The case relates to understanding and comparing the operation of two top retail companies- Tesco and Ahold. The case introduces the tools of Dupont and Modified Dupont Decomposition. Ahold has had significantly better stock market performance compared to Tesco while performance as has been similar for the two businesses.
Ahold has a large amount of money on its balance sheet resulting in low rates of net debt. The case requires students to examine operation using Modified Dupont Decomposition methods then propose strategies to improve functionality and to evaluate if firm performance is resulting from operating profitability or from financial influence. Students learn the best way to reformat and condense the balance sheet and income statement to separately measure profitability arising from operating activities as well as financing activities, to do the altered Dupont Decomposition. Students also see precisely what factors should drive the appropriate level of influence for a company and how excessive cash holdings can depress profitability.
PUBLICATION DATE: September 18, 2012 PRODUCT #: 113040-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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