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Financial Statements of Tesco

   

Added on  2021-01-01

7 Pages1112 Words250 Views
FINANCE

Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3TASK 1............................................................................................................................................3Current Ratio..........................................................................................................................3TASK 2............................................................................................................................................3Companies policy on depreciation.........................................................................................3TASK 3............................................................................................................................................4Annual Report of Tesco..........................................................................................................4a. Interest Expense.............................................................................................................4b. Average Scale of Debt...................................................................................................4c. Average Cost..................................................................................................................5d. Interest Coverage...........................................................................................................5CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6APPENDIX .....................................................................................................................................7

INTRODUCTIONThe below report identifies the financial statements of Tesco. The report shows thecalculations and provides current ratio of the last three years. Further, it explains the company'spolicy on depreciation and explores whether the company's treatment of depreciation matches therequirements of the IFRS (Guo and Wang, 2019). The annual report of Tesco Plc and identifiesthe interest expense, income statement and calculates the average scale of debt. MAIN BODYTASK 1Current RatioThe current liabilities of Tesco in 2018 were (-19,238) and the current assets of theorganisation are 13,517. The calculated current ratio is 0.7 in 2018. The current liabilities of theorganisation in 2017 were 15,417 and the current assets were (-19,234). The calculated currentratio for the organisation in 2017 is 0.8. The current liabilities of Tesco were 17,866 and thecurrent ratio were 14,684 in 2016. The current ratio of the organisation is 0.8 in 2016. Working Notes: In order to evaluate the Current ratio. The formula used was CurrentRatio = Current Assets/Current Liabilities. The same formula was used in the identification ofthe current ratio for all years including 2016, 2017 and 2018. TASK 2Companies policy on depreciationIAS 16 (of the IFRS) provides two alternatives approaches which are acceptable for fixedassets to accounting. The first approach used here is the cost model under which the item of fixedassets is carried at its minus cost and its depreciation that is accumulated. The declined value of the fixed assets are known as depreciation. In IAS 16 thedepreciation is described as the decline in value of an asset in over time along with thesystematic allocation of the amount of depreciation over the useful life of an asset. The depreciation policy of Tesco asserts that the decline in value of a company's asset inits useful life which is later used in order to account for the declined value of the overall assets ofthe company. The company's treatment of depreciation matches the requirements of IFRScompletely but it explains that the value of the overall assets are determined by the depreciation

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