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  • Essay / Comparison of Woolworths and Tesco - 1604

    Tesco generates healthy returns because a percentage increase in return on equity (ROE), meaning the more efficient management uses its assets and the better return is for investors. However, for Woolworths this contained a decrease, demonstrating inefficiency. Tesco's return on assets (ROA), profit margin, gross margin and cash flow to sales ratio all declined over the year. This determines that Tesco is unable to manage cost control and increase profits as the business grows, making it unprofitable and not generating healthy returns. For Woolworths, all percentages have increased in these areas, meaning Woolworths is able to maintain earnings from its total revenue/sales. Ensuring Woolworths generates healthy returns and is