TESCO PLC Analysis | Report

Running Head: TESCO PLC ANALYSIS 1
TESCO PLC ANALYSIS

Running Head: TESCO PLC ANALYSIS
Table of Contents
Tesco Introduction...........................................................................................................................3
Financial position and Analysis.......................................................................................................3
Good investment or not...................................................................................................................3
Limitations of Analysis....................................................................................................................3
References........................................................................................................................................4

Running Head: TESCO PLC ANALYSIS
Tesco Introduction
The most renowned company situated in Welwyn Garden City, Hertfordshire and belongs to
British arena; Tesco Plc has been discussed in this report. Founded in the year 1919, 100 years
ago, the company is engaged in the business of groceries and general merchandise. The current
operations of the company are in United Kingdom, Ireland, India, Malaysia, Thailand, Czech
Republic and Hungary. The company has almost 6800 shops operating having a current revenue
of £63911 million. The net profit being 1320 million for the financial year 2019 and this has
been achieved only with the help of 450000 employees. There are so many subsidiaries of the
company such as Tesco Ireland, Tesco Mobile, Dunnhumby. The key people associated with this
company are John Allan who is Chairperson and Dave Lewis who is CEO of the company.
Under this report a detailed financial analysis has been undertaken via implementing the ratio
analysis technique and at the same time to figure out whether it shall be a good investment or
not. Further, the limitations have also been listed in the report which have been found out and
stated.
Financial position and Analysis
The financial performance and valuation report on Telco Plc will cover the last two financial
years that is 2018 and 2019. In order to analyze the financial statements the company has chosen
the ratio analysis technique which will evaluate the company from all the aspects. These ratios
have been calculated and analyzed below in detail (Goldmann, 2017). The organization's
exhibition will likewise be contrasted with different firms inside the retail and discount industry
particularly contenders. Financial investigation figuring will be remembered for the reference

Running Head: TESCO PLC ANALYSIS
sections and some other data portrayal as diagrams. Estimations were finished utilizing
Microsoft Excel
Financial ratio Formula
Net profit (profit after tax / Net sales) * 100
Return on equity (profit after tax / equity) * 100
Current ratio current assets / current liabilities
Quick ratio (current assets – inventory) / current liabilities
Times interest coverage ratio (EBIT/ interest expense)
Debt ratio totals liabilities / total assets
Debt to equity ratio total liabilities / total equity
Total Asset turnover ratio Net sales/ Average total assets
Days receivable outstanding Accounts receivables *365 / Credit sales
Profitability
The profitability of any company can be analyzed with the help of calculating ratios such as net
profit ratio and return on equity ratios. The net profit is an important financial metric that is used
to analyze how profitable the business is and how much share will be available to the
shareholders as well as investors. The net profit ratio of Tesco PLC, is too low as it is 2.07% in
the year 2018 and the same was 2.10%. This indicates not much profit has been kept to distribute
to the shareholders.