In this paper, the financial performance analysis has been done using ratio analysis of five major food retailers in the UK: Tesco, Sainsbury, Asda, Morrison and The Cooperative for five years from 2006-2010. To analyze the financial performances of the companies their balance sheet, income statement and cash flow are used to analyze the companies’ profitability, solvency and liquidity. Get professional assignment writing service
Question 1: FINANCIAL POSITION OF COMPANIES
TESCOis the global food retail market and headquarter located in the UK. TESCO is the leader of food retail market in the UK with market share approximately 30%. In order to analyze the financial performance of the company, balance sheet, income statement and cash flow statement of the company from the period 2006 to 2010 has been extracted and ratio analysis is done that includes profitability, solvency and liquidity ratios.
PROFITABILITY ANALYSIS FOR TESCO
LIQUIDITY ANALYSIS OF TESCO
SOLVENCY ANALYSIS OF TESCO
PROFITABILITY ANALYSIS FOR Sainsbury
LIQUIDITY ANALYSIS OF Sainsbury
SOLVENCY ANALYSIS OF Sainsbury
Factors Influencing the Financial Performance of theTESCO
In the UK, the supermarket and superstore industry is the leading industry and as of 2002, the retail sale of food through food retailers and supermarket has reached to£83.68bn. Tesco is one of the most leading food retailers in the world, operating 2,318 supermarkets and 326,000 employees along with offering online service through its subsidiaries. The company mainly operates under four banners: Extra, Superstore, Metro and Express. Although the company mainly sells food products, but there are products, sold such as clothing and other non-food lines.
Ever since, the company has been one of the largest food retailers with 50 per cent of its sale of company’s own-label products. It is identified that external factors in the industry affect the financial performance of the TESCO Company. The next part aims to insight into TESCO the supermarket company, which emphasizes on the external environment of the company and analyzed using resources, competence and culture that influence the company’s financial performance.
Operating across the UK, the financial performance of Tesco is highly influenced by the political and legislative conditions of the UK. However, the market consists of major chains and nationwide outlets there are small level operations with the traditionally regional bias. Most of the chains of the company are currently expanded nationwide and legislation and political affairs are involved in the determination of financial position of the company.
Economic factor is the main concern of the company as this factor affects the demand, supply, cost, price and profit of the company. The higher unemployment as economic factor can also influence the financial reliability and ultimately financial performance of the company by decreasing the demand of food products.
The change in social and cultural trends in the society of UK can affect the sale growth of the Tesco Co. such as recent customers’ trend in the UK society towards one-stop-shop and bulk shopping especially of food items. Tesco realized that this social trend could influence the company’s financial performance by increasing the sale growth therefore; Tesco Co. has paid more attention to non-food items for sale.