Impact of international law on trade

Impact of international law on trade BUSINESS LAW A business has to be built within a defined set of framework regardless of its nature and where it is conducted. This structural framework has to be structured on law which provides the various options for the proprietors of the business to choose the best suited to their particular needs. The particular needs of the business proprietors relates to issues such as the business flexibility, the confidentiality of the business data, taxation and the source of finances. Today, the conduct of the business must be within the legal structure which acts as the vehicle for the business conduct. The term company is used in the civil law countries with a meaning of partnership and limited companies. The international business law originated from the customs, multilateral trities, international conventions and aggreements which came together to form a common framework for world trading and market. Trade and business transactions have enhanced the market globalization with the introduction of div erse business and trade laws. This has further contributed to the developing and growth of the regional trade promoting the business transactions in the international trade. The GATT , NAFTA treaties and the European Union are the main sources of the international law. These international organizational develops and reveiews the international stardards and the legal codes of conduct that binds the member nations. The law mainly addresses the ethical issues that affect the business operations in the global business environment. This involves the stardards set for the protection of the rules for international sales and other difficult issues between the individual nations on agreement. The international law also adreeses the processes involvedin the business disputes resolution in the international business transactions The international law of business determines the rights and the responsibilities of the parties in the business transaction. The US government has globally used its economic and political influences in forcing other nations to remove non-tariff barriers to the US import of goods and services. The spirit of free and fair trade has become widely contagious globally thus there was need for the laws and business guidelines to be conducted between the business partners. With the growth of the global economic integration, many nations have joined the business organizations such as the World trade organization to enjoy the world trade. This has led to the globalization of the global economy and opening up the world market for exports and imports of goods and services enabling the business prospects to the developing nations. The international business laws are the measures and rules followed by the business proprietors conducting the international business. This creates a conducive international business environment with flexibility in the law of international trade and investment. The international law gives the strategic plans in the basic market entry of many firms, protection policies of the intellectual property and licenses as well as the foreign investments. The law puts the emphasis to both the private and the puplic sectors in business environment. The private law which is widely apllied in the international business transactionsincludes the law of the international sales, business agreements and other governing laws. The public business international law includes the convections, business trities and the agreements among the countries that entails the legal frame work within the international business jurisdiction. Many countries has created customs and tarrif laws that open up the market to the international investors. The public international business law provides the foundation for the gorvernments regulation of the international business. Careful business planning and legal practices avoid and reduce the risks involved with the international law a s they affect the public and the private sectors of the business. A private law is considered when the rule of law affects the commercial transactions between two parties whereas the public law is considered in the determination of the rights and the responsibilities of the countries to one another. Management of the International business transactions needs well entailed strategies and better implementation mechanisms due to increase in the trade risks. Today world of business has many challenges in dealing with the illegal business which do not exist. Many business firms are trying to conduct international business illegally in avoiding the taxation in various levels of the business. Handling of the foreign mergers and dealing with the illegal markets goods has been a challenge to many nations in conducting the world trade. The international law faces challenge in dealing with the unexpected differences in foreign corporate law and the evaluation of the political stability in the less stable nations. Political indifference has been an affecting the international business laws with the government giving an outline on business conduct to their respective nations. This has led to the poor economic growth internationally with the international law stressing the strategic decision making processes. Cultural, economic, political and social factors have a great impact on the international business laws as they gives the variations in attitudes towards the law. They influence the way we do business internationally and impacts on the trade relations between the nations. There is difficulty in the Separation of the politics, foreign policies and the country trade evidently seen in the exports controls and trade sanction obligatory to foreign policy or the national security. Trade and the investment issues has also been a challenge in the international business with the occurrence of the nations investment policies. The legal environment on which the international business is conducted has become so intense with the social economic and political forces influencing the development of the business law making processes and legal institutions. The economic environment of conducting business has greatly improved in the developing countries especially China. This is due to the increase in the multinational businesses in world developments as many countries trade with each other. The custom and the tariffs laws enhance the business operation from the international levels allowing the firms to locate the overseseas market and facilitators in expansion of the business globally. Human rights and the international criminal law have been global issues which has affected the international business as many violators being locked out from the common trade organizations. In the developing countries trade and business are incorporated with governmental and regional laws with the development agenda of the fast economic growth. International business has more ethical issues and social responsibilities with outlined corporate codes of conduct in trade transactions. The principles of international business has been affected by the intergovernmental organizations with the laws such as codes of conduct, child labor, workers rights, protection of environment and wildlife, human rights There are a lot of added risks in the international business which includes the risk of the language and cultural differences, international hostility and political influences. The foreign legal actions and practices, trade controls and the restriction of the investment has also been an area of concern in the management of the international business laws. The major forms of the international business the importing and exporting trade, the transfer licensing agreement s and the legal protection of the patents, copyrights and other intellectual property. Active foreign investments have been developed through business mergers, acquitions and the joint ventures. The international business, trade and international licensing of the intellectual property provide the legal relationship between the international parties in conducting the international business transactions. These legal frameworks provide them with important means of foreign market entry with different level of commitment and involvement in the foreign market lifetime. The managerial challenges experienced expose the business entities to different set of legal business risks with long term economical implications. Economic Interdependence Todays world economy has led to the realization of the international business as many countries have realized that they cant rely on the domestic business due to the global competition. This has enabled the interdependency of the world economically enhancing the globalization of products, services and capital markets. The economic interdependence in the world economy has been contributed by the availability of the precious natural raw resources and the technological advances increasingly opening up the free trade and available markets for imports and exports between different sovereignty. The development of the free trade and the steady movement towards economic integration among nations has led to the increased foreign investments and the industrialization promoting the international business. The interdependence has attributed to the common international laws in the business environment with the interrelated financial markets, the world wide flow of capital and the coordination of the economic policies to create a globally competitive economy. The international law has a created comparative advantage to the economic concepts in many nations. Exporting in international business provides the business firms to reach wide range of market which requires modest capital investment and internationally recognized business laws. In the recent past the word was experiencing the legal barriers to the importing and exporting of the nations products. The international law creates the custom regulations identifying the legal controls on the exports and imports of products between countries. Many countries engage in exporting of goods in regular basis complying with the international business law in making of the exporting marketing decisions. Trade relations between nations create the dependence, influence affecting the power position of the nation and strengthening the economic coexistence of the country. Every sovereign nation can at any time influence or interrupt its own export and import trade affairs affecting the international tra de environment as the other countries relying on it must then get another markets and sources of supply or make economic adjustments . The power to interrupt the business relations with any country is a determinant of a countrys global power position. Sovereign nations have increasingly interrupted the trade processes with the increase in competition levels denying the importation and the export processes. Settlement of such business power disputes are fully engaged through the international business law on which a common ground is used in the crisis settlement. In the currency issues a foreign currency transactions requires the exchange rates on which the gain or loss results from the gradual changes on the exchange rates. The policies of securing the international foreign trade secure the controls over the oceanic trade routes increasing the trade partners benefits and trading with nations with mobility of the resources. Many countries have tried to create their own trade laws redirecting their international businesses to their politically friendly nations or the neighbors. The international business policy relies on the influence of the foreign trade between the sovereign nations. Resource mobility between the countries plays a major role in the relocation of the resources with the manufacturing and the trading countries having a major advantage. The international laws in business allow the countries to interpret and detect the relevant mechanisms to put in place to ensure that the rules and the laws dont influence the core business of the nation. Merge dealing policies is currently widely used by the businesses worldwide in order to make an extra revenue. This is achieved as the trade seeks for help in dealing with their distribution and sales of their goods on which they start with the merger plan. This policy allows the trade owner to fully regulate and monitors the business globally opening up to a wider market. International business acquisitions to foreign markets accessibility is a vital entity in business enterprises of all kinds and sizes. This is a major provision of the foreign production or marketing capacity in the global business transactions. Over the past decades businesses has faced difficulties in obtaining harmonizing product or service lines. Many of them run the services with high market risk and high costs. The law governing the global business provides business with methods to obtain regulatory and legal business approvals. legal practitioners and other experts involved in the international business law making need a user-friendly source of information covering the most important jurisdictions of the world trade. International Business Acquisitions has positively affected the business and trade issues due to the great value of the legal business issues. The policies and the business strategies encompass the basic international elements of trade, the licensing and the inves tment policies. The business prospects entering to foreign market depend on the host countries considerations and the sophistication of the firm internationally. With the gradual political changes in many countries the world economy has increased with the rise of the international trade. Many countries are moving towards greater political freedom and good governance. This democratic advance has led to creation of international business law that protects the world business. With this freedom foreign investors are freely integrating themselves in various global businesses creating a market oriented world economies. The greatest challenges facing the international business is the entrenched poverty level and the declining natural resources as excess resource exploitation is experienced in many regions. The environmental degradation, global warming international terrorism and the widespread of infectious disease has also been an area of concern in the international laws. The overlap occurs in business transactions with many countries creating their business plan that complies with the international standards. Ownership of the foreign business by the investors has to comply with the obligations of the corporate citizenship in the invested country. The international trade market has enhanced the investment of the foreigner in various countries enhancing the world economy.

Analysing the Portrayal of Eddie Carbone as a Tragic Hero Essay

Analysing the Portrayal of Eddie Carbone as a Tragic Hero A View from the Bridge by Arthur Miller is a dramatically tense tragedy that presents the story of the downfall of an ordinary man. The play examines the tragic consequences of Eddie Carbone's inability to understand himself and his actions. This predominantly takes the form of his prejudice towards his cousin and his inappropriate attraction to his niece. It is set in the 1950s and was written while Miller had become interested in the lives and work of Brooklyn's dockworkers and longshoremen. Miller uses the character of Eddie to express his viewpoint that the tragedy of the ruined life of an ordinary workingman is just as significant a subject for tragedy as that of any ancient king, God or "Caesar from Syracuse or Calabria". He presents Eddie as an equally valid antihero. Antiheroes, or Tragic heroes, are as Aristotle wrote neither wholly good nor wholly evil but a mixture of both. Eddie is not an evil man, but he acts selfishly, inappropriately and recklessly. Antiheros, unlike heroes, have fatal flaws. These enable a contemporary audience to empathise and identify with his fatally flawed relationships and disastrous choices. Being able to relate to Eddie will let the audience feel the dramatic tension of the situations he is placed in. According to Aristotle a traditional tragic hero is a person who finds himself in a situation where he seems deprived of all outward help and is forced to rely entirely on himself. A View from the Bridge is recognisable as a tragedy because Eddie is a tragic hero even though he is a stereotypical 1950s ordinary American. He is tragic because he refuses to take the help and advice offered by his lawyer, Alf... ...f instead of trying to gain control of the other characters, he would have perhaps succeeded rather than causing complete destruction. By the end of the play, Eddie cannot see any view from the bridges of Brooklyn; he only has eyes for Catherine. Unfortunately, Catherine, like Rodolpho, sees all number of possibilities and dreams that lie ahead of her. Although bridges connect things, they are also a symbol of the way things are divided. Catherine needs to move across these bridges, but Eddie dies fighting to hold onto her. Eddies story is a tragedy because it is about how he handles his hubristic character, the result of his disastrous choices and his drastic change in fortune. It takes the audience on a roller coaster of dramatic tension, ending up with his unfortunate and unnecessary death, leaving the audience in mourning for such a tragic hero.

Aromatherapy

The history of aromatherapy is linked strongly to the development of aromatic medicine. The ancient Greeks, Romans and Egyptians all used aromatherapy oils. In the Doreen of France there are cave paintings found to be 18,000 years old that depict the use of plants for medicinal purposes. The origins of aromatherapy have been lost with time before the keeping of any records. It is although believed that crude forms of distillation, the main method that essential oils are now obtained, were practiced thousands of years ago In Persia, Egypt and India.Distillation was used mainly for the extraction of exotic flower waters. The medicinal use of plants and their extracts In India has been continuous from ,000 years ago to the present day. One of the oldest known books on plants Is Indian and is called â€Å"Veda†. This book highlights the various uses of plants for medicinal and religious purposes. The human was seen as part of nature and the preparation was considered a sacred prac tice. Arrived medicine is one of the oldest forms of medicine practiced since ancient times. There is more information available about the development of plant use in Egypt.The Nile Valley became known as the Cradle of Medicine. Some of the plants brought to this area were codeword, cinnamon, frankincense and myrrh. In Egypt 5,000 years ago, there was a strong link between perfumery and religion. Each God was allotted a particular fragrance. It was the priest who formulated the aromas. The Egyptians used plants, aromatic oils and aromatic resins In the embalming process. They successfully preserved human bodies for 3,000 years using this method. The process of embalming and mummification was developed by the Egyptians in their search for immortality.The ancient Egyptians first burned incense that derived from aromatic woods, spices and herbs in honor of the Gods. It was their belief that as the smoke SSE up towards the heavens it would carry their prayers and wishes directly to the deities. The development of aromatics as medicines delivered the creation of the foundation that aromatherapy was built upon. In the hot climate and with poor standards of sanitation, aromatic substances were used to make life more pleasant and safer. The Egyptians were passionate about the use of simple fragrances and used them In their dally lives.At celebrations and festivals women wore perfumed cones on their heads that melted in the heat and released a beautiful scent. After washing, they sun and to refresh their skin. The use of aromas for religious and medicinal purposes was also adapted in other countries such as China, Greece and Rome. The Greeks expanded the knowledge of the Egyptians by recording and classifying the actions and main properties of plant medicinal. The father of holistic medicine, Hippocrates, was an advocate of massage and recommended the use of daily massage and a scented bath.He also recognized the medicinal values of aromas. Greece is subsequently famou s because of the presence of Hippocrates. Another Greek, Messages, formed a perfume called ‘Angelino'. It was capable of healing mounds and in the reduction of inflammation. The Greeks used the knowledge they had gained from the Egyptians to classify the future study of plant medicine thus making a vital contribution. Because of the influence of the Egyptians and Greeks, the Romans became more appreciative of perfumes and spices. The word perfume derives from the Latin per fume, meaning â€Å"through the smoke†.This refers to the burning of incense. There are many biblical citations making reference to incense together with the use of ointments and plant oils. As the Roman Empire spread, the knowledge of the healing properties of plants parade also. Roman soldiers went on long Journeys and collected seeds and plants which in time reached Britain and other countries, eventually becoming naturalized. Among these were parsley, fennel, sage, thyme and rosemary. The Romans u sed lavish means for plant aromatics with baths and massage being most recognized.Romans also used aromatic plants for beauty treatments, cosmetics, hygiene, and medical treatments. Distillation In 980 AD a man named Vaccine was born in Persia. He is responsible for making a vast improvement to the basic distillation units known then. He extended he length of the cooling pipe forming a coil shape. This enabled the vaporized plant molecules and steam to cool down more rapidly and efficiently. With improvements to the distillation process, more attention was giving to essential oils because of new formulae for ointments and perfumes.It is believed that the use of essential oils as we know them today began at this time. During the Holy Wars, the Crusaders were treated for stomach problems with the same plant medicines used by the natives. These would include the floral waters and essential oils. On their Journey omen they would have stopped at various Mediterranean islands where the kn owledge of plants had been preserved from Roman times. The Crusaders brought home perfumes and flower waters for their wives relaying the stories of the medicines being known once again in Italy and perhaps for the first time in the rest of Europe.During the Middle Ages aromatic plants such as Thyme and Melissa were cultivated in monasteries. In the 12th century a German Abbess, Hildebrand, grew lavender for therapeutic properties which he also used as an essential oil. Throughout the 14th century, Frankincense and Pine were found to be burned in the trees. Perfume candles were burned inside and garlands of aromatic herbs and spices were often seen worn around ones neck in a bid to fight against the deadly plague which raged throughout Europe. Venice was the gateway to trade with the Arabs.Perfumed leather for gloves was first discovered here. In 1 533, Catherine De Medici influenced the production of essential oils and perfume in France. The area of Grease in France became the main perfume producing area. The Renaissance period brought with it the wide use of essential oils because of improvements in methods of distillation. The first botanical gardens were introduced in Europe prior to the birth of Christ. They were later to be found in many monasteries. During the 16th Century, Royal Hungarian Water was produced by the distillation of alcohol with fresh rosemary blossoms.Another infamous water was introduced by a Franciscan monk who left Italy to live in Cologne in 1665. The recipe for ‘Aqua Memorabilia' was made world famous by his nephew J. M. Farina. It is known nowadays as the well known ‘AAU De Cologne'. It was used as a health-promoting lotion and included the essential oils of bergamot, lemon, orange, lavender, thyme and smeary. These were then diluted in strong ethyl alcohol. In Britain by the year 1700, the use of essential oils was widespread. It was used in mainstream medicine until the time came that chemistry allowed the synthesis o f materials within the laboratory.Around the time of the Bubonic Plague, doctors would walk through streets wearing hats with large ‘beaks'. Within these beaks they placed aromatic herbs so that the air inhaled passed through them and this air was believed to be antiseptic. The decline of the use of herbs in Britain is partly due to the Industrial Revolution. The relocation of peoples housing to smaller terraced houses with little or no gardens resulted in a decline of the use of fresh herbs. By the year 1986, chemistry was becoming increasingly important.The drugs produced through the synthesis of the therapeutic properties from plants have proved to be very powerful in the role of modern medicine. The synthetic copies of the natural healing materials tend to be toxic and do not appear to have the same respect for the living human tissues. During the early years of this century a renewed interest in natural healing methods became apparent. This was no doubt stimulated by the side effects shown after long properties of essential oils. Essential oils were used on the wounds of those who suffered in the awful trench warfare of 1914- 1918.Gatepost © discovered in his research that essential oils take 30 minutes to 12 hours to be absorbed by the human body after application to the skin. Aromatherapy was introduced by beauty therapists using massage techniques which is why aromatherapy has appeared to be, for many years, a massage using essential oils. The main use of aromatherapy in Britain was to relieve stress and improve skin conditions by massage and only sage. Today aromatherapy is growing hugely in popularity and is recognized widely for an alternative treatment by many people.The use of the essential oils and plants has increased hugely in recent years. It is in general considered to be a complementary therapy. It is also being recommended by professional health careers as a complement to traditional medical treatments. Aromatherapy has been associa ted with massage as a method of delivering essential oils. There is growing evidence that aromatherapy treatment has many positive side effects on medical conditions either alone or in conjunction with traditional medicine.

Morrison Is A Uk Company That Operates Finance Essay - Free Essay Example

Sample details Pages: 6 Words: 1923 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Morrison is a UK company that operates retail food stores in the UK ,,it is known to be the fourth largest food retailer by sales with the total turnover in excess of  £17 billion the Morrison have the total number 475 stores across Britain with over 11 million customers and 131,00 employees. According to www.morrisons.co.uk the companys strategy for sustainable growth is designed to provide a distinctive offer to customers centered around fresh food, craft skills and vertical integration ,offering outstanding service and seizing opportunities to grow the business profitably through new formats ,categories and channels. This focused report aims at analyzing the suitability of Tesco which is way bigger that the Morrison and ranked number 1st as the largest retailers in the UK with operations in 14 countries, with 500,000 employees with the strategy that aims to broaden the scope of the business to enable it to deliver strong sustainable long-term growth. Don’t waste time! Our writers will create an original "Morrison Is A Uk Company That Operates Finance Essay" essay for you Create order Ratio analysis There are many users of financial statements such as shareholders, investors, managers and so many more. In regards to conducting a business analysis, Ratio analysis can be used to access the performance of a company therefore giving a closer connection to shareholders wealth maximization. Understanding the ratio analysis will allow users of accounts make reasonable decisions for instance an investor will be able to determine if the business is worthy of its investment due to the past accounts. The ratios show how profitable the business is, how efficient it is, and also how a company is financed in respect to their equity and debts (Mclaney Atrill, 2008). Profitability ratios The profitability ratio is gives an insight on how well a company is doing in terms of profit making the ratios are calculated in terms turnover or profit over the years. TABLE 1 PROFITABILITY RATIOS MORRISONS TESCO ROSF% CHANGE 2012 2011 2012 2011 13% 12% 15.8% 16.0% 1% 0.2% ROCE % CHANGE 12.9% 12.8% 14.3% 14.9 % 0.1% -0.6% GROSS PROFIT % CHANGE 6.8% 6.9% 8.1% 8.4% -0.1% -0.3% OPERATING MARGIN % CHANGE 5.5% 5.4% 6.1% 6.4% 0.1% -0.3% Return on ordinary shareholders funds According to Mclaney Atrill,( 2008) ROSF is used to compare the total profit for the period available to the owners available to the owners average stake in the business during that same period .However the Morrison ROSF increased slightly in 2012 by 1% this is an improvement in the ratio compared to Tesco ROSF which reduced by 0.2% during the same period. Return on capital employed (ROCE) The ROCE is a fundamental measure of the profitability of the company. It is a popular indicator of the management efficiency because it contracts the net profit generated by the company with the total value of fixed and current assets, which are presumed to be under management control (Elliott and Elliott, 2007).ROCE measures the performance of a business fundamentally (Mclaney Atrill, 2008). Morrison had a slight increase of 0.1% from 2011 to 2012. Although this is not a huge increase, it is much better than having a decrease change. This is not a good sign for the company as it shows its profitability is either fluctuating or growing slowly. Tesco on the other hand had a decrease in ROCE of 0.6% from 14.9% down to 14.3%. Although in 2012 Tesco had a decrease, it is in a better situation than Morrison is in terms of the ROCE ROCE FOR MORRISON AND TESCO (2011-2012) Gross profit margin The gross profit margin is used to measure the profitability in buying and selling of goods or services before any other expenses are taken (Mclaney Atrill, 2008). Morrisons gross profit margin reduced by 0.1% between the period of 2 years from 6.9% down to 6.8% this reflects that the gross profit was lower relative to the sale revenue in 2012 than it had been in 2011.This may have been as a result of the recent expansion of the business through acquisition of new retail stores .just like the Morrison Tescos gross profit margin dropped more than the Morrison during the same period by a difference of 0.3% from 8.4% in 2011 down to 8.1% in 2012 this may have occurred due to the fact that they may be selling at a higher margin and not at a stage of expansion. As a result of the wet weather in the summer 2012, sales became weak, and overall gross profit declined. Operating margin According to Mclaney Atrill (2008). The operating profit margin is regarded as the most appropriate measure of operational performance because it represents profits from trading operations before interest payable expense is taken into account. Operating profit margin is a way of measuring a companys strategy and operating efficiency and it shows users of accounts if the fixed costs are too high for the production or sales volume. The percentage increase of Tesco from 2011 to 2012 was 28.57% decrease as the ratio was initially 6.4% and went down to 6.1% respectively. The fall in OPM may have occurred due to the profit from operations 33.39% decrease in 2012 which was as a result of high expenses Margate incurred. Having a low OPM is a negative implication for Margate as they may find it difficult to have a profit in future years as a result of the operations and expenses are high figures in relation to their sales at this occurrence. This however might cause them to have low capita l to run the business smoothly which can also lead to financial assistance from banks or other sources of finance. In conclusion to this section there was a strong performance in the business says Tesco especially in Asia. Thailand experienced the worst flooding for 70 years which caused over 150 stores to close down but with the dedication and cooperation of their staff, they maintained a good supply line for with their customers. Table 2 Efficiency ratio Morrisons Tesco 2012 2011 2012 2011 Return to capital employed 2.1times 2.1times 2.1times 2.0times Receivables 6.6days 5.9days 15days 14days 0.7day 1day Payables 44.9days 45.5days 69.1days 69.1days 0.6days same inventory 16.8days 15.1days 22.1days 20.8times 1.7times 1.3times Efficiency ratios The efficiency ratio measures how efficient the business is in terms of collection of debts, payments of loans and also the stock turnover. The inventory period shows how many times a companys inventory is sold and replaced over a certain period of time. According to Richard Loth, (2005) It is said that the higher the ratio the better the turnover of inventory. Morrisons inventory period increased by 3.7times within 2011 and 2012 more than the Tescos that increased by 1.3 times during the same period this shows that Morrisons sold more and replaced of their inventories than Tescos did. Trade receivables ratio shows the number of times average receivables are collected during a year. A high ratio is usually a good indicator to the users of accounts of the business but a ratio that is too high requires monitoring the Morrisons trade receivables are quiet lower than the Tescos Trade payables show how long the company takes to pay off its creditors for account payable balances. T his could be as a result of accepting payments of sales on credit which means they do not have any funds till they make enough from their sales. The payables for Morrison reduced within 2011 and 2012 from 45.5days to 44.9days which is a sign of improvement, which is better than the Tescos that remained the same during the same period Table 3 Liquidity ratios Morrisons Tesco 2012 2011 2012 2011 Current Ratio=Current assets/current liabilities 0.5 0.5 0.6 0.7 Acid Test =Current assets Inv /Current liabilities 0.2 0.2 0.4 0.4 Liquidity Liquidity ratio shows the solvency of a company and its ability to repay its debt in the short to medium term. The current ratio shows how many times a companys current assets cover its current liabilities. The quick (acid) ratio is calculated in the same way as the current ratio but the value of inventory is excluded from current liabilities as it is less liquid than other current assets and may take time to be converted to cash or cash equivalent. In both years, Morrisons had more current liabilities than current asset with approximately half of it inventory. There wasnt any change in both the current ratio and acid ratio at 0.5 and 0.2 respectively in the 2 years under review same as the Tesco. Investment ratio Table 4 Investment ratio Morrisons Tesco 2012 2011 2012 2011 Leverage % change 28.5% 23.2% 0.3% 0.3% Interest Cover =Profit before interest/Interest payable 20.7 times 21.0 times 9.5 times 8.1 times Earnings per share 26.68p 23.93p 36.75p 34.43p Tesco have improved their interest cover over the period from 8.1 to 9.5 times, this can be attributed to rising profits before interest and tax and decline in interest payable. While Morrisons operating profits increased, interest payable increase at a higher rate and with this their interest cover reduced from 21 to 20.7 times. Interest cover is a short term measure of the firms ability to meet its financial obligations, and sometimes can be manipulated to achieve immediate results. Therefore there is a risk of investing at this period until the share earning price is increased. The earning per share ratio is used to measure share performance. However for Morrisons EPS increased by 2.75p which was a slightly higher than Tesco. There are many limitations to the use of the ratios when making important investment related decisions. Ratios focus on past performances of businesses in the sense that the figures used do not take into consideration what will happen in the future. The ratios obtained will only enable the company to predict what can happen in future years (Mclaney Atrill, 2008). Due to the fact that ratios deal with numbers, factors such as the quality of products, customer service, employee behaviour and so many more are not put into consideration. Therefore such areas of the business will not be considered or highlighted when improving the activities of the business.(Mclaney Atrill, 2008). There are different accounting policies used by several different companies, therefore causing it to be difficult to compare the ratios.(Mclaney Atrill, 2008). APPENDIX 1 RATIOS FORMULA PROFITABILITY RATIOS Return on capital employed Operating profit x 100 Debt + Equity Return on shareholders fund Profit of the year x 100 Equity Gross profit margin Gross profit x 100 Sales revenue Operating Margin Operating Profit x 100 Revenue EFFICIENCY RATIOS Return to Capital Employed  Cost of Sales Return on Capital Employed Receivables Trade receivables x 365 Revenue payables Trade payables x 365 Cost of Sales Inventory Inventory________________ Cost of Sales INVESTMENT RATIO Leverage Debt Number of employees Dividend pay out Profit as dividend Profit of the year Interest Cover Operating profit Finance cost LIQUIDITY RATIOS Current ratio  Current assets Current liabilities Acid test ratio Current assets (excluding inventories) Current liabilities APPENDIX 2 RATIO ANALYSIS FOR MORRISON PROFITABILITY RATIO 2012 2011 RATIOFOR 2012 RATIO FOR 2011 Return on capital employed 973/5,397+2,159100 = 12.9% 904/5420+1643x 100= 12.8% 12.9% 12.8% Return on Shareholders Fund 690/5,397100= 13% 632/5,420100 =12 % 13% 12% Gross profit margin 1,217/17,663100= 6.8% 1,148/16,479100= 6.9% 6.8% 6.9% Operating Margin 973/17,663 x100=5.5% 904/16,479 x100=5.4% 5.5% 5.4% EFFICIENCY RATIOS Return to Capital Employed 16,446/7,559= 2.1times 15,331/7,063= 2.1times 2.1times 2.1times Receivables 320/17,663365= 6.6 days 268/16,479365= 5.9days 6.6 days 5.9 days Payables 2,025/16,446365=44.9 days 1,914/15,331365= 45.5days 44.9 days 45.5 days Inventory 759/16,446 x365= 16.8 days 638/15,331365= 15.1 days 16.8 days 15.1 days Investment ratio Leverage 2,159/7,556100=28,5% 1,643/7,063 x100=23.2% 28.5% 23.2% Interest Cover 973/47 904/43 20.7times 21.0 times Earnings per share Basic Basic 26.68p 23.93p LIQUIDITY RATIOS Current ratio 1,322/2303= 0.5 times 1138/2086= 0.6 times 0.5 times 0.5 times Acid test ratio 1,322-759/2203=0.2 times 1138-638/2086= 0.3 times 0.2 times 0.2 times RATIO ANALYSIS FOR TESCO RATIO USED 2012 2011 RATIOFOR 2012 RATIO FOR 2011 PROFITABILITY RATIO Return on capital employed 3,985/9911+17801=14.3% 3,917/9689+16535100= 14.9% 14.3% 14.9% Return on Shareholders Fund 2,814/17801100=15.8% 2,671/16623100= 16.0% 15.8% 16.0% Gross profit margin 5,261/64539 x100=8.1% 5,060/60931100= 8.4% 8.1% 8.4% Operating Margin 3,985/64539 x100=6.1% 3,917/60445 x100=6.4% 6.1% 6.4% EFFICIENCY RATIOS Return to Capital Employed 59,278/27,686 x365=2.1 times 53,330/26,224365= 2.0 times 2.1 times 2.0 times Receivables 2,657/64,539365=15.0 days 2,330/60,445365= 14.0 days 15.0 days 14.0 days Payables 11,59,278/x365=69.1 days 10484/55,330365= 69.1 days 69.1 days 69.1 days Inventory 3,598/59,278 x365=22.1days 3,162/55,33023 x100= 20.8 days 22.1days 20.8 times Investment Ratio Leverage 9,911/27686=0.3% 9,689/26,224=0.3% 0.3% 0.3% Interest cover 3,985/417=9.5 times 3,917/483=8.1 times 9.5 times 8.1 times Earnings per share Basic Basic 35.75p 34.43p LIQUIDITY RATIO Current ratio 12353./19180=0.6 times 11438/17731= 0.7 times 0.6 times 0.7 times Acid test ratio 12353-3598/19180= 0.4 times 11438-3162/17731= 0.5 times 0.4 times 0.4 times APPENDIX 2 TESCO 2012 ROCE (12.8% ) Asset Turnover (2.3 times) X Net Profit margin (6.1%) 2011 ROCE (12.8% ) Asset Turnover (2.3 times) X Net Profit margin ( Morrisons 2012 ROCE (14.3% ) Asset Turnover (2.6 times) X Net Profit margin (5.5%) 2011 ROCE (14.9% ) Asset Turnover (2.8 times) X Net Profit margin (5.4