for Morrison remains the same that is 1.8% in 2018 and
1.9% in 2017 approximately. Despite an increase in net profits and sales, Morrison
maintains the same margin of profit in both the years. However, the Morrison does not
utilized its assets in 2018, as return on assets decreased by 0.8% in 2018 as compared to
3.30% in 2017 (Morrison,2018). Gross profit margin decreased by 0.30%, this is not that
major decline but this indicate that operational expenses of the company increased.
Hence, not a good indicator.