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Principles of Accounting (AAF001-1) Referral or Deferral assignment.

Outline This is an individual assignment and takes the form of a series of tasks relating to the annual report and accounts of a public limited company. The objective is to familiarise you with the content of a companys annual report, and to test your understanding of important financial accounting concepts and processes. The assignment is to be completed using 2012 Annual Report of Morrisons plc. This is available from the companys web site:http://www.morrisons.co.uk/Corporate/2012/annualreport/financialstatements/downloads/Default.aspx Requirements The tasks are based on the data reported for the Morrisions group of companies. Some of the required tasks are numerical and can be answered directly from information taken from the annual report. Others require more discursive answers, and will necessitate wider reading and research. The tasks are grouped in ascending order of challenge, and later ones are weighted more heavily. The deadline for submission of your assignment is 21 September 2012 By that time you must:1. Submit a copy to the Assignment Handling Office and also, 2. Upload an electronic copy of your answers to Turnitin on the BREO site for your course. (DONT BE LATE in submitting remember that late work attracts a zero (G) grade) Provide written answers to the following questions. You do not need to prepare a report or add any text other than the answers, but please make it clear which question you are answering by careful tabulation of your answers. In using the annual report of Morrisions, make sure to use only the group accounts. As do most large quoted companies, Morrisions owns a number of subsidiary companies. In Morrisons case, these are largely part of its supply chain. For the purposes of investigation and analysis, we are interested in the whole organisation, inclusive of its subsidiaries (the group). Largely for legal reasons, a small part of the report deals with the ultimate holding company (the Company, on pages 95 to 107); you should ignore these pages. Note that the term balance sheet is still used by Morrisons (and has been repeated below). International accounting standards now demand the term statement of financial position.

Part 1 Questions (20% of the overall grade) 1.1 What is the full name of the Morrisons holding company (the one that is quoted on the London stock exchange), and where is its registered office? 1.2 In which geographical areas does the company operate, and which are the most important to it? 1.3 Summarise the principal activities of the company. Identify the primary business sector in which it operates, and research its relative importance within that sector. 1.4 Who are the main stakeholders of the company? For each stakeholder group, suggest what information provided by the annual report might be of interest to that group, and why.

Part 2 Questions (30% of the overall grade) 2.1 How does the company value the land on which its supermarkets are situated? 2.2 How long does the company expect its supermarket buildings to last, on average? 2.3 How much is owed to the group by trade debtors on 29 January 2012? What might this amount represent, given the nature of the companys business? 2.4 On average, how many days stock were held on the shelves during the financial year to 29 January 2012? (use averaged stock figures from the opening and closing balance sheets of the company) 2.5 On average, how long did the company take to pay its suppliers during the financial year to 29 January 2012 (use average figures from opening and closing balance sheets for this calculation). 2.6 Calculate the gross profit margins for the last five years, and suggest what might be the reasons for any changes you note. 2.7 What is the difference between the profit after taxation for the year to 29 January 2012, and the cash generated by that profit? Briefly explain the main reasons for this difference. 2.8 Calculate the current and quick ratios for the group on 29 January 2012 and 30 January 2011 and comment on the significance of these.

Part 3 questions (50% of the overall grade) 3.1 Calculate the return on capital employed for the last five years for the company (use yearend figures for capital employed), and comment on the changes. 3.2 To the nearest penny, how much of each pound spent in a company supermarket was left for shareholders in the financial year 2011/12? How does this value compare with the companys main competitors? 3.3 Establish the share price on the last day of the financial year 2011/12. State the par value of one equity share as given by the balance sheet on the same date. How do you account for any difference between these figures? 3.4 Prepare a chart of the share price of the group on a weekly basis for the whole of the financial year 2011/12. If you find any major sharp fluctuations, try to establish what might have caused these, and note your findings. 3.5 Apart from profitability, how else does the company say it measures its performance? 3.6 If you were a shareholder of this company, would you be satisfied with its performance during the current accounting period? Explain and justify your reasoning.

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