BUSINESS ANALYSIS REPORT

Business Analysis Report

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Executive Summary

In this report we would try to analyse a Tesco Plc, a retail firm domiciled in the UK and would compare it with Wal-Mart Inc, a retail firm domiciled in the US, by conducting a financial analysis of the firms' profitability, leverage and operations. The main focus of the research is on the financial ratios decomposition. The research also analyzes the difference between the two firms, with respect to ratio analysis. The study follows the secondary research methods for the data collection and data analysis. Finally the research provides a comparative ratio analysis between the two firms.

Table of Contents

EXECUTIVE SUMMARY2

LITERATURE OVERVIEW5

METHODOLOGY7

TESCO PLC10

Company Overview10

Company History10

Business Description16

SWOT Analysis18

WAL-MART INC.19

Company Overview19

Business Description20

SWOT Analysis24

WAL-MART`S SALES BOOST25

TESCO PLC, FINANCIAL ANALYSIS29

Profitability Ratios29

Liquidity Ratios30

Debt Management30

Asset Turnover Ratios31

Market Ratios32

WAL-MART INC, FINANCIAL ANALYSIS33

Profitability Ratios33

Liquidity Ratios34

Debt Management34

Asset Turnover Ratios35

Market Ratios36

COMPARING TESCO & WAL-MART36

Liquidity Ratios36

Profitability Ratios37

Asset Turnover Ratios37

Market Ratios38

REFERENCES39

Literature Overview

Whether financial percentages, such as dividend-price ratio, earnings-price ratio, and book to- market ratio, estimate upcoming stock profits has attracted much attention from both experts and instructors. The forecast of stock profits using financial percentages is in theory based in existing value designs (for example, the results lower price design, income lower price design, and re-occurring income model). These designs imply that stock come back is determined by basic principles included in financial percentages. Using a log straight line existing value design, Campbell and Shiller (1989) demonstratio that the dividend-price ratio is either confidently associated with upcoming stock profits or adversely associated with upcoming results development ratios. Scientific evidence generally indicates that financial percentages can estimate upcoming stock profits, especially in lengthy capabilities. In contrast, brief skyline profits and the lengthy run development of basic principles are more difficult to estimate.

Recently, this view has been inquired and pushed on several grounds. First, the mathematical inference is difficult. It is well known that financial percentages are very chronic, and come back excitement are adversely associated with financial percentages. Because of the near-unitroot property of financial percentages, the mathematical inference leads to uninformative inference on the forecast regards. Ang and Bekaert (2007) prove results makes do not significantly estimate excess profits at lengthy capabilities after carefully accounting for small example properties of standard assessments. Goyal and Welch (2003, 2006) show that financial percentages have poor out-of-sample predicting energy.

Second, it is not clear what predictive energy can be linked to. Summers (1986), Fama and French(1988), and Campbell and Shiller (1989, 2005) suggest a simple concept of slowly mean reversion to explain the forecast energy. That is, stock values cannot flow too far from their basic principles (e.g., results, income, and book value) in the lengthy run. The concept of slowly mean reversion requires financial percentages to be fixed. However, it is clear that all percentages display a downwards trend. Lamont (1998) claims that basic principles only estimate profits in the brief run, while costs estimate profits in the lengthy run.

Third, the forecast regards between profits and financial percentages appears to suffer from architectural lack of stability ...