Tesco Financial Analysis Report: 2016, 2017, and 2018

This report provides a financial analysis of Tesco's performance between 2016 and 2018. The analysis focuses on key financial metrics such as revenue, cost of sales, and gross profit margins. The report highlights the fluctuations in gross profit margins, comparing the years 2016, 2017, and 2018. It discusses the factors influencing these changes, including increases in sales versus increases in the cost of sales, and potential impacts of inventory valuation. The report references sources to support its findings and provides a comprehensive overview of Tesco's financial health during the analyzed period, offering insights into the company's strategies for improving profit margins.

TESCO

Table of Contents
MAIN BODY.......................................................................................................................................4
REFERENCES.....................................................................................................................................4

MAIN BODY
Tesco 2018 2017 2016
Revenue 57491 55917 54433
Cost of sales 54141 53015 51579
Gross profit margin 3350 2902 2854
Gross profit margin=gross
profit/revenue*100
5.82699900
85
5.18983493
39
5.24314294
64
The gross profit margin have not much changed in the three years that is from 2016 to 2018, the
company's gross profit have reduced just by 0.05% from 2016 to 2017 and increased by 0.64% from
the year 2017 to 2018.(Gonen, 2017) The reason for the decrease in 2017 is firstly though the sales
has increased by around 2.72% but the cost of sales has increased by 2.78%, this is one of the basic
reason because of the slight reduction in the GP margin. These increase in the cost of sales may be
due to the increase in the raw material prices, labour prices, or any other direct cost incurred by
Tesco or may be due to the over valuation of opening stock or under valuation of the closing stock.
This can be easily controlled as there is only a slight reduction of 0.05%.
The increase of 0.64% in the gross profit margin in the year 2018 is due to the sales has
increased by around 2.82% but the cost of sales has increased by just 2.12% which is showing the
increase in the GP margin by 0.64%. This increase is may be due to under valuation of opening
stock or over valuation of the closing stock.
Tesco need to devise some good strategies in order to increase the sales so that there profit
margin can be improved. (Wood, Coe and Wrigley 2016)
REFERENCES
Books and journals
Gonen, N.,and et.al., 2017. Normal levels of Sox9 expression in the developing mouse testis depend
on the TES/TESCO enhancer, but this does not act alone. PLoS genetics. 13(1).
p.e1006520.

Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability transference:
exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies.50(3).
pp.475-495.