Investing in Equities Case of Morrison Supermarkets Plc - Essay Example

The organization was selected due to its recent trend in performance, operations, and positioning within the industry. Tables 1, 2 and 3 in the Appendices show the operations, performance, and market positioning of Morrison Supermarket Plc. In terms of the performances, Morrison has provided a positive indicate especially in respect to the market capitalization as well as the volume of shares traded (Table 2). On the other hand, Table 2 shows that amongst the various players in the industry, Morrison Supermarket Plc had experienced a positive change in the share price.

Lastly, Table 3 provides a deeper understanding of the performance of the Morrison Supermarket Plc hence justifying the reason behind its investment. From the information contained in Tables 1, 2 and 3, it is clear that Morrison Supermarket Plc is a profitable organization to invest in shares or other securities. The fact that during the fiscal year 2010 Morrison Supermarket Plc was able to pay dividends. The fact that the firm was able to pay dividends is a clear justification that investing in this organization is likely to yield to more profits and returns.

Therefore, this was the main motivation behind the investment of ?10,000 in shares between 2008 November and 2012 December. In this report, findings, which are in terms of financial analyses, are provided. The report concludes by an overview of the investment process as well as recommendations towards further investments. Findings The investment involved buying shares worth ?10,000 between 2008 November and 2012 December. Table 4 within the Appendices provides the value of shares at the beginning and at the end of 2008, 2009, 2010, 2011, and 2012.

The following calculations are based on the figures in Table 4 within the Appendices section. Assumptions: The following are the assumptions used in writing this report: 1. The earned dividends were reinvested throughout the years. 2. The total amount obtained from the amount invested and the dividend earned is invested at the beginning of a fiscal year hence the close price of the beginning of the year is applied In November 2008, the share price = ?242.50 (close) Total Amount of investment = ?

10,000 It is important to calculate the number of shares since dividend is usually earned per share. Therefore, the number of shares will be given by the following formula: No of shares bought in 2008 = 41 shares. The following table shows how the 41 shares earned dividends and how the dividends were re-invested and more shares bought (NB. The table is obtained from calculations performed in an Excel function; the Excel file is attached) Based on the above assumptions, the calculations were done on the Excel (Excel file attached) and the following table shows the results.

The table is also obtained in Table 5 of the Appendices. Date Amount Close Price Shares Dividend Earned Dividends Total Amount Nov-08 10,000.00 242.50 41.24 0.00 10,000.00 May-09 10,000.00 242.50 41.24 5.00 206.19 10,206.19 Sep-09 10,206.19 236.50 43.16 1.08 46.61 10,252.79 May-10 10,252.79 280.00 36.62 7.12 260.71 10,513.51 Sep-10 10,513.51 266.10 39.51 1.23 48.60 10,562.10 May-11 10,562.10 293.80 35.95 8.73 313.84 10,875.95 Sep-11 10,875.95 297.70 36.53 3.17 115.81 10,991.76 May-12 10,991.76 302.20 36.37 7.53 273.88 11,265.

64 Sep-12 11,265.64 266.10 42.34 3.49 147.75 11,413.40 Total 1,413.40 11,413.40 From the above table it is evident that there was a return of ?1,413.40 on the ?10,000 amount invested in shares between November 2008 and September 2012. Ratio Analysis for 2012/2013 In a bid to provide further justification on the reasons for the selection of