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Tesco and Ahold

In: Business and Management

Submitted By sakurazuka
Words 289
Pages 2
This report provides an analysis and comparison of Tesco Inc. and Ahold N.V, paying close attention to form an investment decision for shareholders. The ratios have been chosen to show profitability and liquidity (risk). Methods of analysis include Porter’s Five Forces analysis, trend and ratios such as ROA, Current and D/E ratios.

Results of information and data analyzed show that Ahold has a higher liquidity level and a slightly better return on assets than Tesco. In addition, Tesco has a higher credit risk level and is facing a dangerous situation with current ratio of less than 1 in 2011.

The report finds that Ahold is a better investment choice for shareholders than Tesco. Tesco should do a better asset management to improve its liquidity as well as boost its efficiency compared to Ahold.

Comparison and recommendations include:
1. Tesco should control its increasing accounts payable and increasing accrued expenses or its liquidity would be worse. Ahold kept a constant amount on those two accounts and thus it is safer to invest Ahold.
2. Ahold’s asset turnover ratio is higher than Tesco, indicating that Ahold has a higher efficiency that allows it to maintain a lower profit margin. And Ahold has a slightly higher ROA.
3. The overall performance of Ahold is better than Tesco. But Ahold’s future prediction may not be accurate as it changes its business strategy in 2011.

Some of the limitations include:
1. Information and data are from 2008 to 2011, which might not fully represent the recent financial positions of both firms. And the economic characteristics have changed since then.
2. Not enough information is provided after Ahold changed its business strategy.
3. Results analyzed are based on past performances not…...

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