FINANCIAL INFORMATION: COURSEWORK ASSIGNMENT
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1.docxFINANCIAL INFORMATION: COURSEWORK ASSIGNMENT
SEMESTER TWO – 2013/14
This coursework is to be prepared as an individual assignment. Each student is required to answer all questions below using the published information of Tesco Plc, which is provided as a separate pdf document on Blackboard[footnoteRef:1]. The coursework weighting towards the final module mark is 70%. Your work will be marked on the basis of a) the accuracy of your calculations, b) the quality of the analysis provided and, c) the presentation of your report, which must be prepared in a professional manner. [1: Please make sure that you also look at the notes to the financial statements to verify/obtain the correct figures for certain items (i.e. inventory, trade receivables, trade payables, average share price, etc.). In case there are two sets of accounts, i.e. consolidated and company accounts, please use the group accounts for the calculations of the ratios.]
Please use the following guidelines:
· Your report should not exceed 1,500 words (excluding tables and calculations)
· Your report should be word-processed and presented in a professional manner
· The font used should be Times New Roman, Size 12, Line Spacing 1.5
·
Question 1:
What is (are) the principal activity(ies) of this business?
2 marks
Question 2:
Comment on the outcome of the auditor’s report for Tesco Plc. Briefly discuss the importance the auditor’s report with respect to financial information.
4 marks
Question 3:
Compute the following ratios, using the table provided below as a template:
32 marks
Profitability
a) Return on equity (ROE)
b) Gross profit margin
c) Net profit margin
Liquidity
d) Current ratio
Asset Management
e) Inventory (stock) turnover period
f) Trade payables’ (creditors’) turnover period
Other
g) Gearing ratio
h) Price earnings ratio
|
Ratio |
Expression |
2013 |
2012 |
2013 result |
2012 Result |
Industry Average |
|
Eg Trade receivables period[footnoteRef:2] [2: The figures used in calculating the trade receivables period ratio are provided as an example and do not reflect items on Tesco’s annual reports.] |
|
|
|
39 days |
26 days |
- |
|
ROE
|
|
|
|
|
|
19% |
|
Gross profit margin
|
|
|
|
|
|
10% |
|
Net profit margin
|
|
|
|
|
|
3% |
|
Current ratio
|
|
|
|
|
|
1.70 |
|
Inventory turnover period
|
|
|
|
|
|
50 days |
|
Payables’ turnover period
|
|
|
|
|
|
20 days |
|
Gearing ratio
|
|
|
|
|
|
4% |
|
P/E ratio
|
|
|
|
|
|
9.0 x |
Question 4
Calculate the yearly percentage change in the following items stating, in each case, whether the change is a rise or fall:
12 Marks
a) Sales
b) Operating Profit
c) Share Price
Question 5
Comment and reflect upon the ratios and percentage changes in items computed in your answers to questions 3 and 4.
30 marks
Question 6
Using the DuPont analysis technique, evaluate and comment on any changes in profitability (ROE) from 2012 to 2013. In particular, use the DuPont method to assess which aspects of the company’s performance have played a key role on the change in its profitability (if any).
20 Marks
