Finance Statement of Tesco Assignment
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Added on 2021-02-19
Finance Statement of Tesco Assignment
Added on 2021-02-19
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FINANCE
Table of ContentsINTRODUCTION...........................................................................................................................32.1 Financial analysis:.................................................................................................................32.2 Valuation of company:........................................................................................................142.3 Capital structure..................................................................................................................19CONCLUSION .............................................................................................................................22REFERENCES..............................................................................................................................23
INTRODUCTIONThe finance is a basic element for a business because it fulfil the need of fund to operateall type of activities which are being performed in an organisation (Morris, 2012). In the absenceof sufficient finance, it can be difficult for businesses to sustain in competitive environment. Foreffective management of finance, companies prepare various kind of financial statements such asincome statement, balance sheet, cash flow, ratios calculation etc. The companies assess theperformance of various activities as per analysis of these financial statements. Herein, the projectreport Tesco company's financial performance is analysed and compared with competitor so thatissue of their shareholders regarding to pension fund can be resolved. Further, in report valuationof Tesco is done in terms of asset based valuation, dividend valuation model. Additionally, somecalculation is done such as cost of debt, equity, weighted average cost of capital on the basis ofgiven information. 2.1 Financial analysis:(a) Financial analysis-To analysis of financial position of above Tesco company, various types of financialstatements such as income statements, balance sheet, cash flows and ratios are interpreted.Herein, below Income statement of Tesco company is analysed that is as follows:
Income statement for year ending 2018 of Tesco PlcAnalysis- On the basis of above income statement of Tesco plc, it can be analysed thatcompany's overall financial performance is in good condition. It is so because their gross profit isof £4144 GBP million and in compare their operating expenditures are of £2068 GBP millionwhich are not in huge amount (About financial statement of Tesco, 2019). As well as their netincome from continuing operations is of £1320 GBP million and to share dividend withshareholders, they have net profit of £1322 GBP million. It shows that their financial condition iswell enough to pay the pension to their shareholders.Comparison of income statement of Morrison's with the Tesco Plc:Income statement for year ending 2018 of Morrison's plc
Differentiation:ParticularTesco(Amount in £ GBPmillion )Morrisons(Amountin £ GBP million )Difference(Amount in£ GBPmillion )Net income13203111009Net income available forshareholders13223111011EBITDA33438622481Analysis- On the basis of above comparison of both companies' income statement, this can beanalysed that Tesco seems to be more comparable and strong in compare to Morrisons. It is sobecause net income of Tesco plc is of £1320 GBP million while Morrison's income is of £311GBP million. Along with comparison between both companies' net income is of £1009 GBPMORRISON (WM) SUPERMARKETS PLC INCOME STATEMENT2018-19Revenue17735Cost of revenue17128Gross profit607Operating expensesSales, General and administrative303Other operating expenses-88Total operating expenses215Operating income392Interest Expense50Other income (expense)-22Income before income taxes320Provision for income taxes76Net income from continuing operations244Net income244Net income available to common shareholders244Earnings per shareBasic0.52Diluted0.51Weighted average shares outstandingBasic471Diluted482EBITDA813
million. As well as availability of net income for shareholders is also different of bothcompanies. Like £1322 GBP million (Tesco) and £311 GBP million (Morrisons). Hence, as perthe above comparative analysis of both companies, this can be said that Tesco company iscapable for making payment to their shareholders.Balance sheet of Tesco company for year 2018:TESCO PLC BALANCE SHEET2018-19AssetsCurrent assetsCashCash and cash equivalents2916Short-term investments457Total cash3373Inventories2617Prepaid expenses319Other current assets6678Total current assets12668Non-current assetsProperty, plant and equipmentFixtures and equipment7063Other properties24949Property and equipment, at cost32012Accumulated Depreciation-12989Property, plant and equipment, net19023Goodwill4909Intangible assets1355Deferred income taxes132Other long-term assets10960Total non-current assets36379Total assets49047Liabilities and stockholders' equityLiabilitiesCurrent liabilitiesShort-term debt1563Capital leases36Accounts payable9354Taxes payable325Other current liabilities9402Total current liabilities20680Non-current liabilitiesLong-term debt5580Capital leases93Deferred taxes liabilities236Pensions and other benefits2808Minority interest-24Other long-term liabilities4816Total non-current liabilities13509Total liabilities34189Stockholders' equityCommon stock490Additional paid-in capital5165Retained earnings5405Accumulated other comprehensive income3798Total stockholders' equity14858Total liabilities and stockholders' equity49047Analysis- On the basis of balance sheet of above companies, this can be analysed that company'stotal current assets are of £12668 GBP million that are less then to current liabilities which are of£9402 GBP million. It indicates that company's liquidity position is good due to availability of
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