TESCO

Financial Performance of Tesco

Financial Performance of Tesco

Introduction

Tesco is a multinational British retailer, from small shops to hypermarkets, based in the UK. The principal activity of company is retailing and related activities in the United Kingdom, China and U.S. etc. Tesco operates compact hypermarkets, convenience stores, department stores, hypermarkets, supermarkets and superstores. Company also offers services in insurance services and retail banking, in which Tesco provides three sorts of products that include credit, insurance and savings.

Tesco is present in Europe with 825 stores across six countries (117 in Ireland, 313 in Poland, 164 in Hungary, 74 in Slovakia, 127 in the Czech Republic and 30 in Turkey) and Asia with 1,136 stores (137 in Japan, 280 in South Korea, 30 in Malaysia, 614 in Thailand, 71 in mainland China, and four in Taiwan). Tesco was also present in France, via a store in Calais, specializing in the sale of alcohol to British. This is explained by smaller taxes on alcohol in France and Britain. The turnover in 2006 was 2 million pounds.

Financial Analysis of Tesco

Key Financials

(In GBP as of 02 / 25 / 2012) Income Statement

Revenue

64,539 m

Net Income

2,806 m

EPS - Net Income - Diluted

0.35

Revenue per Share

8.07

Balance Sheet

Total Assets

50,781 m

Total Liabilities

33,006 m

Shareholders' Equity

17,775 m

Total Assets per Share

6.32

Net Assets per Share

2.21

Cash Flows

Cash from Operations

4,408 m

Cash from Investing

- 3,183 m

Cash from Financing

- 1,366 m

Cash Flow per Share

0.55

From the key financials of Tesco plc, it can be said that the assets of the company are financed by the liabilities; which is not a good sign for Tesco as the long-term and short term liabilities of the company are not steady. Furthermore, the equity of company appears to be satisfactory; however, in comparison to liabilities, the equity position of the company is not appropriate so that it needs to be increased as that the company can be able to pay off it debts. In addition to this, net assets per share of the Tesco is 2.2 and total assets per share is 6.3 that shows that company assets composition is in good shape that indicates that can pay off its debt; however, it is necessary and essential that assets should be utilized properly. Besides it, the cash flow of the company is 0.55 that seems to be encouraging for the company as the overall the operating cash flow of company is in good shape; however, investing and financing cash flows are not in favour of Tesco.

Ratio Analysis

Profitability Ratios

02 / 25 / 2012

02 / 26 / 2011

02 / 28 / 2010

02 / 28 / 2009

02 / 23 / 2008

ROA % (Net)

5.74

5.73

5.05

5.58

7.75

ROE % (Net)

16.4

17.15

16.9

17.18

19.08

ROI % (Operating)

12.67

12.27

10.76

11.86

14.47

EBITDA Margin %

6.45

6.47

6.46

5.97

6.3

Calculated Tax Rate %

23.48

24.84

26.73

27.71

24.67

Liquidity Ratios

02 / 25 / 2012

02 / 26 / 2011

02 / 28 / 2010

02 / 28 / 2009

02 / 23 / 2008

Quick Ratio

0.43

0.43

0.51

0.57

0.32

Current Ratio

0.67

0.67

0.73

0.78

0.61

Net Current Assets % TA

(12.44)

(12.42)

(9.23)

(8.67)

(13.14)

Debt Management

02 / 25 / 2012

02 / 26 / 2011

02 / 28 / 2010

02 / 28 / 2009

02 / 23 / 2008

LT Debt to Equity

0.56

0.59

0.8

0.96

0.51

Total Debt to Equity

0.66

0.67

0.91

1.27

0.68

Interest Coverage

11.91

10.13

7.39

9.61

16.37

Efficiency Ratios

02 / 25 / 2012

02 / 26 / 2011

02 / 28 / 2010

02 / ...