Market Oricle.16 Jun 2015 22:29
To illustrate the magnitude of the crisis that Tesco faces is that a year ago when I first started to literally warn of Tesco's probable demise Tesco was worth approx £30 billion against debt and liabilities of approx £12 billion, against today Tesco is barely worth £13 billion with debt and liabilities of approx £15 billion (debt+pensions hole). The other critical factor in Tesco's debt crisis is what has happened to Tesco's profits, a couple of years ago Tesco was reporting profits of £4 billion, which was ample enough to service its debt mountain and waste on junk such as private jets for CEO's, but today that profit has been wiped out to just £112mln, and remains in a steep decline which implies LOSSES are around the corner, and when companies make losses DEBTS tend to EXPLODE higher, for it means the company needs to borrow money just to stay alive as it is unable to cover day to day activities such as paying suppliers and workers and of course debt interest of £500mln a year. What this does is to result in a quantum shift in debt vs assets in a relatively short period of time which tends to result in bankruptcy as no one is going to lend more money to a company with a ballooning debt mountain that it will increasingly be unable to service (interest payments) let alone actually repay.
Bloomberg and Market Oracle are wrong then. Ok I will believe you, many would not. You are adding assets that Tesco may not own. Most of their stores are rented.
Anyhow I will not digress further into Tesco, it is after all the superb MRW BB. If you wish to correct us some more may I point you to tsco, I`ll be sure to look in.
Sign In
Follow the stocks
