International Standards for Financial Reporting Case Study

International Standards for Financial Reporting - Case Study Example Looking first to Profit Ratios, the investment analyst would take interest in the return on invested capital that is a measure of profits earned on the capital that is invested in the company. The profit ratios would inform an investor about the reliability of the company in the use of its resources. The more reliable and efficient a company the more profitable it will be. ROIC is of value as a benchmark for Morrisons or other investors to compare the company to compete in the marketplace, as well as to compare subsidiary companies that Morrisons envelopes (Hill and Jones C3). Over time, profit ratios can show if a company’s performance is improving or declining. There are many types of profit ratios, for Morrisons, the Return on Investment Capital ratio (ROIC) will be analyzed: ROIC = Net profit/Invested capital   = â‚ ¤ 93.4 million (over 25 weeks)/ â‚ ¤ 3, 662.4 million Thus, profits were down, before tax being â‚ ¤ 61.5 million. Although the overall financial re sult was disappointing for Morrisons in 2006, achievements were made; so it was a period of dramatic changes. Benchmarking has had a strong focus at Morrisons over the past financial year, and a range of company labeled products has been adapted and extended to meet market demands. Also, the retraining of almost 90, 000 Safeway employees has led to progress in the contributions of experience, skills, competencies, and knowledge that are of deemed value to the Morrisons team (Morrisons’ Annual Report 5).  Ã¢â‚¬â„¢ Annual Report 5). It appears from the Annual Report published by Morrisons, that ROIC weaknesses are being buffered by a