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Financial Analysis Management & Entrepreneurship : Report

   

Added on  2020-07-23

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Financial AnalysisManagement & Entrepreneurship

Table of ContentsINTRODUCTION...........................................................................................................................11 Evaluation of the financial performance and financial position of Walmart and Tesco..........12. Evaluation of the Working Capital.......................................................................................193. Evaluation of cash flow.........................................................................................................20CONCLUSION..............................................................................................................................22REFERENCES..............................................................................................................................23

INTRODUCTIONIn this report, analyses of the financial performances of two companies Walmart andTesco has been done. Both company has compared through ratio analysis and vertical andhorizontal analysis of both the companies. Their working capital has been evaluated in thisreport, to find the efficiency of Walmart and Tesco during operations. Cash flow analysis willrecommend which company is more liquid. Walmart is an American transnational selling corp that run as a chain of supermarket anddeduction division stores. It has 11.695 stores and approaches to 28 countries. Its hasapproximate revenue of $480 billion. Tesco is also a British multinational grocery retailer as likeWalmart. It is leaded by Walmart in total number of stores. Because Tesco has only 7000 storesacross the countries. It has recorded $73.59 billion as a revenue at the end of 2016. So againWalmart is leading with $480 billion revenue which is 5 times greater than TESCO.1 Evaluation of the financial performance and financial position of Walmart and TescoTo understand the value a company, investors have to look firm's financial positions(Burns, 2010). Financial analysis involves the use of financial statements, horizontal and verticalanalysis, ratio analysis, etc. to find the actual positions of two companies. Financial statementsconsists Income Statement, cash flow statement and Balance sheet of a company. Below is thefinancial statements of Tesco and Walmart over 4 years from 2013 to 2016:Horizontal Analysis of TESCO's income statement: Total Revenue: Company's total revenue is declining continuously from 2013 to 2014 asin 2013 it records approx $63 billion revenue which decline in 2014 by approx 11% and2015 it again records approx 5% shortfall in revenues. But due to implementing attractivestrategies its revenue again increased approx 4.2%. Still Tesco needs more improvement.It should increase advertisements, improve its quality services and should examine themarket.Interest Expenses: Tesco's paying more interest on its debts, as from the figure it isclearly shown that its besides decreasing in its total revenue, its interest expenses isincreasing continuously. Which indicates that the company is utilizing more fundscomparing to previous years. So it can use these funds either in the expansion of the1

business or in promotion. But Tesco has declining revenues thus it is clear that companyhas invested its debt funds in opening new stores.Net Income: Tesco's net income is not stable. As company is only earning profit in 2013and 2015. But it has incurred huge loss in 2014 which is approx $5.74 billion. It indicatesthat company was fail to control its costs of goods sold and other operating expenses withthe decline in Total revenues.2

(Source: Yahoo finance)BALANCE SHEET OF TESCO3Income statement of TescoAll numbers in thousandsRevenue25/02/1627/02/1528/02/1422/02/13Total revenue55295000533570005638800063050000Cost of revenue52932000511840005432000058876000Gross profit2363000217300020680004174000Operating expensesResearch development--------Non-recurring----Others----Total operating expenses54122000525510005626900060069000Operating income or loss11730008060001190002981000Income from continuing operations----11730008060001190002981000Interest expense-513000-480000-487000-441000Income before tax----Income tax expense87000-54000-670000347000Minority interest--------Non-recurring eventsDiscontinued operations-112000-127000-102000-942000Extraordinary items----Effect of accounting changes----Other items----Net incomeNet income-40000138000-5741000974000--------Selling general and administrativeTotal other income/expenses netEarnings before interest and taxesNet income from continuing opsPreferred stock and other adjustmentsNet income applicable to common shares

(Source: Yahoo finance)4BALANCE SHEET OF TESCOAll numbers in thousandsPeriod ending25/02/1627/02/1528/02/1422/02/13Current assetsCash and cash equivalents3032000252800015490002021000Short-term investments301100035200005930001016000Net receivables1488000142100017850001881000Inventory2301000243000029570003576000Other current assets6300004120002920002567000Total current assets15417000146840001195800015572000Long-term investments1562000186300019150001301000----Good will1792000182700022880002286000Intangible assets----Accumulated amortisation----Other assets----7070004900051400073000Total assets45853000439040004421400050164000Current liabilitiesAccounts payable88750008293000967700010359000Short/current long-term debt12153000139430001265900011365000Other current liabilities12830008410008600002036000Total current liabilities19405000178660001981000021399000Long-term debt949000011029000105200009340000Other liabilities-------885000Minority interest----Negative goodwill----Total liabilities39439000352880003714300035442000Stockholders' equityMisc. Stock options warrants----Redeemable preferred stock----Preferred stock----Common stock5505000550200055000005485000Retained earnings332000326500019850009728000Treasury stock601000-141000-414000-498000Capital surplus10300088000131000115000Other stockholder equity----Total stockholder equity----Net tangible assets----Property plant and equipmentDeferred long-term asset chargesDeferred long-term liability charges

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