Chapter 16 Tesco plc 2005. Financial Information Analysis2 Copyright 2006 John Wiley & Sons Ltd Issues Text has stressed importance of: ratios as a means.

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Presentation transcript:

Chapter 16 Tesco plc 2005

Financial Information Analysis2 Copyright 2006 John Wiley & Sons Ltd Issues Text has stressed importance of: ratios as a means to an end interpretation informed by as wide a frame of reference as possible accounting as an aid to decision-making Any report must respect these Importance of being sensitive to: likely users decision-making context

Financial Information Analysis3 Copyright 2006 John Wiley & Sons Ltd Typical report Reports contain some or all of the following: Background SWOT analysis Financial Analysis Management efficiency (Activity + Liquidity) analysis Financing analysis Profitability analysis Governance Strategic objectives Other relevant issues Conclusion – Buy/Sell/Hold Appendices

Financial Information Analysis4 Copyright 2006 John Wiley & Sons Ltd Tesco plc 2005 Executive Summary Global leader: Turnover: £34b Pre-tax Profits: £2.03b Market value: £24.7b European expansion progressing well S.E. Asian expansion healthy but problematic World leader in online grocery sales Presence established in Telecoms Non-food turnover increasing significantly Financial services area being developed Funding available for continued expansion

Financial Information Analysis5 Copyright 2006 John Wiley & Sons Ltd Tesco plc illustrative ratios

Financial Information Analysis6 Copyright 2006 John Wiley & Sons Ltd Other perspectives Environmentalists or community groups might be more interested in the following: UK cheap food policy problematic construction of large hypermarkets good record on health and safety issues concerns of suppliers overall a good employer, but must make environmental concerns more central

Financial Information Analysis7 Copyright 2006 John Wiley & Sons Ltd Summary Nature / content of report depends on users investors and environmentalists have different perspectives and agendas Most reports will have standard sections Important that report be: focused relevant to users contextual aid to decision-making function