Segmental Disclosures In Tesco
Segment disclosures are widely regarded as some of the most useful disclosures in financial reports because of the extent to which they disaggregate financial information into meaningful and often revealing groups. Discuss.
Firstly, our report talks about the objectives and requirement of segmental disclosure followed by brief introduction of the four FTSE companies selected.
Since, each of the four companies may have resemblances and variances on how they report the operating segments, we will discuss how much segmental information is provided, whether the companies are in compliance with relevant accounting standards, and discuss the similarities and differences between their disclosures and practices.
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Its aim is to provide high quality brand food, home products and clothing. Marks and Spencer has segmented its operations geographically, split into UK and international. Their UK segments consist of UK retail business and UK franchise operations. Whereas, their international segments include Marks & Spencer owned businesses in the Republic of Ireland, Europe and Asia, together with international franchise operations.
Tesco PLC is a British multinational grocery and merchandising retailer. It is one of the world?s largest stores in terms of profits. Tesco PLC has also segmented its operations by geography. Their operation segments consists of UK, Asia, Europe and Tesco Bank.
Finally, Sainsbury?s, which is the second largest chain of supermarkets in the United Kingdom, where their aim is to provide great quality products at cheaper prices. Sainsbury?s group business is organized into three operating segments, and they are, retailing (supermarkets), Financial services (Sainsbury Bank), and property investments (joint ventures with the British Land Company PLC and Land Securities Group PLC).
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However, firm size is a significant element of disclosure practices. Bigger firms tend to provide more information in the disclosure because it reduces the political cost and risk of litigation. On the other hand, smaller firms disclose less information with the fear of losing their competitive position. Among the four companies, Tesco is the bigger firm in terms of market value, which is also reflected, in its more detailed and itemized segmental analysis. (Alfariah.M & Alanezi.F,