Case Study Of Tesco And Financial Global Crisis

According to the graph above, it can be said that before financial global crisis performance shows that there was 2% crisis in 2008 while it decreases in 2009 with 1.5%. Although, in 2010, before financial global crisis increases to 1.6% whereas 1.73% in 2011. In 2010, before financial global crisis the performance increases to 1.9%. Concerning the after financial global crisis, in 2008, the after financial crisis was 1.67% whereas it increases to 2.3% in 2009. In 2011, the crisis increases to 2.2% which shows that the crisis enhance in 2011 also. In the view of the graph above, it is identified that after financial crisis decrease till 1.2% in 2012, hence, the result demonstrate that after financial global crisis performance showed more reliable

al (2013), the company take into account what interest rate they get for different percentages of debt capital is known as capital structure. It is usually not difficult to get loans if they represent 20% or 30% of total investments (the rest being equity), not if the situation is reversed. In the latter case, who lend money will require a much higher interest rate in order to offset the higher risk that it will be running. In this case, Tesco is worth having a higher percentage of borrowed capital up to 40%, even with the highest interest rate, and to have a percentage higher than 40% is no longer recommended because the increased interest rate decreases the return on equity. This effect is not least because of the financial burden is deductible for tax purposes, i.e. a 6% interest rate becomes a real rate of 4%. In accordance of Brannen et. al (2013), leverage happens only when the return on investment is higher than the actual cost of the liability. In short, the company must choose the mix of financing that maximises the return on equity invested in the project. This demonstrates the percentage change in net results resulting from a percentage change in operating results. According to Brannen et. al (2013), Tesco used the existing infrastructure to keep costs down. Metzger (2014) said that the company spent enormous sums trying to build a brand and a customer base and used its existing brand and customers to drive its online business. In

According to the annual reports, the dividend per share for both the years excluding the items development which is dropped 92.14% and 396.12% significantly. In addition, the two years annualised dividend per share development or growth ranks shows the average relative to its peers.
According to Wrigley (2014), the company has adopted aggressive dividend policy which tends to enhance the number of investors interested in the actions that bring more resources to the company. In other word, Tesco Plc need resources for the investment in business and retained profit which is one of the cheaper forms of financing. It is examined that company reinvest through shares and distribute the less to shareholders. In the view of Brannen et. al (2013), the dividend policy of the company is a criterion of choice of assets where, many investors may be comfortable with the input money in their accounts. Thus, in accordance with the dividend policy adopted each entity will attract investors that it is pleasing. If investors find stocks that match preferences, equilibrium is reached and the value of the shares is unaffected by dividend policy. In accordance of the annual reports, it is examined that future excess cash must be going to the customers but not in the shareholders pockets. The interim dividend of the company is 75% which means