Willliam morrison
689 mots
3 pages
William MorrissonKey ratio’s calculation: * Basic EPS 2008 = 554£ million/2 664.3 million = 20, 79 pence * Basic EPS 2007= 248 £ million/2 657.5 million = 9, 32 pence * Diluted EPS 2008 = 554£ million / (2 664.3 million + 15.7 million) = 20,67 pence * Diluted EPS 2007 = 248£ million / (2 657.5 million + 1.2 million) = 9,31 pence * PE 2008= 305/20,79= 14,67 times * Gross profit/sales 2008 = 818£million/12 969 million£ X 100= 6,31 * Gross profit/sales 2007=636£million/12 462 million£ X 100= 5,10 * Dividend cover 2008 = 554/(0,048 X 2 664.3) = 4,33196 * Dividend cover 2007= 248 / (0,04 X 2 657.5) = 2,33301 * Acid test ratio 2008= (191+199+74)/1858 = 0,25 * Acid test ratio 2007 = (231+151) / 1855 = 0,206 * Working capital ratio in 2008 = 906/1853 = 0,4889 * Working capital ratio in 2007 = 750/1855 = 0,4043
Analysis of the ratios:
Firstly, concerning the basic and diluted EPS, both ratios have been multiplied by more than 2 times. This fact in mainly explained by the considerable increase of the earnings attributable to ordinary shares: indeed, the value of them has also been multiplied by more than 2 times (exactly 2, 23 times). Given that the EPS is a ratio allowing the investors to consider the opportunity to invest in a share, this ratio will have a positive impact on the evolution of the price share at the time of the disclosure of the company’s financial statements.
Secondly, as regards the PE (price earnings), the ratio equals to 14,67t times: given that the market value of the share is £305 and the earnings per share explained above is 20,79, the company Morrison Supermarket is trading at a multiple of 14,67. An investor is willing to pay £14, 67 for £1 of current earnings. In this case, our company has a high PE: thus investors are expecting higher growth in the future (investopedia online). Therefore, given that they are anticipating higher profit for this company, they will purchase this share and