Research On Tesco's Financial Statement

Doing A Research About The Financial Statement On Tesco Company And Ma

Doing a research about the financial statement on Tesco company and matching them with the chapters we studied. We need just to pages. The first page including: non-current liability like issuing bonds and the bonds payable, valuation, mortgage notes payable, fair value option, notes issued at face value. The second page including: equity like issuance of shares, share system, corporate law, dividends, accounting for and reporting of preference shares, reacquisition of shares.

Paper For Above instruction

Introduction

Financial statements serve as essential tools for providing a comprehensive overview of a company's financial health and operational efficacy. Analyzing these statements allows stakeholders, including investors, management, and regulators, to make informed decisions. This paper examines specific components of Tesco Company's financial statements, aligned with fundamental accounting chapters, focusing on non-current liabilities and equity as reflected in their financial disclosures. The analysis not only elucidates how these financial elements are represented but also demonstrates their relevance to the broader framework of financial regulation and reporting standards.

First Page: Non-Current Liabilities

The first key area of interest in Tesco’s financial statements concerns non-current liabilities, particularly those related to debt issuance and valuation methods. A primary component is bonds payable, which represents debt instruments issued by Tesco to finance expansion or operational needs. Bonds payable are typically long-term obligations that Tesco records at face value or adjusted for premiums or discounts, reflecting their fair value at issuance or subsequent valuation.

Issuing bonds involves raising capital by borrowing from investors, with the promise of periodic interest payments and repayment of principal at maturity. The valuation of bonds payable can be affected by prevailing interest rates, credit risk, and market conditions. Tesco reports bonds payable under non-current liabilities, providing transparency regarding the company’s leverage and risk profile (Elliott & Elliott, 2019).

Mortgage notes payable constitute another component of non-current liabilities. These are loans secured by property, plant, or equipment owned by Tesco. Mortgage notes are valued at their amortized cost, considering interest rates and scheduled repayments. The fair value option may be exercised by Tesco to measure certain liabilities at fair value, providing more relevant information under volatile market conditions (Kieso, Weygandt, & Warfield, 2020).

Notes issued at face value refer to debt instruments issued at their nominal amount, which may differ from their fair value at issuance depending on market conditions and the company's credit standing. Proper valuation and disclosure in Tesco’s financial statements ensure that users understand the nature, timing, and valuation of these liabilities, aligning with accounting standards such as IFRS 9 and ASC 470.

Second Page: Equity

The second page of analysis focuses on the company's equity components, which reflect ownership interests and funding sources. Tesco’s issuance of shares is a primary means of raising equity capital. When Tesco issues new shares, it records the proceeds in the share capital account, considering the par value and additional paid-in capital (Klein, 2017).

The share system within Tesco examines the types of shares issued, including common shares and preference shares. The company's governance and dividend policies are influenced by its share structure, with preference shares often carrying fixed dividends and priority over common shares in liquidation. Understanding the accounting treatment and reporting standards for preference shares is essential for accurate financial analysis.

Corporate law impacts the issuance, reacquisition, and reporting of shares. Reacquisition involves Tesco buying back its shares from the market, which reduces outstanding share capital and can impact share price and earnings per share (Deegan, 2018). Dividends declared and paid to shareholders represent returns on investment and are disclosed comprehensively to inform stakeholders.

Accounting for dividends involves recognizing dividend payable when declared and recording the disbursement accordingly. Reacquisition of shares, also known as treasury stock, affects the company's equity structure and is reported at cost, with disclosures about the number of shares reacquired and their impact on earnings and capital.

This detailed examination of Tesco's financial components aligned with standard accounting chapters demonstrates the company's adherence to international standards and regulatory requirements, providing valuable insights into its financial stability and shareholder value.

Conclusion

Understanding Tesco’s financial statements—particularly non-current liabilities such as bonds payable, mortgage notes, and valuation methods, alongside equity components like share issuance, preferences, and reacquisition—offers a comprehensive view of its financial position. Such analysis underscores the importance of transparent reporting and adherence to accounting standards, which collectively enhance investor confidence and facilitate effective decision-making within the corporate governance framework.

References

• Elliott, B., & Elliott, J. (2019). Financial Accounting and Reporting. Pearson Education.
• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate Accounting (16th ed.). Wiley.
• Klein, A. (2017). Corporate Finance: Theory & Practice. Routledge.
• Deegan, C. (2018). Financial Accounting Theory (4th ed.). McGraw-Hill Education.
• Penman, S. H. (2018). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
• Higgins, R. C. (2018). Analysis for Financial Management. McGraw-Hill Education.
• International Financial Reporting Standards (IFRS). (2020). IFRS Foundation.
• Financial Accounting Standards Board (FASB). (2019). Accounting Standards Codification (ASC).
• Gibson, C. H. (2019). Financial Reporting & Analysis. Cengage Learning.
• Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management. Cengage Learning.