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Tesco Plc Financial Analysis - Coursework Example

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Tesco Plc Financial Analysis

Furthermore, Tesco operate online sales of product which has seen them expand internationally and get customers all over the world. There are reasons as to why Tesco is customers’ favorite store in the UK. Tesco have got a well analyzed capital structure which supports the growth of business plan with consideration of their expertise in the financial system and cash management. Tesco also has a business that deals in banking. In its finance department, Tesco has schemed on operation of its business and financial strategies which is inclusive on debt, financing, equity, and capital investment. Tesco as a corporation is authorized to give only three categories of capital stock. These categories are unlimited in number and are inclusive of preferred shares, common shares, and the 2nd preferred shares. The common shareholders are permitted to attendance of any meeting and receiving of notice of the Tesco’s shareholders. The common shareholders also have the right to only one vote. Both the second and first shareholders are known as preferred shareholders. According to the rights of the preferred Shareholders, the common shareholders have gotten the right to receivership of any dividend that has been declared by Tesco Corporation and upon dissolution receive any remnants of Tesco Corporation. Tesco states that their main sources of finance are from medium and long term debts, retained profits, commercial paper, leases, issues and bank borrowings (Tesco 2007). There is a FY Tesco generated 2611 million pounds from their operating activities that financed 3 billion pounds expenditure on capital, inclusive of 1899 million profit that added to retained earnings. Another finance provider is from the shareholders. The company gets financed by debt more than equity. Leases also form a source of financing Tesco, which is a major contributor towards its balance sheet and in its capital structure. The financial strategy of Tesco seems to have moved to a change in its capital structure hence making equity returns get better by the increase of finance debt in utilizing tax shield. Nevertheless, it seems that it is because of the ratio of debt-equity that there have not been any changes. To support this, by the year 2010, this ratio had actually dropped to approximately 0.11 from 0.12. After debt issues in the balance sheet and sale of property, this level was reinstated to its initial level. By consideration of this ratio, there is a sign that Tesco is not concentrated on improvement of shareholders’ equity return. Taking this to be their major goal, Tesco would have achieved it by the increase of leverage and more debt issue. Instead, they take advantage of conversion of assets into capital with the aim of making the shareholders interested. Question two Question two requires an explanation on what ‘FACTORING FOR BUSINESS’ means and its usefulness in an organization. Factoring for business is a transaction in finance that involves selling of a firm’s account receivables. In a detailed level, factoring involves the provision of finance by the factor to the account’s seller in advance cash form (Seidman, 2005). The accounts are always approximately 80 percent of the total price of the accounts purchase, taking into account payment of the purchase price balance, commission and upon collection other charges. The factor may opt for ...Show more


Tesco Plc Financial analysis Name: Institution: Date: Question one The first question requires an identification of Tesco’s capital structure. Other than that, it requires the type of finance raised by the company from one of Tesco's balance sheet and comment on the balance sheet using the financial ratio based on Tesco’s capital structure…
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Tesco Plc Financial Analysis essay example
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