Non Financial Factors

TABLE OF CONTENT INTRODUCTION1 TESCOS RATIO ANALYSIS2 SUMMARY TESCOS RATIO13 comparative degree ANALYSE Tescos Vs mark and Spencers________________ _______14 fine ANALYSIS OF TESCO PLC__________________________________________ 21 CONCLUSION? BIBLIOGRAPHY? appendage 1 TESCOS PLC adjunct 2- attach AND SPENCERS- CONSOLIDATED STATEMENTS I-Introduction This report will criterion out the mo earningsary surgical procedure of Tescos and canvass it to attach and Spencers has the purpose of evaluating the attach tos virtue as enthronisation.As a well learned comp each around the world and having an classical background in the retail surround Tescos is one of the largest supermarkets in the world. reconcile in 14 countries around Europe, Asia and mating America. Tescos is ever so dealing in the pecuniary world, providing also bank and restitution services. Tesco was founded in 1919 by Jack Cohen from a market stall in seat of goernment of the United Kingdoms East End. Ov er the geezerhood our stock has grown and we now process in 14 countries around the world, utilise everywhere 500,000 people and serve tens of millions of customers both week.We endure always been committed to providing the ruff shopping experience. Today we continue to centering on doing the right thing for our customers, colleagues and the communities we serve. (Tesco 2012). The prototypical dent of this report, which is the main body, will drop pecuniary statements from 2010, 2011 and 2012, a immense with standard financial symmetry compendium to develop a clear picture of Tescos financial performance comparing to the opponent. The second section includes a comparative synopsis of the competitor strategy and also a conclusion on the performance and health of Tesco PLC establish on the familys 2010, 2011 and 2012.The third section, presents a critical outline containing the non-financial factors and risks impacting on the in store(predicate) of Tesco PLC. II -Tescos proportion analysis symmetry analytic thinking simplifies the financial statement and helps in future planning. It also helps us to declargon the full story of compounds and current performance of the political party. ratios highlight all the different factors linked with successful and unsuccessful business. It is a properly tool of financial analysis in the comp whatever. By using Ratio analysis it is easy to evaluate and understand financial health and purport of the business and mathematical future forecast of the phoner.Currency = ? (000) The father on capital employed is an important bank bill of a companys benefitability. If ROCE is high than the company is telephone healthy. In 2010 Tesco had 11. 52% ROCE which attach steady in 2011 and 2012 independently 12. 93 and 12. 64. So there is a attain equal origin for this change is that lucre subjoin. It de marchesines perplexitys ability to show net from a companys total kitten of capital. Compan ys complete(a) avail edge dimension shows that there is fairly difference in the midst of 2010 and 2012 which shows there was no any study change in their prices.In 2011 the company enter a gross profit marge ratio of 8. 30%. The positive trend in this margin shows that the company is on profi sidestepness trend and therefore is a in force(p) investing option. So there is a come-at-able reason for this change the higher(prenominal) address of production. operational Margin often diagnose to simply as a companys profit margin, there is no major change during the period from 2010 to 2012. Activity ratio 1. Assets employee turnover Asset Turnover= Sales tax revenue/Capital employed During the brook trine course of studys Tesco has improved gradually returning(a) continuously in 2011 and 2012 turnover was independently 2. 4 and 2. 06 . For most companies, their investment in net summations represents the largest component of their total summations. in that locat ion argon no significant changes in asset turnover. liquid state ratio Liquidity is a very important ratio for money lenders, suppliers and potential investors to access. jibe to the Tesco yearly statement the result from 2010 to 2012 shows that the current ratio was less than 1 which has a riddle to meet their liability in myopic term. Tescos assets are less and its liabilities are quite high which indicates companys weak current ratio and runniness problem.Quick ratio is a much materialistic (safer) measure of liquidity. A higher officious ratio implies greater safety. According to the sultry test ratio Tescos acerbic test ratio was non secure because it is down the stairs the standard. The liabilities have increase because of increase loan 2010, 2011 and 2012 respectively. In the year 2010 due eld was 12. 10 eld just after that in 2011 and 2012 fiscal year respectively it was increase to 13. 86 days and 15. 02 days, which is showing their arrangement is non go od to collect due earlier.It could affect business as well because customers always like a long era to break back whatever they have taken on credit. 2012 = 3598/59278*365 = 22. 15 days It takes Tescos approximately 19 to 22 days taken to sell its product from the time it acquire it. Inventory days increased continuously since 2010 to 2012. The possible reasons could be the companys sales are non good. Capital Gearing The term capital railroad train or supplement unremarkably refers to the proportion of relationship in the midst of impartiality apportion capital including reserves and surpluses to druthers function capital and opposite intractable touch on bearing funds or loans.As the higher a companys degree of leverage as the more the company is considered baseless. In, Tescos string scenario gearing was bring down in 2010 and 2011 separately from 0. 51 to 0. 43, and it was standstill 0. 43 in 2012, which indicates the company improving financially. So there a re possible reasons for this change, long term is decreasing in comparison with capital employed. Return on assets . The profitability ratio here measures the relationship between net profit and assets. Return on assets= Net profit before interest group and tax / Total asset*100Return on asset (ROA) indicator of how profitable a company is relation to its total asset . ROA gives us an idea of Tesco how efficient management is sat using its asset to set about earning. In 2010 return on asset was 7. 51% after that there was a decrease till 2012 to 5. 54 %. Tesco PLC has preserve in decreasing sharply abide by of P/E with note values of 14. 12, 12. 12, and 8. 74, creation recorded for 2010, 2011, and 2012 respectively ( rube pay initiative Nov 2010,2011,2012). A number of factors could be possible vary due to decreasing in P/E including increased battle for capital in market. Yahoo Finance 2012) 2. Earnings per plough lot The Earning per Share (EPS) considers the benefit tha t could be paying to each routine copeholder. The increase in profit resulted in the increase in EPS. Earnings per share Earnings o holders / No of o shares in issue 2010 = 29. 33p 2011 = 34. 43p 2012 = 36. 75p The company recorded EPS increased in 2010, 2011 and2012 respectively. There could be number of reason for increasing earnings per share. Possible reason could be the increase in profit, increasing in loan. exactly it would non be the long term sustainability. 3.Dividend Dividend per share (DPS) is the sum of declared dividends for both ordinary share issued. DPS is the total dividends paid out over an entire year divided by the number of expectant ordinary shares issued. Tesco financial statements indicate that dividend ease up for the company has been rising in the last five long time. The company recorded dividend yields of 3. 15%, 3. 56 %p and 4. 59% for 2010, 2011 and 2012 respectively (Yahoo Finance 1st Nov 2010, 2011, 2012). This is an mark that investor will t o invest in the company have a chance of receiving better dividend in the future. Yahoo Finance 2012) In 2011 companys debt/equity ratio was higher to1. 04, which is not very good indication for the company. Because it heavily depends on loan is not a good policy for any business. But it was reduced the next years in 2011 and 2012 respectively 0. 77 and 0. 77. Debt to lawfulness Debt to equity = Non-current interest bearing debt candour It is used to determine how easily a company can pay interest expenses on outstanding debt. In 2010 companys interest coverage was 5. 99 times which increased in 2011 to 10. 47 times precisely in 2012 decreased slightly to 9. 5. The companys profit has increased to pay their interest easily. adaptation and ratio analysis conclusion In the year 2012 Tescos activity, profitability, liquidity ratio, financial gearing, and investment ratio was comparing with the precedent year ratio. In the activity ratio net assets turn increased. Liquidity ratio was quite reasonable due to the scotch look into and creditor days decreased which was not good for the company. financial gearing was not satisfactory and finally, investment ratio increased margin which indicates revenue.The organization managed to increase its return on capital and assets turn over remarkably. Tesco has slightly increased its receivable and collectable credit payment period soon showing its financial position. On the another(prenominal) side, it can also be an luck for the customers to attract more customers as they always prefer to hold back as ofttimes as possible. There is no major difference in the net profit and gross profit margin that means Tesco did not bring any change in its prices and there was not any external pressure from organization or competitors.Liquidity of Tesco shows not a major decline over the past 3 years even though it is below 1 which is quite risky condition because current ratio below 1 means liabilities are more and assets are very less. If there will be major decline in the business, the company will not be able to pay their short term liabilities. The stave report shows that they are reducing the gearing but we Tesco improved its shares value by having an increase in the dividends per share and share price. Investors will be attracted by this but this will not detain for long. Yahoo Finance, 2012) III-Comparative Analyse Tescos Vs Marks and Spencers We can use Ratio Analysis to do a comparative analysis and seeing our performance with respect to our competitors. For this I have taken Marks and Spencer concourse PLC and compared it with Tesco PLC to see the Standing of my company with other company. This helps us to know our strengths and weaknesses in all the areas of the business. Summary of Comparative Results between M & S and Tesco (2010-2012) Revenue and Operating pelfThe revenues earned by the company and the train of direct profit does tell us the size , capacity and type of musician th e company is in market. The Tescos Operating profit s increase over the years but if we see the table below M & S, they reduced the operating cost, but the revenue increased forever as well. Chart Tesco & M and S Revenue Comparison The Comparison of Tesco and Marks & Spencer tells us that Tesco is a much big company and has a much higher turnover. But through its policies we see that the level of Operating profit of Tesco is higher because of its unfaltering Optimization policies and procedures.Ratios comparison between M& S and Tesco Tescos and M & S ratio analysis Ratio Analysis helps us to inform the entire story of changes and current performance of the company. = 12. 93% 2012 = 3985/ (13731+17801) *100 = 12. 64 % The return on capital employed is an important measure of a companys profitability. If ROCE is higher than it the company is go away healthy. If we see the chart we can M is in stronger condition. 2011= 9740. 30/ (2677. 40+2456. 50) =2. 46 2012= 9934. 30/ (2778. 8 0+2489. 10) = 2. 49 = 0. 43 2012 = (1460. 10-681. 90) /2005. 40 0. 38 Earnings per share Earnings o holders / No of o shares in issue 2010 = 29. 33p 2011 = 34. 43p 2012 = 36. 75p M & S 2010 = 33. 50 p 2011 = 38. 80 p 2012 = 32. 50 p The increase in earnings per which is attractive point for investors. Tesco Earning per share increased on 2012 while M Earning per share decreased. 2012 = 2489. 10/2778. 80 = 0. 89% Tesco debt/equity ratio was higher to 1. 04 %, which reduced the take uping years in 2011 and 2012 respectively 0. 77% and 0. 77%. While M & S was 1. 40 % on 2010 & its got bit better on following years.IV-Critical Analysis of the non- financial factors and risks for Tesco PLC In todays ecumenical competitive environment organisations have to argue with others regarding a wide range of field like product quality, delivery, reliability, after-sales services, brand, customer complaint and feedbacks (Chairman, FTSE 100 Company, 2003) The financial ratio analysis done above, is very useful as it summarises all the necessary information in order to understand the health of a company, covering profit, liquidity, growth and risk of a company.But it is also essential to look at the non financial factors that can have a huge impact on a companys future potential. V-Conclusion winning into consideration the ratio analysis utilize to Tescos between 2010 and 2012 what can be noticed is that the company had some variation. According to level of risk, Tescos is less risky than M&S in impairment of investment considering that in 2010, 2011 and 2012 had as gearing ratios 1. 04 %, 0. 77% and 0. 77% respectively and M & S for the same period 1. 40 %, 0. 92% and 0. 89%. As much higher is the gearing ratio more vulnerable is the company to downturns.With an improvement of its shares value by having an increase in the dividends per share and share price, Investors will be attracted by this but this will not stay for long. Moreover considering how much cash fertiliz e is available for each pound invested, which is show by the dividend yield, Tescos in 2010 had a variation from 3. 15% to 4. 59% in 2012 which is positive for the business. On the other hand, Tescos reacted negatively into the full analysis of profitability, ability and effectiveness, liquidity and investor ratios.As an example, the investment per share had a decrease of 5. 38 from 2010 to 2012 and also receivable days had a considerable increase which is a negative impact. Despite of having abase prices than M&S with strong position in UK and also in other continents, Tescos might be a good investment in the future, depends on its performance and long-term investment for the follow years. However currently it is not an investment to be considered. Bibliography London Stock telephone exchange (2012). Tesco PLC ORD SP. London Stock Exchange (2012). Marks and Spencer Group PLC ORD 25P.Available athttp//www. londonstockexchange. com/exchange/prices/stocks/ stocky/fundamentals. html ? fourWayKey=GB0031274896GBGBXSET1 Mark and Spencer (2010)-Annual Report and Financial Statements. Available at http//corporate. marksandspencer. com/documents/publications/2010/annual_report_2010 http//corporate. marksandspencer. com/documents/publications/2011/annual_report_2011 http//corporate. marksandspencer. com/documents/publications/2012/annual_report_2012 (Yahoo Finance, 2012) http//www. bizmove. com/finance/m3b3. htm attachment 1 APPENDIX 2 APPENDIX 1 APPENDIX 2