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| Words: 627 | Submitted: 04-Oct-2011
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Tesco’s earnings per share have increased steadily over three years, from 22.36 pence to 29.12 pence, making it a good target for potential investors. The dividends paid to shareholders have also increased which can be expected considering its excellent increase in earning per share value. Apart from the profit and share price the company came top in other categories of the business also namely quality of goods & services provided to the customers, marketing value. Tesco’s sparkling growth pushed its main rivalry Sainsbury to third position which was the biggest grocer in UK until 1995. From then onwards Tesco became the UK’s leading grocer and still maintaining its position in the market ahead of the tough competition with Morrison and Sainsbury. The company’s performance is analyzed more deeply using ratio analysis.
The purpose of this report is to prepare an analytical review of the financial position of Tesco PLC, using the analysis of ratios as a financial tool. This report is prepared for the investors (shareholders), based on the latest available Tesco’s annual report, to identify and reconcile the company’s profit position and identify trends in the business performance.
The information used will be taken from the company’s annual report of 2007, 2008 and 2009.
This report will also compare Tesco, with its competitors J Sainsburys PLC and Morrisons
Tesco PLC is the 3rd largest grocery retailer in the world. It has 4331 stores in 14 countries, although United Kingdom market still represents the largest source of income.
In the UK, it operates through small grocery stores under Tesco metro brand name, smaller neighbourhood stores called Tesco express and big supermarkets (Tesco Extra and 24-hour stores).
Apart from grocery, which is the core business, Tesco PLC has also diversified into non-food items like household goods, electrical appliances, clothing, home furnishings, petrol stations, online shopping, telecoms and financial services.
Its main strategies are to maintain a strong UK core business, become as strong in non-food as in food, extend operations into retailing services (Tesco Finance, Tesco.com, Telecoms), develop international operation and actively support the local communities.
Tesco PLC has continued to grow despite the current economic downturn. It has recently acquired the remaining 50% of Tesco personal finance from Royal Bank of Scotland.
Tesco has 37 green stores across the group; including the most recently opened and the greenest in Manchester, United Kingdom.
Tesco has also been involved in charity and has raised £6.2 million for Marie Currie Cancer Care.
Financial ratios are used to look at the financial position and performance of Tesco PLC to be able to look at the financial strengths and weaknesses.
The accounting policies adopted by Tesco PLC have been consistent (International Financial Reporting Standards), although there were few changes this year, as ...
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