M2-I will be analysing the performance of Tesco using suitable ratios.
Net profit as % of sales
Revenue for 2015= 62,284m revenue for 2014= 63,557
Sales 2015= 48,237m sales 2014= 48,177m
2015= 129.1%
2014=131.9%
In terms of the net profit as % of sales as Tesco had a figure of 129.1% this shows they have done well,
however in 2014 they had a figure of 131.9% which shows they did not make as much profit as they did
in 2014 due to the possibilities of low sales and high expenses. Tesco is first in the supermarket market
share which shows they are making an high amount of sales so the likeliness of the fall from 2014 is
probably due to high expenses such as wages, rent and electricity and if this is too high the business will
have no choice but to pay it if they want to have a good reputation and have the business running
smoothly. Tesco can be doing better by finding a cheaper supplier, make staff redundant, find cheaper
buildings to rent out and make good investments as this can give Tesco a high return which will leave
them with more profit. The decrease in 2015 could be due to Tesco opening more stores which they did
not need, for Tesco to make more profit they will need to make more sales by doing lower prices and
better advertisings to make customers aware. It can also be due to Tesco not having good products
which is why customers did not buy their products and building a good relationship with suppliers will
provide possibilities of discount’s. The strengths of Tesco in their net profit percentage in both years is
that the percentage is still high and they still made a profit and they did not make a loss and also the
difference between 131.9% and 129.1% is not a big difference which means it will be simple for them to
improve and their weakness is that the percentage did decrease from 2014 which means they need to
pay more attention to their sales.
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
The current ratio for the both years was the same which shows they did not improve and they did not
get worse , however they still owe debt and as Tesco is a big company this is not a good look on them
because it can prevent investors from investing. However as they had a ratio of 0:6 in both years it shows
they owe more than they own and this means if creditors require payment as soon as possible Tesco will
not be able to do this without taking out a loan and this will leave them with even more debt to pay and
it also prevents Tesco from being able to do other things for the business such as opening new stores
Net profit as % of sales
Revenue for 2015= 62,284m revenue for 2014= 63,557
Sales 2015= 48,237m sales 2014= 48,177m
2015= 129.1%
2014=131.9%
In terms of the net profit as % of sales as Tesco had a figure of 129.1% this shows they have done well,
however in 2014 they had a figure of 131.9% which shows they did not make as much profit as they did
in 2014 due to the possibilities of low sales and high expenses. Tesco is first in the supermarket market
share which shows they are making an high amount of sales so the likeliness of the fall from 2014 is
probably due to high expenses such as wages, rent and electricity and if this is too high the business will
have no choice but to pay it if they want to have a good reputation and have the business running
smoothly. Tesco can be doing better by finding a cheaper supplier, make staff redundant, find cheaper
buildings to rent out and make good investments as this can give Tesco a high return which will leave
them with more profit. The decrease in 2015 could be due to Tesco opening more stores which they did
not need, for Tesco to make more profit they will need to make more sales by doing lower prices and
better advertisings to make customers aware. It can also be due to Tesco not having good products
which is why customers did not buy their products and building a good relationship with suppliers will
provide possibilities of discount’s. The strengths of Tesco in their net profit percentage in both years is
that the percentage is still high and they still made a profit and they did not make a loss and also the
difference between 131.9% and 129.1% is not a big difference which means it will be simple for them to
improve and their weakness is that the percentage did decrease from 2014 which means they need to
pay more attention to their sales.
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
The current ratio for the both years was the same which shows they did not improve and they did not
get worse , however they still owe debt and as Tesco is a big company this is not a good look on them
because it can prevent investors from investing. However as they had a ratio of 0:6 in both years it shows
they owe more than they own and this means if creditors require payment as soon as possible Tesco will
not be able to do this without taking out a loan and this will leave them with even more debt to pay and
it also prevents Tesco from being able to do other things for the business such as opening new stores
