P5-I will be performing ratio analysis to measure the probability, liquidity and efficiency of Tesco.
Ratio analysis is what a business uses to analyse their financial information and it will allow them to
know what areas they are doing well in and not doing well, in other words identifying their strengths and
weaknesses. Businesses use this because it allows them to know how well they are doing and how they
can improve due to being able to work out ratio analysis for different years it enables them to compare
and improve. Businesses will be able to identify if they are improve or not and they can decide to open
more businesses or stores or close down the business if they are doing very badly in terms of their
financial performance.
Net profit as % of sales
Net profit for 2015= 62,284m Net profit for 2014= 63,557
Sales 2015= 48,237m sales 2014= 48,177m
2015= 129.1%
2014=131.9%
The results for Tesco’s net profit as a % of sales shows me that in 2015 Tesco done really well because as
this percentage represents the profit when all expenses have been subtracted and as Tesco had a high
percentage in 2015 even when expenses have been removed it shows they made an high amount of
sales and their expenses was not expensive. However in 2014 they had an even higher percentage which
was 131.9% whereas 2015 was 129.1% and this shows since 2014 Tesco has not made as many sales as
they have in 2014, in 2014 they must have made an high amount of sales and their expenses were low
cost.
Current ratio
Current assets 2015= 11,819m current assets 2014=13,085
Current liabilities 2015= 19,805m current liabilities 2014= 20,206
2015=0:6 2014=0:6
Current ratio is the amount of current assets to current liabilities, in 2015 Tesco had a ratio of 0:6 which
means for £0 they own in current assets they owe £6 in current liabilities which means they owe more
than they own and the ratio was the same in 2014 which shows Tesco have not improved and they still
owe much debt and this means they have not paid previous debts or they have acquired more debts.
Tesco owing more than they own means they will find it difficult to pay urgent debts and as they had a
figure of £0 in current assets it shows they will find it difficult to do other business activities such as
paying wages unless they take out a loan.
Quick ratio
Current assets 2015= 11,819m Current assets 2014 = 13,085
Ratio analysis is what a business uses to analyse their financial information and it will allow them to
know what areas they are doing well in and not doing well, in other words identifying their strengths and
weaknesses. Businesses use this because it allows them to know how well they are doing and how they
can improve due to being able to work out ratio analysis for different years it enables them to compare
and improve. Businesses will be able to identify if they are improve or not and they can decide to open
more businesses or stores or close down the business if they are doing very badly in terms of their
financial performance.
Net profit as % of sales
Net profit for 2015= 62,284m Net profit for 2014= 63,557
Sales 2015= 48,237m sales 2014= 48,177m
2015= 129.1%
2014=131.9%
The results for Tesco’s net profit as a % of sales shows me that in 2015 Tesco done really well because as
this percentage represents the profit when all expenses have been subtracted and as Tesco had a high
percentage in 2015 even when expenses have been removed it shows they made an high amount of
sales and their expenses was not expensive. However in 2014 they had an even higher percentage which
was 131.9% whereas 2015 was 129.1% and this shows since 2014 Tesco has not made as many sales as
they have in 2014, in 2014 they must have made an high amount of sales and their expenses were low
cost.
Current ratio
Current assets 2015= 11,819m current assets 2014=13,085
Current liabilities 2015= 19,805m current liabilities 2014= 20,206
2015=0:6 2014=0:6
Current ratio is the amount of current assets to current liabilities, in 2015 Tesco had a ratio of 0:6 which
means for £0 they own in current assets they owe £6 in current liabilities which means they owe more
than they own and the ratio was the same in 2014 which shows Tesco have not improved and they still
owe much debt and this means they have not paid previous debts or they have acquired more debts.
Tesco owing more than they own means they will find it difficult to pay urgent debts and as they had a
figure of £0 in current assets it shows they will find it difficult to do other business activities such as
paying wages unless they take out a loan.
Quick ratio
Current assets 2015= 11,819m Current assets 2014 = 13,085
