Managerial finance, Tesco

Résumé du document

Tesco Plc. is the biggest retailer by sales in U.K (T.N. Sofres, 2012). Its market share has grown since 2010, 30.6 to 2012, 31.5, through 2011, 30.9 (Tesco, 2012). The company recorded revenues of £64,539 million during the financial year ended February 2012, an increase of 13.1 from 2010 (Tesco, 2012). The operating profit of the company has grown as well, £3,457 million in 2010 for £3,917 million in 2011 to reach £3,985 million in 2012, an increase of 15.3% from 2010 (Table 1, Appendix 9).

The net profit of £2,336 million in 2010 has reached £2,814 million in 2012, through £2,671 million in 2011, which represents an increase by 20% between 2010 and 2012 (Table 1, Appendix 9). Generally speaking, we can say that the trend of Tesco Plc. has increased from 2010, with a growth of the market share, a growth of the sales revenue, a growth operating profit and a growth of the net profit (Table 1, Appendix 9).

But are these data reflecting the reality? Indeed, a look on the cost of the sales, since 2010, £52,303 million to 2012, £ 59,278 million, shows us that the cost of sales has increased as well by 13.4, when the sale revenue has only increased by 13.1 (Table 1, Appendix 9).

Extraits

[...] Let us admit that the ROE is an average of in 2013. Interpreting forecast financial statements using Ratio analysis (Appendix 20, p36) If the Sales increased by during the activity February 2012 to February 2013, Sale Revenue of 2013 should be m. What does it imply? We will need 103m of stocks to satisfy the objective fixed what should increase the Cost of Sales as well. We forecast m pounds of CS, because the Gross Profit Margin should not change in 2013, it should represent of the Sales Revenue. [...]

[...] of Tesco and Sainsbury was respectively 0.56 and This means that for every of current liabilities, the companies have respectively 56p and 41p of cash available at short-notice. Between 2010 and 2012 the A.T.R. has significantly decreased for both companies (more than 16%). Ideally, the answer should be around 1. The C.R. & the A.T.R. show that the both companies have difficulties in meeting their short-term debts but this is significantly more critical for Tesco. It looks like Tesco and Sainsbury held poor liquidity. [...]

[...] Generally speaking, we can say that the trend of Tesco Plc. has increased from 2010, with a growth of the market share, a growth of the sales revenue, a growth operating profit and a growth of the net profit (Table Appendix 9). But is these data reflecting the reality? Indeed, a look on the cost of the sales, since 2010, £52,303 million to 2012, 59,278 million, shows us that the cost of sales has increased as well by when the sale revenue has only increased by (Table Appendix 9). [...]

[...] and J Sainsbury Plc. are Public Limited Company because they floated their shares in the market, to raise money for their expansion (Tesco Plc., Sainsbury Plc., 2012), so the formula used is the following one: 1.2 + 1.4 + 3.3 + 0.6 + 1.0 With A = Working Capital/Total Assets, B = Retained Earnings/Total Assets, C = Operating Profit/Total Assets, D = Market Value of Equity/Total Liabilities and E = Sales/Total Assets. The ratio of Tesco and Sainsbury has been negative during these past three years, respectively 0.092 ) & 0.087 ) in 2010 to reach 0.126 ) & 0.089 ) in 2012, because of a negative Working Capital (Altman, 2000). [...]

[...] Indeed, "Profit" in the English language is translated by "Profit" in the French language. The word is the same; the meaning is completely different in accounting. should be “bénéfices” and profit”. Moreover, ratios have to be interpreted and different people may interpret the same ratio in different way.) To be efficient a ratios analysis should be done with a lot of ratios. The financial statements are subject to several limitations, for example, the financial statement of Tesco plc. includes 52 weeks until February, for Sainsbury plc. includes 52 until March. [...]