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Unit 2 P5 Interpret the contents of a trading and profit and loss account and a balance sheet for a selected company

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Introduction

P5: interpret the contents of a trading and profit and loss account and a balance sheet for a selected company This report is going to interpret the contents of a trading and profit and loss account and a balance sheet for a selected company. The selected company that is report is going to interpret the content is Tesco plc from 2012 to 2013, and looking into their income statement and their balance sheet found from their website. Income statement The income statement measures the trading performance through revenues, gains, expenses, losses, net income etc. Profit figure can be established by deducting expenses from sales. This allows calculation of profitability. Revenue is in the financial statement that looks at the amount of income that an organisation receives in a specific period. For example Tesco plc.’s revenue has total revenue of 64,826m in 52 weeks in 2012/2013. The revenue gives an overall cost of money that an organisation has made from selling goods. The revenue of Tesco plc have increased in 2013 to £64,826m from £63,916m in 2012 this indicates that Tesco plc have sold more product that they have sold in 2013 to increase their revenue. ...read more.

Middle

The Net profit is the overall of the loss and profit taken into account on the balance sheet, for example Tesco plc’s net profit is £120m for the year, and this indicates the net profit gives an overall amount of money they have made in the organisation after all cost covered. The net profit in 2013 has decreased than in 2012 for example Tesco plc’s net profit was £120m and in 2012 Tesco plc’s net profit was £2,814m. This shows that in 2013 Tesco plc has made less profit in 2013 than in 2012 for example Tesco plc have a cost of sales was from £58,519m in 2012 to £60,737m in 2013. This shows that the suppliers have increased their prices up. Balance sheet A balance sheet is a statement of the total assets and liabilities of an organisation at a particular date the balance sheet is split into two parts: (1) A statement of fixed assets, current assets and the liabilities (Net Assets) (2) A statement showing how the Net Assets have been financed, for example through share capital and retained profits. ...read more.

Conclusion

Equity is the amount of money shareholder get in return in the organisation. The equity in Tesco plc shows the amount the shareholder would receive after investing in to Tesco plc and paying off debt in Tesco plc for example Tesco plc total equity in 2013 is £16,643 million. However in 2012 the shareholder had 17,801million. This indicates that the shareholder didn’t get more money in 2013 than in 2012. In conclusion, Tesco plc.’s income statement and balance sheet has gone from good to bad. For example in 2012 Tesco plc had more gross profit and less cost of sales in 2012, but in 2013 Tesco plc had less gross profit and more cost of sales on their income statement, this indicates that in 2013 Tesco plc didn’t perform well as in the 2013, but performed a lot better in 2012. The balance sheet is the same from the income statement in some ways for example, Tesco plc’s non-current liabilities were £14,483 million in 2013 but in 2012 it was £13,731million. This shows that Tesco plc borrowed a lot more in 2013 than in 2012, which could mean that Tesco plc were trying to increase their finance more. | Page ...read more.

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