USEFULNESS OF THE INCOME STATEMENT AND BALANCE SHEET OF MORRISON'S

Usefulness of the financial statement of Morrison's

[Institution]

Unit Title:

Evaluate the usefulness of the income statement and balance sheet to Morrison's when they made the decision to acquire (takeover) Safeway

Morrison

Morrison's is fourth-largest UK supermarket chain supermarket Western, based in Bradford, West Yorkshire UK. The company is often called as Morrison's brand; it is the FTSE 100 index part of the company.

Morrison's' for the December 2008 market share of 11.8%, making the "big four" supermarket smallest, behind TESCO (30.9%), ASDA (16.8%) and Sainsbury (16%), but far ahead of the fifth joint operation group, it has a 4.4% share.

Safeway

Safeway Inc. is a Fortune 500 company, is North America's third largest supermarket chains, in the entire western and central United States and western Canada in 1743 stores. It also works in the central region of the east coast of the Atlantic Ocean some stores. The company is headquartered in Pleasanton, California.

Income statement & Balance sheet

Balance Sheet

A balance sheet provides a snapshot of the current position of the organisation. It displays detailed information about the organisation's assets, its liabilities and the shareholder's equity. The purpose of balance sheet is to display the assets of the company. Balance sheets are based on a fix reporting period, which can be a quarterly or on yearly basis. It provides a quick glance of the current position of the company displaying the total amount owned by the company and the amount it owes.

A balance sheet is subdivided into three main categories: Assets, liabilities and shareholder's equity.

This can be portrayed by a simple equation, the accounting equation:

“ASSETS = LIABILITIES + SHAREHOLDERS' EQUITY”

BALANCE SHEET SAMPLE

Year

0

1

2

3

Cash

Inventory

Accounts receivable

_ _ _

_

Total current assets

Gross property, plant & equipment

Less accumulated depreciation

_ ___

______

__

Net property, plant & equipment

Total assets

Accounts payable

Bank notes payable

______

______

______

______

Total current liabilities

Long-term debt

Shareholders equity

______

______

______

______

Total long-term debt and shareholders equity

Total liabilities

Income Statement

An Income Statement, is a summary of the revenues earned and expenses paid during a period. An Income statement displays the total revenue earned against the cost incurred, thus showing whether the organisation made profits or had to bear losses over a specific time period.

At the top of a profit and loss statement is the amount of sales, which is the total revenue earned through sale of products or services during a period. This top line is often referred to as the gross revenues from sales. The cost of goods sold is then deducted from gross sale to get the gross profit. It is termed gross because the operating expenses have not yet been accomodated.

INCOME STATEMENTS SAMPLE

Year

0

1

2

3

Sales

Less COGS

______

_____

_____

_____

Gross profit

Less SG&A expenses

Less depreciation

______

_____

_____

_____

Earnings before interest and taxes

Less interest expense

______

_____

_____

_____

Earnings before taxes

Earnings before taxes

Taxes

Pre-tax income

Less taxes

______

_____

_____

_____

Net income

The advantages and disadvantages of the accounts for a retail company

Morrison's Safeway acquisition target

Morrison's supermarket operating as a leader in a wide range of supermarkets in the UK and leading with sustainable growth

This is the simple goal of the acquisition of Safeway supermarkets. In both cases, the Morrison's supermarket Safeway, ...