Therefore, the liquidity position of Ahold is much stronger than Tesco however, when we analyze the cash flow statements of both the companies as shown in exhibit 4 in the appendices, then Tesco seems to have higher net cash inflow as compared to that of Ahold and this suggests a higher worth of Tesco stock and strong operating performance of the company.
Although the above analysis suggests there are some strong and some weak parts of both the companies, however, since Tesco is highly profitable and its cash flow position is strong therefore, it is recommended to invest in Tesco.
However, the trend showed a deceasing trend for Tesco. FAQ How much will I earn? Ahold also has higher cash as compared to Tesco as shown in vertical analysis in exhibit 3 and cash ratio in exhibit 1. How long is the approval process? The current liquidity position is strong for the company however; it needs to manage the debt of the company because the debt repayment capacity is low for the company.
Buy Now The case relates to the understanding and comparing the performance of two leading trading company Ahold and Tesco. However, Mary used financial data including income statements and balance sheets from the year to to evaluate the financial performance of both retailers in order to determine which would be beneficial for investment purposes.
The case presents the tools and Dupont Dupont decomposition property. Operating efficiency and cash conversion cycle The net long-term ratios to sales ratio for Tesco were higher than the ratio calculated for Ahold, which indicated that Tesco was more efficient in converting or exploiting its long-term assets to generate sales revenues.
The current debt repayment ability should be maintained by Tesco.
It emphasized on providing its customers with value added products and services and continued development of a strong management team. Management should maintain its current working capital performance. Furthermore, the cash ratio for Ahold was higher than the cash ratios for Tesco.
Students also see how excess liquidity can weaken the profitability and the factors that should drive the appropriate level of leverage for a company.
We will run it through our quality assessment. Tesco needs to find an optimal capital structure and if it has not achieved the limit of its debt capacity, it should take advantage of debt financing. Students also see how excess cash holdings can press return and what factors should drive the appropriate level of leverage for a firm.
Ahold needs to reduce its cost of goods sold and increase the profitability of the company by revising the revenue model of the company.
While performance is measured by the return on equity for the two companies has similar, Ahold had significantly better performance of the equity markets compared to Tesco.
Moreover, it can be assessed that the cash ratio exhibited a decreasing trend over the years for both retailers. The situation introduces the various tools of Dupont and Modified Dupont Decomposition.
However, this meant that Ahold was in a better position to pay-off its debt as the cash position of the retailer was adequate as compared to Tesco. Additionally, it was assessed that the long-term asset to sales ratio showed an increasing trend over the three year period for Ahold.
Furthermore, its net long-term asset to sale ratio was decreasing, which showed that the retailer had become less efficient with time. Additionally, the net income margin of Tesco was higher than Ahold.The case relates to the understanding and comparing the performance of two leading trading company Ahold and Tesco.
The case provides the tools of Dupont and Dupont Modified decomposition. Ahold versus Tesco--Analyzing Performance case study solution, Ahold versus Tesco--Analyzing Performance case study analysis, Subjects Covered Accounting Financial analysis Financial statements Valuation by Suraj Srinivasan, Penelope Rossano Source: Harvard Business School 11 page.
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Ahold Vs. Tesco – Analyzing Performance Case Solution. Short Term Liquidity. Finally, if we analyze the liquidity position of both the companies, then based on the current and quick ratios, Ahold has a stronger liquidity position and it has more current assets to cover the current liabilities as compared to Tesco.
Case study solutions by top business students. Ahold versus Tesco–Analyzing Performance The situation pertains to understanding and evaluating the performance of two leading retail companies-Ahold and Tesco.
Case Analysis: Ahold vs. Tesco. Ahold ultimedescente.com Case Analysis Group 5: Rayan Alqubaysi, Yuchen (Jason) Jin, Laura Payne, Lei Wang Introduction of Case Alpha Plus Asset Management- investment decision Analyzed history, business strategy, recent performance and future goals Differences in stock prices with similar ROEs How should cash position be taken into account when assessing performance?Download