In comparisons from the gross profit in 2012 to 2013 their gross margin has gone down in 2013 this because in their gross profit margin in 2012 was 8.44% and in 2013 they have now got a profit margin of %6.31. This indicates that their profit margin is gone down because of the gross profit has gone up by %15 this can influence Tesco plc’s shareholders, as they might think that Tesco plc is losing value unless they increase the amount of shares they that they give to shareholder. This is so that they can keep their shareholders or interest shareholders to invest in to the organisation.
Net profit margin
The net profit margin gives an overall of the hat Tesco plc has made in a year; this is calculated by dividing the net profit by the sales Tesco plc and multiplied by 100 for an overall percentage, for example:
Net profit/sales x 100 = net profit margin (use profit for the year)
This will allow Tesco plc to show an overall loss and profit taken into account on their balance sheet, this the actual profit after working expenses not included in the calculation of gross profit have been paid.
In comparisons from the calculation in 2012 to 2013 their net profit has gone down in 2013 than in 2014, this is because in 2013 the “profit of the year” Tesco plc has eared was 120 million and in 2012 Tesco plc profit of the year was 2,814 million. There is a huge difference of the amount of profit they haven’t gained in 2013. This is by £1146 million of money that Tesco were supposed to make in 2013.
Return on capital employed
Return on capital employed (ROCE) is a measure of the returns that a business is achieving from the capital employed, Capital employed equals a company's Equity plus Non-current liabilities (or Total Assets − Current Liabilities), the long-term funds used by the company. ROCE indicates the efficiency and profitability of a company's capital investments.
Net profit/capital employed x 100 = Return on capital employed
This will allow Tesco plc to show an overall loss and profit taken into account on their balance sheet, this the actual profit after working expenses not included in the calculation of gross profit have been paid.
In comparisons from the calculation in 2012 to 2013 their Return on capital employed has gone down in 2013 than in 2012, this is because Tesco plc.’s current assets have increased and the net profit have decreased in 2013,
Solvency ratios
The solvency ratio is a measure of the risk an insurer faces of claims that it cannot absorb. The amount of premium written is a better measure than the total amount insured because the level of premiums is linked to the likelihood of claims.
Current ratio
The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. It is expressed as follows:
Current assets/current liabilities: 1= Current ratio
If all other things were equal, a creditor, who is expecting to be paid in the next 12 months, would consider a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which fall due in the next 12 months. You should view the relation between the operation cycle period and the current ratio.
In comparisons from the calculation in 2012 to 2013 their Return on capital employed has gone down in 2013 than in 2012, this is because Tesco plc.’s current assets have increased and the net profit have decreased in 2013,
Debt ratios
Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as 'goodwill').
Gearing
A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.
NCL/Capital employed x 10= gearing ratio
This will allow Tesco plc to show an overall loss and profit taken into account on their balance sheet, this the actual profit after working expenses not included in the calculation of gross profit have been paid.
In comparisons from the calculation in 2012 to 2013 their Return on capital employed has gone down in 2013 than in 2012, this is because Tesco plc.’s current assets have increased and the net profit have decreased in 2013.
Shareholders
A shareholder or stockholder is an individual or institution that legally owns a share of stock in a public or private corporation. Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.
Dividend per share (DPS)
The DPS shows the amount of shares that shareholders get
The dividend per share in Tesco plc is hasn’t changed in 2013 and 2012 at 14.76p. This indicates that Tesco plc has maintained the dividends between their shareholders as they want to keep their shareholders
In conclusion, the aspects of each finance statement used on the balance sheet gives indication of what Tesco plc uses to calculate their finance in to a ratio to get a more precise result from the calculation. From the calculation from the aspect on the balance sheet in 2013 and 2012, shows a clearer visual of what has decreased and increased for example, Tesco plc current ratios has increased in 2013 than in 2012, however profit margins has decreased in 2013 than in 2012
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serhad123456hotmailcom (student)
