Tesco Three Year Analysis

Q1.

The main business and strategic aim of TESCO is “to be an outstanding international retailer in stores and online” (TESCO, 2013; p.13). It has stores mainly in Europe and Asia. Retails in grocery, food (including fish, chicken, beef, spices, bakery items, soft drinks, & alcoholic drinks), general merchandise and financial services (mortgages & car loans etc).

Q2.

Company Act 2006 requires all the public limited companies (plc) in the UK to be audited every financial year. TESCO plc, trading as TESCO is a British company, headquarters based in Chestnut (Companies House, 2014) is therefore required to have a yearly audit.

Pricewaterhouse Coopers LLP, one of the Big 4 accountancy firms in the world, is the independent auditors of TESCO. They have given an unqualified opinion in their auditor’s report (TESCO, 2013) while commenting that TESCO has prepared its financial statements in accordance with international financial reporting standards (IFRS) and its profit give a true and fair view.

It is very important to obtain an unqualified report (“a good report”) by the auditors as it will increase public’s confidence while doing business with TESCO and it shall be able to raise funds by means of selling its shares instead of taking out an expensive long-term loan for its expansion.

On a different note, auditors have stated that they want to look further into the Director’s remuneration (TESCO, 2013) and parent company, TESCO PLC has not kept adequate accounting records (TESCO, 2013).

Q3.

Ratio | Expression | 2013 | 2012 | 2013result | 2012Result | IndustryAverage |

Eg Trade receivables period | Trade RecSales×365 | 16.416152.661×365 | 10.217142.231×365 | 39 days | 26 days | - |

ROE | Net IncomeShareholder's Equity | n/a | n/a | 12.7% | 14.7% | 19% |

Gross profit margin | Gross ProfitRevenue X 100% | 4.58b64.8b X 100% | 5.39b63.9b X 100% | 7.06% | 8.43% | 10% |

Net profit margin | Net ProfitRevenue X 100% | 0.124b64.8b X 100% |...