Financial Statement Analysis

Running head: FINANCIAL STATEMENT ANALYSIS
Financial Statement Analysis
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1FINANCIAL STATEMENT ANALYSIS
Table of Contents
Introduction:...............................................................................................................................3
Role within the wider international market:...............................................................................3
Competitors and current market conditions impacting financial performance:.........................3
Development in both external and internal environment:..........................................................4
Ratio Analysis:...........................................................................................................................5
Profitability Ratios:....................................................................................................................5
ROCE:....................................................................................................................................5
Gross Profit Ratio:..................................................................................................................5
Operating Profit ratio:............................................................................................................6
Liquidity Ratios:.........................................................................................................................6
Current Ratio:.........................................................................................................................6
Acid Test Ratio:.....................................................................................................................7
Activity Ratios:..........................................................................................................................7
Trade receivables Collection Period Ratios:..........................................................................7
Trade Payables Payment Period:............................................................................................8
Inventory Turnover Period Ratio:..........................................................................................8
Solvency Ratio:..........................................................................................................................9
Debt to Equity Ratio:.............................................................................................................9
Debt to Total Asset:...............................................................................................................9
Interest Cover Ratio:............................................................................................................10

2FINANCIAL STATEMENT ANALYSIS
Market Position Analysis:........................................................................................................10
Earnings per Share:..............................................................................................................10
P/E Ratio:.............................................................................................................................11
Dividend Yield:....................................................................................................................11
Recommendations:...................................................................................................................12
Conclusion:..............................................................................................................................12
References:...............................................................................................................................13

3FINANCIAL STATEMENT ANALYSIS
Introduction:
Tesco Plc that has the trading name of Tesco is regarded as the British multinational
groceries and general merchandise retailer that has headquarter in Welwyn Garden City
Hertfordshire, England (Tesco plc 2019). Tesco is regarded as the third largest retailer in the
world in terms of the gross revenue generated and ninth largest in the world based on the total
revenues. Tesco was founded during the year 1919 and expanded globally from the early
1990 having operations in 11 other countries.
Role within the wider international market:
Considering the role of Tesco in the international market the company mainly
operates through joint venture with local firms. The success of Tesco in the international
market is generally aided by the local culture that makes it easy for the company to offer
customers in the international market by serving as per their needs (Wood, Wrigley and Coe
2016). Tesco plays a vital role in the international market to promote joint venture and
networks among the business associates to establish the contacts with the local suppliers.
Competitors and current market conditions impacting financial performance:
Tesco faces intense competitors from Aldi and Lidl Stiftung & Co.KG, Sainsbury and
Morrison. Tesco leads the UK retail market with market share of 28% however the business
faces strong competition from Sainsbury, Asda and Morrison. These brands compete heavily
among themselves and are generally known for their penetrative pricing strategy. Even
though Asda and Sainsbury are second and third largest retailer in UK but they are better
known for their expansion stores in the supermarkets. Morrison is also not far away in terms
of competition with approximately 10.7% of the market share from Tesco. Morrison also has
tie-ups with several farmers that directly supply their groceries to Morrison which reduces the
cost distribution and increases competition.