Financial Statements and the Monetary Situation of Morrisons Essay

Financial Statements and the Monetary Situation of Morrisons - Essay Example The report is aimed towards guiding interested shareholders to rationally invest in Morrisons Supermarkets. Morrisons is one of the largest chains of supermarkets located in the U.K. The firm has their headquarters located in Bradford, England. Morrisons is counted amongst the big four supermarkets in the U.K, after Tesco, Sainsbury, and Asda. Currently, the company holds approximately 11% market share in the supermarket sector of the U.K. The company had initially begun as retailers of butter and egg in the year 1899. However, the firm has remained successful in expanding itself and presently it has 515 superstores and 113 local stores spread across the U.K, England, Wales, and Scotland. The U.K supermarkets are highly competitive and also possess the ability to earn a very high level of revenues. Consumers, in general, are seen to gain benefits from such high competition as they are able to procure goods and services at reduced prices. The purpose of the paper is to understand how analysis of financial statements facilitates better investments decision making. Income statements are prepared to estimate the level of profitability existing in a firm. They also indicate the efficiency with which an organization performs and earns revenue. Investments decisions are crucial as they may either cause a shareholder to earn adequate profits or lose earnings on the capital invested. Shareholders face the risk of losing their savings if financial statement interpretations are not carried out effectively. The income statement is essentially a summary of the incomes and expenses of a firm presented in a summarised form for a particular period. By analyzing the incomes, expenses and the profits of a number of years, investors can understand how effectively a firm manages their internal operating expenses so as to earn sufficient profits.