Analysis of Financial Statements of Tesco Plc

This report involves in the analysis of the financial statements of Tesco Plc. It provides an overview of three main financial statements of Tesco Plc that are necessary for gaining information about the financial standing of the company.

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING AND FINANCE
Introduction
One of the major requirements of the business organizations is to provide the investors
and other users with all the accounting and financial information through different financial
reports. It is expected that all these financial statements will reflect the true financial position of
the business organizations. However, in the recent years, most of the business organizations are
not recognizing all the losses and gains in the profit and loss statement and other statements; and
this aspect is creating confusion and complexity for the users in understanding the consolidated
financial statements. This report involves in the analysis of the financial statements of Tesco Plc.
Discussion
Tesco Plc is a British multinational retailer. It can be seen in the 2018 Annual Report of
Tesco that the company has provided all the accounting and financial information of their
business with the help of financial statements like group income statement, group statement of
comprehensive income or loss, balance sheet, cash flow statement and the statement of change in
equity. From the notes to the financial statements of Tesco, it can be observed that the company
has prepared and presented their financial statements as per the regulations of International
Financial Reporting Standards (tescoplc.com 2018). At the same time, the company also follows
the principles Companies Act 2006. In this context, it needs to be mentioned that IFRS is an
international accounting standard and it plays a significant role in the correct preparation and
representation of the financial statements so that they can reflect the true financial position of the
companies. One major condition of IFRS is that the companies are needed to take into
consideration all the profits and losses of the companies so that the financial situation of them
can correctly reflect (tescoplc.com 2018).

2ACCOUNTING AND FINANCE
From the 2018 Annual Report of Tesco Plc, it can be observed that the company has
released all the information about the losses, gains, assets and liabilities through three major
financial statements; they are Group Income Statement, Group Statement of Comprehensive
Income/(loss) and Group Balance Sheet (tescoplc.com 2018). The major elements of these
statements are discussed below in relation to the main statement of the report:
In Tesco Plc, the main purpose behind the preparation of the income statement is to show
the revenue and expenses of the business so that net profit or loss can be showed. From the
income statement of Tesco Plc, it can be seen that the company has taken into consideration all
the gains and losses in order to reach to net profit or loss for the year (Henderson et al. 2015).
Tesco Plc has considered profit or losses from property related items of their business. At the
same time, they have considered the profit or loss from the joint venture and associates. It can
also be seen that Tesco Plc has considered the finance income as an important factor. At the time
to get to the profit, taxation expenses have also been taken into consideration (Edwards 2013).
This same pattern can also be seen in case of the preparation of group statement of
comprehensive income or loss. This statement shows that Tesco Plc has taken into consideration
the gains or losses from cash flow hedge; they net fair value gains or losses and reclassification
of the income statement of the company (Khan 2015). There are all many factors that have been
considered while computing the comprehensive income or loss for the year. Thus, this statement
is also an evidence that Tesco Plc has considered all the gains and losses required for getting the
comprehensive income or loss (Weil, Schipper and Francis 2013).
Another major important statement is the group balance sheet. This financial statement of
Tesco Plc shows all the assets and liabilities considered by Tesco Plc in the financial year. Tesco

3ACCOUNTING AND FINANCE
Plc has provided information of all of their assets in the form of non-current assets and current
assets. On the other hand, the company has provided all the information about their liabilities in
the form of current liabilities and non-current liabilities (Bazley et al. 2013). These sections
under the assets and liabilities consist of all the required asset and liabilities of Tesco Plc. Some
important assets are investment property, loans and advances, current tax assets, derivative
financial instrument, cash and cash equivalent and others. Some important liabilities are
borrowings, provisions, customer deposits and deposits from banks, deferred tax liabilities and
others (May 2013).
Apart from the above discussed financial statements, Tesco Plc has provided crucial
information related to their assets, liabilities, gains and losses in the notes to the financial
statements. These notes include all the required justification as well as clarification on various
financial as well as accenting treatments carried out by the Tesco Plc. The users of the financial
statements can easily refer to these notes to the financial statements at the time to analyze
different dimensions of the financial statements of Tesco Plc (Sharma and Panigrahi 2013).
Conclusion
The above discussion provides an overview of three main financial statements of Tesco
Plc that are necessary for gaining information about the financial standing of the company. It can
be seen from the above discussion that Tesco Plc has provided all the information of their
incomes as well as losses in the income statement. At the same time, the company has also
considered the crucial gain and loss factors in the comprehensive income statement. Information
of all the assets as well as liabilities can be seen in the balance sheet of Tesco Plc in the presence
of different segmentation. At the same time, information in the notes to the financial statements

4ACCOUNTING AND FINANCE
plays an important part in clearing the confusion of the users as they contain all the required
clarification as well as justification. Moreover, these notes to the financial statements support the
valuation of assets and calculation of losses and profits with the help of accounting regulations.
Thus, one can counter the provided statement with the help of this analysis as this analysis states
that Tesco Plc does not manipulate with their gains, losses and assets as they have taken into
consideration all these aspects. For this reason, these financial statements of Tesco Plc do reflect
the true financial standing of the company. Hence, this discussion proves the provided statement
wrong as companies provide all the true financial information by complying with all the
accounting rules and regulations.

5ACCOUNTING AND FINANCE
References
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https://www.tescoplc.com/media/474793/tesco_ar_2018.pdf [Accessed 18 Jul. 2018].
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methods and uses. Cengage Learning.