Business and financial performance of an organisation over a three-year period -- Organisation is Tesco
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TABLE OF CONTENTS
CHAPTER 3: FINANCIAL AND BUSINESS ANALYSIS1
3.1 Profitability comparison of TESCO and Morisson1
3.1.1 Operating income margin1
3.1.2 Return on equity2
3.1.3 Return on assets analysis3
3.1.4 Net profit margin4
3.2 Liquidity comparison of TESCO and Morissons4
3.2.1 Current ratio analysis4
3.2.2 Quick ratio analysis5
3.2.3 Cash ratio analysis7
3.3 Gearing ratio comparison of TESCO Plc and Morissons8
3.3.1 Total debt to assets analysis8
3.3.2 Debt to equity analysis9
3.3.3 Interest coverage ratio analysis10
3.3.4 Long-term debt to Net working capital ratio analysis11
3.4 Investor ratio comparison of TESCO and Morissons12
3.4.1 Earnings per share12
3.4.2 Price-Earnings Ratio13
3.4.3 Dividend Yield14
3.5 SWOT analysis of TESCO Plc15
3.5. 1 Strengths15
CHAPTER 3: FINANCIAL AND BUSINESS ANALYSIS
In this section, we will make analysis of the financial and business performance of TESCO Plc and will make a comparison of TESCO with the financial and business performance of Morison's Plc, which is another super market in UK and a competitor of TESCO Plc. In order to make an analysis of the financial performance of a company, one has to focus on analyzing three major areas of the company, i.e. financial leverage of the company, Liquidity management, profitability, and investor suitability of the company (Williams, Susan, Mark and Carcello 2008, 266). Through analyzing a company from these three major perspectives, we can gauge the financial performance of a company (Weygandt, Kieso & Kell 1996, 470).
The business analysis of TESCO would be conducted through using the tools of Porter five forces analysis and SWOT analysis.
3.1 Profitability comparison of TESCO and Morisson
3.1.1 Operating income margin
The third factor in our analysis is the profitability factor of the company. The first profitability ratio in our analysis is the operating income margin (Bandler 1994, 58).
Table 1: Operating income margin comparisons
(Expressed in whole numbers)
In table 8, we have described the operating income margin of both the companies in our analysis. From the above table, we cans see that there is not much difference between the profitability of Morissons and TESCO in terms of percentage. The operating income margin of TESCO has been at a constant percentage of six percent in the past three years and in case of Morissons, it has been around five percent. We can see the same thing in chart 9, in which we have shown the operating income margin trend ...