International Financial Management: Morrisons Dividend Distribution Policy, Efficient Market Hypothesis Analysis, and Project Appraisal Techniques

This report on international financial management discusses Morrisons' dividend distribution policy, efficient market hypothesis analysis, and project appraisal techniques. It explains how Morrisons manages its finances in a global context and evaluates the benefits and drawbacks of market efficiency. The report also highlights the importance of international financial management in promoting easy money circulation and equity in businesses.

International Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
A. MORRISONS Dividend Distribution Policy:........................................................................3
B. Analysis of Efficient Market Hypothesis Theory in context of MORRISONS:....................4
C. Techniques of Project Appraisal:...........................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
International Financial Management is management of company's finance, whose
business activities are spread globally. It includes decision related financing and investment.
These decision are taken in the context of estimation of unpredictable cash flow that will happen
in future. Exchange rate of country's currencies have a wide impact on investing and financing
decision, and to reduce this impact of exchange rate analysts needs to observe and taken into
consideration insolubility of forecasting exchange rate. MORRISONS is the chain of
supermarkets which is fourth biggest supermarket chain in UK. The main purpose of this report
is to highlight the dividend distribution policy of MORRISONS, analyse their efficient market
hypothesis and identify different project appraisal techniques that MORRISONS use (Moran,
Warren and Alexander, 2021).
TASK
A. MORRISONS Dividend Distribution Policy:
Dividend distribution policy is the framework that is maintained for distributing some
amount of profit to the shareholders as their share dividend. On the basis of this policy company
decides how much proportion of their they are going to distribute as dividend. It is also used for
maintaining a balance of retained earning in order to meet future requirements. There are
numerous kinds of dividend distribution policies that MORRISONS used (Shaw and Pecorari,
2018).
Morrisons declared their dividend as per share on the basis of ordinary equity shares of
MORRISONS, that have a face value of €3.43, MORRISONS only has one class of share, apart
from ordinary equity share it does not issued other types of share. Hereby, company declared
their dividend distributed among all stakeholders according to their holding of shares based on
the recorded date. MORRISONS dividend decisions generally were taken by their board of
directors once in a year, after calculating and announcing outcomes of the whole accounting year
and before the help of annual general meeting of all investors. Interim and other kinds of
dividend are also declared in the board meeting. Morrisons has have a regular and consistent
policy declaring system that fulfils the goal of rewarding their shareholders appropriately by
providing dividend so that, they will support for gaining growth in future. In the previous time,
MORRISONS dividend payout is determined on the basis of their financial resources available,

determining requirement of investment and after taken into consideration optimal return of
shareholders. After covering all these parameters, MORRISONS will try to be able in
maintaining a total ratio of dividend payout in 20% to 35% range.
B. Analysis of Efficient Market Hypothesis Theory in context of MORRISONS:
Theory of Efficient Market Hypothesis states that current price of stocks fully shows the
required information regarding a business and also states that beating market with only that
information is not possible. In simple words, MORRISONS can not beat market condition only
with the use of information that public already knows about their business because market
already made available all the information to shareholders which might effect shares and its price
as well (Watson, 2020). Below are some important points that a company using efficient market
hypothesis must believes:-
 Shares are always being traded at fair price and shows all related information at definite
time.
 Purchase of an undervalued share is impossible and selling it at an inflated price is also
not possible.
 Investing in shares that are more riskier in comparison to other stocks is the only option
to investor for earning higher return compared to market.
Types of Efficient Market Hypothesis Forms:
There are three different types of forms available in efficient market hypothesis that
challenges various investment strategies in the stock market:-
 Weak form:- Weak form of efficient market hypothesis describes that current market
price of a share fully incorporates with its information in the price history of shares.
Thereafter, shareholders of MORRISONS can not make profit with the information that
is available to everyone. Also, MORRISONS is not able to beat market only on the basis
of past price. Weak form gives direct challenges to technical analysts whose trading
strategy is totally depends upon chart trends and movement of previous stocks price
(Cubby, 2021).
 Semi strong form:- This form of efficient market hypothesis indicates that market price
of a share incorporated with some pieces of information that is publicly available. All
information such as movement of past prices, financial statements like (income
statement, balance sheet and cash flow statement), economic factors (deflation and

unemployment) and corporate announcements (bonus and dividends) were already shown
in stock price. Share prices are get adjusted according to data that is available publicly.
According to this form, it is difficult for fundamental analysts of MORRISONS to make
profit only with analysis of fundamentals of shares.
 Strong form:- IT states that market price of stocks fully incorporated with all existing
insiders information whether it is private or public. This proves, that shareholders of
MORRISONS should not be able in generating profit only by trading on the basis of
insiders information. It anticipates future growth in market in an unbiased way (Relph
and Milner, 2019).
C. Techniques of Project Appraisal:
The four methods of project appraisal that is used by MORRISONS:-
 Net Present Value:- By performing NPV method MORRISONS predicts inflow and
outflow of cash that will happen in future. Net Present Value method enables
MORRISONS in assessing expected financial loss and profit from a particular project.
NPV helps finance managers of MORRISONS in valuing projects in long term while
accounting time worth worth of money, even it is known that actual value of a project can
be assessed only when it will be completed.
 Payback Period Analysis:- This technique helps MORRISONS in determining period
that a particular project will take in recovering its net value of initial investment.
Investments with shorter pay back period are pursue to be less riskier in comparison to
the investments with longer pay back period. There are some cons of this method also
available such as it did not considers elements like time worth of money or net flow of
cash in post recovery of initial investment (Das Nair and Landani, 2019).
 Internal Rate of Return:- Internal rate of return is a method of investment appraisal that
calculates a particular project's average rate of return per year during project's lifetime.
Same as net present value method, IRR is also analyses discounted cash flow. It means,
IRR always analysed the declining value of money. Higher IRR of project that
MORRISONS implemented indicates higher desirability of project under this technique.
Analyst of MORRISONS uses IRR method mainly NPV method because outflow of
initial investment from a project and its net inflow in future, the project can have lower
internal rate of return but a higher net present value. This reflects that a project's IRR

might be low than expected, yet its contribution in overall development and growth of
company will be sustainable. IRR will always gives better rankings to short projects as
well as projects that are undervalued can repay their value in long term.
 Accounting Rate of Return:- Accounting rate of return is calculated by dividing net
annual income with amount of investment initially in the project. Calculation of this
method is very easy which makes it commonly used technique. Although, it also not
considers time worth of money and flow of cash while calculations, that are necessary
factors of any project for companies like MORRISONS (Cooper, 2018).
CONCLUSION
From the above report, it can be concluded that the Internal Financial Management of
MORRISONS is analysed through some of the investments techniques of appraisal and tools or
techniques of market efficiency. Investment appraisal techniques involves in this report are Net
Present Value, Pay Back Period method, Internal Rate of Return and Accounting Rate of Return.
Benefits and drawbacks of the market efficiency critically evaluate and explains three elements
which can be supposed as strengths also, that are weak form, semi strong form and strong form.
These forms are used in process of decision making and while forecasting future for planning
further activities. It provides business, all necessary information about price index in market of
different commodities and services. International financial management plays a vital role in
managing finance of businesses. It promotes encouragement in the integration of easy money
circulation in the company. Its outcomes reflects in equity of business which are an important
part of financial system across the globe. It helps in management of business in connecting with
activities of movement in resources in whole world. Although it is very tough for finance
managers of company to coordinate and handle the chaos of international financial management
system but with proper planning and strategies MORRISONS makes it easier for them.

REFERENCES
(BOOKS AND JOURNALS)
Das Nair, R. and Landani, N., 2019. The role of supermarket chains in developing food, other
fast-moving consumer goods and consumer goods suppliers in regional markets (No.
2019/59). WIDER Working Paper.
Relph, G. and Milner, C., 2019. The Inventory Toolkit: Business Systems Solutions. Kogan Page
Publishers.
Cooper, A.D., 2018. Two-way communication: a win-win model for facing activists pressure: a
case study on McDonald's and Unilever's responses to Greenpeace.
Watson, D., 2020. Business models: Investing in companies and sectors with strong competitive
advantage. Harriman House Limited.
Cubby, D., 2021. Vaccination at the'Homebush Corral'-what can we learn from a
pandemic?. Global Media Journal: Australian Edition, 15(1).
Shaw, P. and Pecorari, D., 2018. Types of intertextuality in Chairman’s statements. Nordic
Journal of English Studies, 12(1), pp.37-64.
Moran, D., Warren, F. and Alexander, P., 2021. How does market power affect the resilience of
food supply?. Global Food Security, 30, p.100556.