Financial Forecasting TESCO Plc Essay Example | Topics and Well Written Essays - 1500 words

Financial Forecasting TESCO Plc - Essay ExampleFor estimating the revenues earned by the business, the Compounded Annual Growth Rate (CAGR) all over the last four twelvemonths has been used. The revenue earned by the company during the year 2005 was 33974 million. This increased at a CAGR of 12% to 54327 million in the year 2009. Assuming that the outrank of growth remains the same in 2010, the estimated revenue of the company for this year is estimated to be 61091.81 million. The cost of gross sales is taken as a percentage of revenue at 0.92. Therefore the estimated cost of sales of the company for 2010 is 56348.58 million. The Normal Operating Expenses of 31845 million for the year 2005 is assumed to be the cost of sales for the year. The operating costs of the company depend on the level of sales. Higher the sales level, higher is the amount of operating expenses of the company. This ratio is calculated as 0.02. establish on this ratio the operating cost of the company is est imated as 1403.40 million. It has been assumed that the net interest payable of the company grows at a compounding rate of return. Based on the net interest expense of 170 million in 2005, the CAGR for the four year period is calculated as 21% devising the estimated net interest payable of the company for 2010 to be 437.29 million.Taxation and dividend- In the year 2005 and 2010, Tesco Plc paid taxes at a rate of 20% and 40% respectively. The CAGR of taxes is calculated as 19% making 48% as the forecasted tax rate for 2010. Therefore the estimated taxation of Tesco Plc is 1386.44 million. The dividend paid by the company has increased at a CAGR of 19% from 587 million in 2005 to 883 million in 2009. From this the forecasted dividend of Tesco Plc is estimated as 977.89 million.The revenue of Tesco Plc is expected to grow in 2010 by 6765 million. For this the company will need enumerate funds of 5734.52 million. As a