Questions On Comparing Tesco And Tesco

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Farhad Hussain 3300902 Accounting and Finance Coursework November 27th 2014 David Oakes Contents 1. Introduction 3 1.1 Limitations 3 1.2 Introduction of Companies 3 2. Financial Ratios 4 3. Profitability Ratios 4 3.1 Return on Equity (ROE) 4 3.2 Return on Total Assets (ROTA) 4 3.3 Operating Profit Percentage 5 3.4 Return on Capital Employed (ROCE) 5 4. Efficiency Ratios 5 4.1 Trade Payables 5 4.2 Trade Receivables Collection Period 5 4.3 Inventory Holding Period 6 5. Liquidity 6 5.1 Current Ratio 6 5.2 Quick Ratio Test 6 6.1 Interest Cover Ratio (ICR) 6 7. Factors on Performance 6 8. Conclusion 7 9. References 8 10. Apendecies……………………………………………………………………………………………………………………………….10 Farhad Hussain Financial Accounting and Analysis…show more content…
The second limitation may be that different companies may use different accounting practices such as for calculating depreciation as there are two methods, straight line and reducing balance which can make it difficult to compare between two companies when using ratio analysis. The third limitation is that it is difficult to determine if a ratio is useful or not as you have to search for trends and analyse the financial information. 1.2 Introduction of Companies Morrison, which had its first store open in Bradford 1899, is the fourth largest chain supermarket in the U.K. which specialises in food and grocery with 12 million consumers each week. The company has 125,000 colleagues, 500 stores and 130 M locals located around the country with an online shopping service. In recent months, Morrison has stated that they will price match with the leading supermarkets and has introduced an additional 1,600 trading hours per week. The brands aim is to maintain competitive prices, quality of its products and help its customers save money. Tesco, which is one the largest supermarket chains in the U.K., was founded in 1919 by Jack Cohen. The first store that was opened was in a small market in London and since then it has managed to expand over 12 countries with 530,000 employees. The brands aim is to maintain competitive prices. 2. Financial Ratios Financial ratios consist of four categories which are: profitability, financial position, short term
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