Financial Accounting Essay Example | Topics and Well Written Essays - 1000 words - 1

Financial Accounting - Essay Example Tesco’s performance in the two preceding year 2008 and 2009 has been good and the company has been performing with its best abilitites. Although the company has operated well, there are few areas that my need improvement. The profitability of the company has been good and has increased a bit but the net profit margin has decreased, indicating that the company’s conversion of its gross profit to net profit is rather low and it has gone bad in the year 2009 as compared to 2008. The liquidity is a bit shaky and needs some attention. The liquidity ratios calculated above clearly predict that the company is facing some working capital issues; the feasible result for the current ratio is 2:1, whereas the feasible result for acid test ratio would be 1:1. According to the ratios calculated, TESCO does not have the necessary current assets to deal with its current liabilities. The company as per the calculations above seems to have too many current liabilities (almost double to the amount of the current assets), such an effect is really alarming for any company and Tesco should clearly employ techniques to overcome this issue. The chairman has concluded that the company has performed well during the year end 2009 although there were major economic downturns for the global business environment due to which many weak companies collapsed. Considering that particular economic recession, TESCO has performed exceptionally well in the year 2009. Besides this, the chairman has pointed out on the acquisition of TESCO personal finance held by the Royal Bank of Scotland considering this an organic growth for the company. TESCO has certainly grown over the years and it would have been in a much better state if it was not for the global economic recession. Debenhams is a leading department stores group. Debenhams has a strong presence in key product categories including women’s wear, menswear, home wares, health and beauty, accessories,