With the help of the information presented in the financial statements, the ratios are computed which can be compared with the past figures to highlight any improvement or deterioration. A fall in the…
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For estimating the revenues earned by the business, the Compounded Annual Growth Rate (CAGR) over the last four years has been used. The revenue earned by the company during the year 2005 was £33974 million. This increased at a CAGR of 12% to £54327 million in the year 2009. Assuming that the rate of growth remains the same in 2010, the estimated revenue of the company for this year is estimated to be £61091.81 million. The cost of sales is taken as a percentage of revenue at 0.92. Therefore the estimated cost of sales of the company for 2010 is £56348.58 million. The “Normal Operating Expenses” of £31845 million for the year 2005 is assumed to be the ‘cost of sales’ for the year. The operating costs of the company depend on the level of sales. Higher the sales level, higher is the amount of operating expenses of the company. This ratio is calculated as 0.02. Based on this ratio the operating cost of the company is estimated as £1403.40 million. It has been assumed that the net interest payable of the company grows at a compounding rate of return. Based on the net interest expense of £170 million in 2005, the CAGR for the four year period is calculated as 21% making the estimated net interest payable of the company for 2010 to be £437.29 million.
Taxation and dividend- In the year 2005 and 2010, Tesco Plc paid taxes at a rate of 20% and 40% respectively. The CAGR of taxes is calculated as 19% making 48% as the forecasted tax rate for 2010. Therefore the estimated taxation of Tesco Plc is £1386.44 million. The dividend paid by the company has increased at a CAGR of 19% from £587 million in 2005 to £883 million in 2009. From this the forecasted dividend of Tesco Plc is estimated as £977.89 million.
The revenue of Tesco Plc is expected to grow in 2010 by £6765 million. For this the company will need total funds of £5734.52 million. As a
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(Financial Forecasting TESCO Plc Essay Example | Topics and Well Written Essays - 1500 Words)
“Financial Forecasting TESCO Plc Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/miscellaneous/1564868-financial-forecasting-tesco-plc.
Detailed Proposal Abstract: The paper will provide a comparison of financial analysis of two major retailer companies in UK namely Sainsbury plc and Tesco Plc. Both these companiers are the leading food retailers in United Kingdom and they are the well known public listed companies in UK.
Started as a small market stall in London’s East End in 1919 by Jack Cohen, today, Tesco Plc is the globe’s third largest supermarket with business operations spanning across 14 nations thereby serving millions of customers every week and offering jobs to more than 520,000 peoples around the world.
The importance of value creation through positive stakeholder relationships has an impact of significantly increasing the profitability of a firm.The increase in environmental legislation and the emerging trends of ethical consumers,the incorporation of social responsibility in the business strategy is more of a necessity in the competitive market.
The area of resource management mainly deals with handling various day-to-day activities or affairs of businesses of any particular organisation. These affairs or activities might comprise repayment of debts to the shareholders, along with gathering of debts from the marketers, delivering quality products or services to the customers and most vitally managing inventories in an effective manner.
It has grown over the years and has now stores that are spread across 14 countries in Europe, Asia and North-America. John Cohen came up with the company in 1919 where it started as a group of market stalls. The expansion process began in 1939 whereby it opened around 100 stores across the country (Tesco, 2013).
The major source of equity finance used by the company is through the issuance of shares to general public and other shareholders as it is a publicly traded company and the various sources of debt finance include bank loans, borrowings, finance leases etc, which finances the rest of the company's financial needs.
An established presence with a huge bricks-and-mortar infrastructure, Tesco is also the world’s most successful and profitable online grocer. The reasons that others failed in the grocery business, where Tesco has succeeded is Tesco is competing on customer loyalty and customer experience, although it keeps its own prices competitive in each local market.
In Asia, its presence is found in Japan, Malaysia, South Korea, Thailand and its latest market, China, which it entered in 2004. The corporate office is located in Hertfordshire in the UK. The major portion of its