The following report contains a financial analysis of Tesco PLC and its current trading position for the financial year ending February 2010. The data that has been analysed will be compared with the previous year’s finances. It will include information such as performance, the businesses liquidity, and Tesco’s efficiency. It will also show the extent to which Tesco may or may not appeal to potential investors after the past financial year. In the current economic situation facing the country it’s natural to expect that there has been a downturn in performance due to most people feeling the effect of the recession for most of the year, therefore having less disposable income. The data that has been collected and used will be shown …show more content…
This shows a slight negative compared with the previous year, as being to obtain cash quicker means the business is more liquid and therefore has a better cash flow. The current ratio is a financial ratio that measures whether a firm has enough resources to pay its debts over the next 12 months. It compares a firm 's current assets to its current liabilities. The businesses current ratio showed the same figure of 0.7:1 in 2009 as well as 2010. This won’t be a concern to Tesco with them selling food products they will not hold onto stock for very long due to the fact it will go off. So this low figure just represents the sort of market Tesco operates in. Gearing Gearing represents the percentage of a business that has been financed from borrowing money rather than from investors or shareholders. In 2009 Tesco’s gearing was 74% but this was reduced significantly in 2010 to 54%. Being highly geared is often seen as being a problem so the figure seen in 2009 can be viewed as a negative. However in 2009 Tesco underwent a huge expansion process into different countries which is a large venture and would therefore require a lot of financial backing for it to actually work. This point shows why the figure in 2009 was so high as borrowing money would be a good way of providing the financial backing needed to get up and running in the various different places. In 2010 the figure falls to 54% a significant decrease which shows during that year Tesco must
However implementation of liquidity ratios illustrates that the ‘short-term debt-paying ability’ of the companies has improved with and without the inclusion of inventories (Jerry J et al, 2008, pg214). This is of particular interest to M&S who may require financial aid to finance the renovation of its stores. In terms of the current recession many investors may be worried to what effect the current recession will have on Tesco and M&S respectively.
The portfolio of the commercial network Tesco increasing day by day which is creating lots of opportunities in the market. In 2012, they opened more than 650 shops in which 440 were international. This global diversification could help the company in the improvement of his economy of scale and limiting to the minimum
The purpose of the report is to measure the performance, financial position and liquidity of the general retailer, Debenhams plc. Its operation would be compared to that of the prior year as well as that of a rival company in the same industry.
Tesco PLC, the top three retailer in the world, which was establish by Jack Cohen in 1919 year, which has near 100-Year history. In these days, it has been thrived to 12 country all over the world, including United Kingdom, Malaysia, India, Hungary, Ireland, Kipa, Slovakia, Poland, Czech, Thailand, even South Korea, and China (Tescoplc.com, 2012). Tesco is a public limited company. According to Marcouse (2011:92), “Public limited company (Plc) is a larger type of company that must have at least £50,000 of share capital and has its shares traded on the stock market”, therefore Tesco can have greater capital source and shareholders in their business.
Tesco has a well established and reliable strategy for growth, which has allowed them to strengthen their business and drive expansion into new markets.
The current ratio compares the liquid assets of a company with the current liabilities. Supermarkets tend to have a relatively low ratio because they are holding only
“Sir Terry: Where Tesco went wrong ‘” Sir Terry saw failure in leadership because the changes In culture that were brought it by the new management was not for the better” thus, Tesco still remains the UK biggest supermarket but the brand has lost its reputation due to low prices but then again customers expect Tesco to have the best prices on the kinds of product they buy which some of the customers trust has been lost and does not resonate powerful enough as sir terry mentioned when you are at the top and the business goes well you get credit and if it doesn’t you must take responsibility towards it. In September 2014 the new boss Dave Lewis was alerted about the shortfall in Tesco worth £250m which was expected as half-year profit, the issue behind this was caused by Tesco securing deals with suppliers earlier than it should have been therefore Tesco is issue shock profits warning in January following a poor Christmas which then have left Tesco out scaled by the rivals as the market share have gone down since 2005, while Tesco is rivaled Morrisons, Sainsbury, Waitrose pressured with efficient marketing and effective offers and deals. Tesco have failed to meet the suppliers demands with the pricing that has been arranged with the two parties, therefore, they have falsely overstated its profits by delaying or deducting payment to their suppliers while still owing money, this is an issue because its business they need these suppliers in order their business to work
Every time Tesco expands there business to a new region, a great deal of money would be paid for ‘tuition’, which will have impacts on its cash flow and competitive strength.
Current ratio measures whether a firm’s has enough current assets to meet the current liabilities. Current ratio is calculated dividing the current asset by current liabilities. The following figure represents the current ratio of both J Sainsbury Plc. and Tesco Plc.
● To identify Tesco’s result over the past 3 years and the contributing factor to it.
TESCO plc is reported as one of the largest retailers across the globe and is originally a UK based entity and operates in 14 countries across Europe, Asia, and North America with 5380 stores and employing around 472,000 individuals. TESCO provides "online services through its subsidiary, Tesco.com..The company sells more than 40,000 range of products including clothing and non food items. Tesco is headquartered in Hertfordshire, UK. The group has recorded £60,931 million revenue for the year ended February 2011, an increase of £4021million as compare to 2010 and £7816 million to 2009.Company earned a profit of £2627 million in comparison with a profit of £2336 million in fiscal year 2010 and £2138m in 2009." (Ghafoor, 2011)
This section of the paper is providing the performance analysis of Tesco Plc using the financial ratios. The selected ratios include liquidity, profitability, efficiency, and asset management over a period of two years. The selected organisation operates in the grocery sector of the United Kingdom categorised as one of the leading supermarkets.
Current ratio is a measure of liquidity and is believed to be a good indicator of a company's ability to repay its outstanding loans. The company has £1,49 of current assets for each £1 of current liabilities in 2008 and £1,33 of current assets for each £1 of current liabilities in 2009. There is only a slight change between the two years but looking at the books we can say 2008 was more liquid for the company rather 2009.
In the United Kingdom, Tesco is the leader company of the food retailer or super markets or companies of there. The company of Tesco was founded in 1919 in London. Now, Tesco Company has served around 12 countries in the world. It also works in Ireland. Now, about 530000 workers are working for the company in the world. They serve almost 10 million people in the world in a week.
1. To demonstrate an understanding of strategic decision making using of knowledge and understanding of business principles to critically reflect on the strategic management of an organization