Essays on Corporate Finance - Bad News about Annual Loss Reported for Tesco Plc in 2015 Case Study

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The paper “ Соrроrаtе Finаnсе - Bad News about Annual Loss Reported for Tesco Plc in 2015” is a   perfect example of a case study on finance & accounting. When companies tend to experience some financial problems, the bad news is reported to the public. Because of such bad news, the affected company is expected to receive some serious impact on its market share and the value of its share prices based on the bad reputation from the public and the general target customers. Tesco Plc happened to report an annual loss of £ 6.4bn for the 2014 financial year as per the BBC news (Butle, & Farrell, 2015, 1).

Consequently, the company experienced some hardships in the market associated with its share prices. This paper seeks to explore the effects of the specific news about Tesco Plc to its share prices and its market value in general (Burke, and Eaton, 2016, 82). There are reasons why such a response from the public is expected to such a company. The paper refers to some literature concerning the same subject of discussion.

Although companies might be performing well in the market, in the case of spreading some bad news regarding the specific companies, their businesses are greatly affected especially in the form of share prices. The bad news about Tesco PlcFor the financial year 2014-15, Tesco reported the worst outcomes in its history about having a statutory pre-tax loss amounting to £ 6.4bn (Butle, & Farrell, 2015, 1). This demonstrated that the company was in business trouble because of its retail operations whereby some of the retail spaces were underused while some of its stores were to be closed and others which were planned be canceled, as per the statement from Bernstein in Tesco (Imrie, and Dolton, 2014, 181).

The amount of loss could not be compared with its earlier annual profit of £ 2.26bn in the year 2012-13 (Butle, & Farrell, 2015, 1). Moreover, this was a big hit to the UK corporate history since it was the major loss suffered in the country. While reporting to the BBC, Tesco asserts that the losses were suspected to have been caused by the decline of the property value in the company’ s UK stores, which were expected to close (Dacosta, and Adusei, 2016, 23).

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