Contents
Introduction 3
Analysis of the share price behaviour 3
Financial structure and cost of capital 6
Conclusion 8
References 9
Annexes 10
Figure 1. Stock prices of Tesco PLS during 2009-2014 2
Figure 2. Rate of return on stocks of Tesco PLS during 2009-2014 3
Figure 3. Rate of returns on Tesco PLC and FTSE 100 Index 4
Figure 4. Risk-Return space for portfolios consisting different portions of Tesco's stocks and FTSE 100 index………………………………………………………………………. 5
Figure 5. Relationship between return on Tesco's stock and return on FTSE 100 Index: Characteristic line 6 Introduction
Founded in 1924, TESCO PLC is the biggest retailer chain company in the United Kingdom with expanding presence in other countries of the world. The company’s
…show more content…
Due to Tesco’s being publicly traded and listed company at FTSE, it will enable us to conduct a comparative analysis of the company’s financial performance with the average industry performance for the reported period.
Figure 1. Stock prices of Tesco PLS during 2009-2014
As the graph above shows, the share price of Tesco during previous 60 months was quite volatile with the generally decreasing trend. Over the period of five years, Tesco’s share price dropped by more than 200 %, meaning that the company is underperforming considerably in comparison with previous years. Specifically, during the last months, Tesco’s share recorded the lowest prices over five years with the drop (from 303p in May 2014) to 186p in September 2014 thanks to recent accounting scandal with Tesco . Consequently, this volatility of stocks has a direct effect on the returns for these stocks
…show more content…
Evidently, negative rate of return above signals decreasing share prices which in turn mean adverse profitability expectations towards the company. This is, again, probably due to the continuing ‘accounting scandal’ of Tesco which has already had negative impact on the reputation of the company on the eyes of investors. Turning to the riskiness of Tesco’s shares, standard deviation, traditional measure of historical volatility and risk, also reflects negative signs concerning the riskiness of Tesco’s assets, i.e., stocks. The standard deviation with the value of 6% calculated for the returns illustrated above reflects substantial volatility of these returns with respect to expected monthly return which is -0.96%. Even without calculating standard deviation, instability of Tesco’s stock prices during the given period can be observed from Figure 2 just
Sensitivity Analysis The sensitivity analysis focuses on examining how Chipotle’s valuation changes when some key inputs vary. Two of the most important inputs of the valuation are the weighted average cost of capital (WACC) and the perpetuity growth rate. In this thesis, it is assumed that Chipotle would have a WACC of 6.65% and a perpetuity growth rate of 2.84%, which would result in a share price of $443.90 for Chipotle.
After almost one year in Oct 2014 legendary investor Warren Buffett expressed that acquired the shares of Tesco was “a huge mistake”, which might impact on future investors more than an ordinary statement made by an investor. The impact further enforced when Tesco announced that no dividend for shareholders nearly after two years in
Tesco is amongst the largest food retailers in the United Kingdom (U.K) with over 3,400 stores and staff amounting up to 310,000. Tesco operates predominately in Europe and America with their headquarters located in the U.K. Tesco has the greatest market share in the U.K dominating approximately 28% of the overall market at the end of 2017. However, there is a constant battle in the highly competitive U.K supermarket industry with the four major players being Tesco, Sainsbury, ASDA and Morrisons. In recent years, Tesco has had to change their business model as well as their services to stay a market leader and differ-entiate from the competition. To find the main sources of competitive advantage that Tesco has over its competitors an analysis of the structure of the industry should be under-taken (Porter, 1980).
Coles Supermarket Australia Pty Ltd is an Australian supermarket, owned by Wesfarmers. It is commonly known as Coles and was founded on 9th April 1914 in Smith St, Collingwood, Victoria. Till now, Coles has operated over 700 stores throughout Australia and employs over 100,000 employees. It controls 35% of Australian supermarket industry. Coles was founded when George James Coles opened the Coles Variety Store on the street in Melbourne.
' The main aim for the firm is to stay as the UK 's leading supermarket and provide good quality services and products at a low cost so that they are cheaper than their competitors. Their objectives are to maximise sales which will increase their profits. They want to decrease their prices to make shopping cheaper for the average household. They want to introduce healthier products which will attract more customers and they want to help reduce food waste worldwide and guaranteeing surplus food goes to those in need. Brockenhurst college has many community values *********** Tesco is a public limited company (PLC) which means the public can buy shares in the firm.
Tesco’s Ownership Tesco’s ownership is a PLC which means Public limited company. Because of this Tesco can easily expand and therefore go global, this is because, if they are a PLC then anyone from around the world can buy shares in that company, thus meaning that Tesco has more capital to invest In their company or other branches around the world, this also causes them to be global. Advantage One of the major advantages of Tesco being a public limited company is the fact that they would have a good status; this is because shareholders would want more dividend/yield from their shares and so they would be spreading the word about Tesco, in addition to this, the more shares people buy the more capital Tesco has to invest in their company to expand it and create other branches.
Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
Without having a good communication, proper information and effective knowledge company can not get the successes in the market. But the Tesco is the big company in the market. They have already had get the successes in the market so they have to maintain that successes and they are making the higher goals that have to be achieved. Tesco also needed a good communication, effective information and effective knowledge.
Recommendations are made concerning the performances of company and the current market share of its industry. Company Analysis Company background Tesco Malaysia Sdn Bhd was established on 29 November 2001 as a result of a strategic collaboration between Tesco Plc UK and Sime Darby Berhad in Malaysia. Sime Darby Berhad holds a 30% stake and 70% for Tesco Plc in that joint-venture. In February, Tesco Malaysia officially launched operations with the opening of its first hypermarket in Puchong, Selangor.
Analysis of Financial Statements Student number: 10221450 Word count: 2993 words Excluding Bibliography Course code: B9AC106 Course title: Financial Analysis Lecturer: Mr. Enda Murphy Company: Whitbread PLC Table of Contents 1. Whitbread plc 3 Financial Ratio Comparison 6 1.1 Profitability Ratio 6 1.2 Liquidity Ratio 9 1.3 Efficiency Ratio 11 2. Intercontinental hotels group plc and Ratio Comparison with Whitbread 12 3. 10% Stake in Intercontinental Hotels Group PLC 13 Conclusion 16 Market Value and Book Value
The value chain analysis indicates the firms that strive to create superior products or services through focused differentiation strategy. To ensure the activities are tailor to the strategy Value Chain is used. How each activity generates value and linked to the strategy in UFS? Table 4: Value Chain Analysis Primary Activities
Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
In terms of controlling, the management of Marks and Spencer has frequent reporting of expenditures with costs to provide a form of feedback. The reactions of managers to such type of data rely on the expectations or the formal budget or planned targets. The management believes in collecting and assigning cost data that is being shifted away from control. There is a recognition related to the repetitive exercise of planning and re-planning for creating a full time job for accountants. The assessment and evaluation of cost data in the aspects of launching new product by Marks and Spencer is about gaining insights and learning ways for achieving the goals of organisation in most effective manner.
Moreover, although the sales turnover of Unilever Plc has decreased, the operating profit and net profit still remain increased. The most highlighted part of this assignment is Unilever