Brief Review of the Accounts
It's all very well being armed with a list of ratios and people who might want to use them, but we need to know where to get all the figures to put into those ratios, don't we?
Here's a reminder of the layout of a basic profit and loss account and of a basic balance sheet; we will look at more advanced versions later if we need to. If it helps, why not print out these financial statements and have them alongside you as you work through the ratios?
These accounts, for Tesco plc, the retailing giant, also show two sets of titles: the titles on the left show the titles that you might be familiar with from your text books; the titles on the left are the ones we can find in published reports and accounts for a business. We have highlighted the terms and phrases that might be different in your books compared to published accounts. We will use these different terms almost constantly so you do need to read and understand them. We have highlighted the differences for you in this table: (ahhh, aren't we kind?)
| Tesco plc | ||
|---|---|---|
| Text book version | Annual Report and Accounts Version | |
| Consolidated profit and loss account | 23 Feb 02 | Consolidated profit and loss account |
| for the year ended | £m | for the year ended |
| Sales | 23,653 | Turnover |
| Cost of Sales | -21866 | Cost of sales |
| Gross Profit | 1,787 | Gross profit |
| Operating Expenses | -465 | Operating expenses |
| Net Profit before other income/costs | 1,322 | Operating profit |
| Other income/costs | 32 | Other costs/income |
| Net Profit before interest and taxation | 1,354 | Profit before interest and taxation |
| Net interest receivable (payable) | -153 | Net interest receivable (payable) |
| Net Profit on ordinary activities before taxation | 1,201 | Profit on ordinary activities before taxation |
| Tax on profit on ordinary activities | -371 | Tax on profit on ordinary activities |
| Net Profit on ordinary activities after taxation | 830 | Profit on ordinary activities after taxation |
| Equity minority interests | 0 | Equity minority interests |
| Profit for the year | 830 | Profit for the financial period |
| Dividends | -390 | Dividends |
| Retained profit | 440 | Retained profit |
| Tesco plc | ||
| Text book version | Annual Report and Accounts Version | |
| Consolidated balance sheet | 23 Feb 02 | Consolidated balance sheet |
| Fixed assets | £m | Fixed assets |
| Intangible Assets | 154 | Intangible Assets |
| Tangible assets | 11,032 | Tangible assets |
| Investments | 317 | Investments |
| Total Fixed Assets | 11,503 | Total Fixed Assets |
| Current assets | Current assets | |
| Stock | 929 | Stock |
| Debtors | 454 | Debtors due within one year |
| Short term investments | 225 | Short-term investments |
| Cash at bank and in hand | 445 | Cash at bank and in hand |
| Total Current Assets | 2,053 | Total Current Assets |
| Creditors | -4,809 | Creditors: Amounts falling due within one year |
| Working Capital | -2,756 | Net current assets (liabilities) |
| Total assets less current liabilities | 8,747 | Total assets less current liabilities |
| Long Term Liabilities | -2,741 | Creditors: Amounts falling due after more than one year |
| Provisions for liabilities and charges | -440 | Provisions for liabilities and charges |
| Net assets | 5,566 | Net assets |
| Represented by | Capital and reserves | |
| Ordinary share capital | 350 | Called-up share capital |
| Share premium | 2,004 | Share premium |
| Other reserves | 40 | Other reserves |
| Profit and loss account | 3,136 | Profit and loss account |
| Ordinary shareholders' funds | 5,530 | Equity shareholders' funds |
| Minority interests | 36 | Minority interests |
| Capital Employed | 5,566 | Total capital employed |
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