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FINANCIAL ANALYSIS AND MANAGEMENT INTRODUCTION OF MARKET AND INDUSTRY FINANCIAL ANALYSIS RECOMMENDATION
Retail Industry
TRADITIONAL RETAILING BUSINESS HAS BECOME TO BE A FAST-GROWING INDUSTRY WITH GLOBALISATION AND INFORMATION TECHNOLOGY DEVELOPMENT AT CURRENT STEP, IT IS WISE TO INVEST IN A FAMOUS MULTINATIONAL RETAILING COMPANY THAT HAS A WORLDWIDE CUSTOMER MARKET, STRONG COMPETITION ABILITY, STABLE OPERATION CONDITION AND GOOD POTENTIAL PROSPECT
with supermarket chains securing their place at the top of the worlds retail chain. Obstacle of stricter legislation on expansion, superstore retailers have sought different formats 1. Using in store services 2. Downsizing stores 3. Promoting click and collect services
Trend
Global Industry Analyst Global supermarket food
products sales are predicted to generate revenue in excess of $1.7 trillion by 2015 Market growth has been driven by the rising importance of consumerism. Economic recession number of consumer visits to supermarkets has fallen over recent years. However, average spends-per-visit have risen.
Tesco at a glance
Founded in 1919
14 countries Employing almost 520000 people and serving millions of customers every week Multi-format
Positioning
Customer relationship management
and online To be as strong in everything we sell as we are in food To grow retail services in all our markets To put our responsibilities to the communities we serve at the heart of what we do To be a creator of highly valued brands To build our team so that we create more value
Performance in 2012
VERTICAL ANALYSIS HORIZONTAL ANALYSIS
1 REVENUE
2 OPERATING PROFIT 3 NET PROFIT AFTER TAX
64,539
3,985 2,965
60,455
3,917 2,777
241
1,183
333
1,083 SEN PER SHARE
14.8
SHARES
50,781 12,863
47,206 12,039
3 ALL INVENTORIES
4 ALL ACCOUNTS RECEIVABLE 5 CASH & CASH EQUIVALENTS 6 CURRENT LIABILITIES
3,598
2,657 2,305 19,249
3,162
2,330 2,428 17,731
7 TOTAL LIABILITIES
8 TOTAL EQUITY 9 TOTAL BORROWINGS
32,980
17,801 11,749
30,583
16,623 11,075
OPERATING PROFIT MARGIN NET PROFIT MARGIN OPERATING ROI NET ROI
ASSET UTILISATION
1.3
1.3
million
Interpretation
Profit margin business was not that good as last year
the main market like USA an London Revenue of sale also decline relative to total assets that is "1.28 to 1.27" Overall profitability base on return on investment has declined according to the previous years.
20.4 15.0
19.1 14.1
35.4
33.2
Interpretation
The company cash resource can't meet up to it
current liabilities as cash is less than 1 Need to increase cash resources because this could cause instability to the cash flow system. Working capital period is good since is lesser than 90 days, indicating a healthy turnover All transaction in the retails industry or Tesco precisely is done by cash on delivery or cash before service
GEARING
66.0
66.6
ASSET FINANCING
23.1
23.5
INTEREST COVER
16.5
8.3
Interpretation
Conservative due to low gearing ratios 2. Normal level of borrowing (between 10-30)
1.
2012
2011
ROE
DIVIDEND PAYOUT EPS P/E RATIO
16.6
40.0 14.8
16.7
39.0
Interpretation
Return to shareholder is a double digit
Overall Performance
Decline in profitability
OPERATING PROFIT MARGIN NET PROFIT MARGIN OPERATING ROI NET ROI
ASSET UTILISATION
CURRENT RATIO
1.3
0.7
2.3
0.9
million
AR DAYS WORKING CAPITAL DAYS GEARING ASSET FINANCING INTEREST COVER ROE DIVIDEND PAYOUT EPS P/E RATIO
21.7
Market Outlook
Still suffering the negative impact of economic
recession Related decline in levels of disposable income Consumer demand for better value for money and greater interest in discount supermarkets Global Industry Analysts predicts recovery from economic recession will put the spotlight back on supermarket industrys growth fundamentals.
Recommendation
Shares are currently not doing better so HOLD Bonds Invest because it gives 5% interest . Overall outlook for investment is NEGATIVE
Balance Sheet: A financial statement that summarizes a company's
assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. idea for the investment.
Averaging the growth over the past 5 to 10 years can give you a better