Create a 6 pages page paper that discusses tesco's financial forecasting. Tesco has now involved in the banking sector manufactures electronic products, telecoms and is involved in other industries li

Create a 6 pages page paper that discusses tesco's financial forecasting. Tesco has now involved in the banking sector manufactures electronic products, telecoms and is involved in other industries like fuel and tech support. It also offers card schemes to the customers through Tesco Clubcard.

In last few years the company was performing quite satisfactorily. In UK, the market share of Tesco’s increased up to 4.3% in the year 2008-09 that makes total market share of Tesco around 30.9% in UK retail market (Hall, 2008). In the financial year 2008-09 too the company registered a healthy growth. To determine the performance of the company in 2010 a forecasted profit & loss account and forecasted balance are being prepared.

In the year 2009 Tesco’s revenue after VAT is £ 54,327 million whereas in the year 2005 it was £ 33,974 million. Therefore the compounded annual growth rate (CAGR) from 2005 to 2009 is calculated which represents the rate at which the revenue of the company is growing (Gray, et al., 2003, p.156). The CAGR value at which the revenue of Tesco group is increasing is 12.45%. Considering this rate of CAGR, the total revenue for the financial year (FY) 2010 can be forecasted as £61092 million.

In the year 2009 the cost of sale was 92.24% of the total revenue (after VAT), if this percentage remains the same for the next year then cost of sale for 2010 will be £56349 million. As gross profit is calculated as revenue less cost of sales (Vance, 2002, p.4), so in the FY 2010 gross profit will be £4743 million.

There lies a difference between the cost of sales and operating expenses, while calculating operating expense certain non-operating expenses should be added back and indirect expenses such as administrative expense need to be added. The operating expense for the year 2009 was £3,206 million (summation of COGS and administrative cost). It is assumed that with enhancement in sale, administrative cost will also increase.&nbsp.