Research paper on tesco analysis.

Need an research paper on tesco analysis. Needs to be 7 pages. Please no plagiarism.

The profitability of Tesco Plc. has been analyzed using four ratios, namely Gross Margins, Net margins, Return on Assets, and Return on Equities. “Gross margin measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better (that is, the lower the relative cost of merchandise sold)” (Lawrence J. Gitman). The Gross profit margin of Tesco Plc. has increased to 8.12% in 2007 as compared to 7.87% in 2006. This is basically because of an increase, in turn, over by 8.08% in 2007 over the sales of 2006. This also reflects the efficiency of the company in effective control over the cost of sales. On the other hand, the Gross Margins of Wal- Mart, which has been chosen as other company in the industry for comparison purposes, are huge 23.43%. Though the gross of firms even in the same industry is not comparable, this is the margin that other companies don’t realize even after the best of their efforts. But when will review net margins of Wal- Mart in next paragraphs, we will find that net margins of Wal- Mart are even lower than Tesco Plc, whose gross margin in 2007 is just 8.12 % as compared to 23.34% of Wal Mart. The difference lies in approach and methods involve enhancing sales. Wal- Mart believes in enhancing overheads like advertise and other promotional activities to get larger sales, and to meet those extra overheads, huge gross margins are required. This factor speaks in the quality of goods being dealt in by the company. That is why Wal- Mart is known for stores for persons from all walks of life, but Tesco Plc. has maintained its qualitative standards and its stores are known for such a reputation.

Net profit margins are the earnings before interest and taxation (EBIT). In fact, these are the net margins remaining after meeting all related and allocated overheads.