Essays on Business Finance- TESCO Assignment

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Investment in join t venturesAnd associates41647631430562Other investments7484259Derivative financial Instruments2161478Deferred taxes14123210421Inventories13091464193124302669Trade and other Receivables769892107913111798Derivative financialInstruments7010897382Current tax assets869Cash11461325104217883509Non-current assetsHeld for sale168408308398Trade and other payables 49745083604672778522Financial liabilitiesBorrowings4821646155420844059Derivative financialInstruments23987443525Current tax liabilities221462461455362Provisions324410Current liabilitiesFinancial liabilitiesBorrowings456337424146597212391Derivative financial Instruments294399322302Post employment Benefits Obligations73512119508381494Other non currentPayables2129294268Differed tax liability496320535802696Provisions65252367Net assetsShare capital389395397393395Share premium37043988437645114638Other reserves4040404040Retained earnings44704597569368717865Equity attributableTo share holders86039380105061181512938Minority interest5164658757Notes to the projected financial statementsTaxationThe amount of taxation has been calculated using an assumed corporation taxation rate on the projected profit before taxation as followsProjected profit before taxation£ (m) 3301 Rate used26.2%Taxation amount865The assumption has been necessitated due to the fact that the company operates in many countries which apply different rates of taxation and hence the need to use a common rate.

This is the effective tax rate. Finance incomeThe amount of finance income is expected to rise slightly because of the projected rise in cash and cash equivalents hence a higher interest receivable. Similar increase in interest receivable is anticipated to come from the small raise in financial instruments. An average rate of growth has been used to determine the projected finance incomeFinance costsIt is projected that finance costs will also increase slightly.

Mainly, this will be accredited to the projected increase in borrowing resulting from increased financing needs. Similarly, an average rate has been used in projecting the finance cost. Exceptional itemsThere are no exceptional items that have been projected to occur during the period and hence they have not been listed in the statements. Computation of earnings per share This has been calculated dividing the projected profit attributed to shareholders with the weighted average number of ordinary shares in issueBasic dilutive share optionsdilutedProfit (£m)24332433Weighted average no. of shares7859537912Earnings per share31pence(0.25)30.75Dividend per shareThe projected dividend per share has been set at 10 percent higher than the last year’s dividend t in order to reflect the increase in earnings.

I. e. 13.16 pence per share. SalesThe group sales are projected to increase at a rate to £m 61140 during the year. This figure has been computed using the Compounded annual growth rate for the last five years. Profit before taxationThe profit before taxation has been projected to increase at a rate of 12 percent to £m3301.TESCO PLCREPORT OF THE ANALYSIS OF THE COMPANY’S FINANCIAL POSITION AND PERFORMANCE FOR THE PREDICTED YEAR TO 28 FEBRUARY 2010IntroductionThe company is projected to continue with its improved performance during the year ending 28th February 2010.The enhanced performance is accredited to the reason that the world economy is expected to improve.

Furthermore, the company is projected to increase its trading activities and hence improve on the level of revenue achieved during the year ended 28th February. The company is also expected to acquire more assets in order to cope with the improved level of performance. The company will also increase its level of borrowing slightly in order to effectively finance the improved level of performance.

The corporate taxation rate is also expected to decrease from 28 percent to about 26 percent in the year ending 28th February 2010. The following is an analysis of the company’s financial position and performance for the year ending 28th February 2010;

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