Essay
Business Financial Performance level 3 P2 UNIT 2
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Describe the performance of a selected business as illustrated by its trading, profit and loss, appropriation accounts and balance sheet.
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In this assignment I will be describing the performance of ASDA as illustrated by its trading, profitand loss, appropriation accounts and balance sheet.
In terms of the total revenues which was $485,651 in 2015 and $476,294 as ASDA is owned by
Walmart the financial information for ASDA is under Walmart. As ASDA is a low priced company the
reason they had an increase between 2014 and 2015 is because they enhanced and invested in their
low price strategy in terms of the pricing of their products and this was done is 2013, which explains
the increase of income in 2015. The increase is also due to ASDA competing, when they compete
with their competitors such Tesco, ASDA tend to reduce their prices more which attracts customers
to buy from ASDA and less from Tesco. Their revenue could have been low in 2014 due to buying
much low priced stock in 2013 as their new investment for low priced products and as their products
was probably high in 2014 before they done the low priced investment, customers were probably
buying from their competitors. As ASDA was making high profit during 2014 and 2015, people may
have decided to buy shares with ASDA which brings income in. Also ASDA could have also invested
the profit made which will bring in more income if the investment goes well.
ASDA profit in 2013 was £993.9m and in 2014 it rose to £1.013bn , I believe the increase was due to
the “ five year plan to lower prices and boost quality”, which was done in 2013 , ASDA lowered the
prices of their products incredibly and increased the quality which made customers shop with them
more which is why in 2014 after this five year plan investment they made over £1bn in profit. Also as
ASDA potentially got new suppliers for their new products, the supplier was probably cheaper which
is why they sell their products low priced, this could have been why they had more profit as the
expenditure was less. Also even though ASDA is low priced they also do sales and discounts and they
advertise often which attracted more customers and increased their profit. ASDA is also the second
on the supermarket market share, which shows they are making many sales due to having goods
products and being low priced which brings in profit. The profit could have been lower in 2013 due
to an expensive supplier and ASDA recruiting more staff which means more wages to pay. ASDA also
opened more stores in 2013 which means they will need to pay rent, electricity and wages etc,
which could also be why the profit in 2013 was lower than 2014.
In terms of ASDA sales it was 23.2bn in 2014 and in 2015 it was 22.4bn, this could be due to the
customers not liking the quality of the products as ASDA did invest in new quality low priced
products because it is low priced the quality may not have been as good which is why the sales
decreased in 2015.In 2014 the sales may have been higher because customers liked the quality and
they may have just been shopping with ASDA because competitors were expensive and in 2015 the
sales may have decreased because ASDAS competitors were doing better quality and lower sales.
The sales in 2015 could have also been lower than 2014 because ASDA did not have products the
customers wanted and it 2014 it could have also been higher because ASDA was doing discounts and
good advertising.
ASDA’s stock/inventory in 2013 was £1,069bn and in 2014 it was £1,112bn , in 2013 the stock may
have been lower than 2014 because in 2013 ASDA just invested in new stock for their plan for low
price and quality, which is a possibility in 2014 stock increased because ASDA had to purchase more
stock because they had more customers they had to satisfy because people liked their new products
price and quality. Also stock could have been low in 2013 because ASDA had an expensive supplier
so they didn’t want to buy as much stock until they started their plan which is why in 2014 they had
more stock because maybe they had a new supplier which was cheaper and gave them a good deal
so they bought more stock.
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