Switch to:
GuruFocus has detected 3 Warning Signs with Tesco PLC \$TSCDY.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Tesco PLC (OTCPK:TSCDY)
Net-Net Working Capital
\$-14.72 (As of Aug. 2016)

In calculating the Net-Net Working Capital (NNWC), Benjamin Graham assumed that a companys accounts receivable is only worth 75% its value, its inventory is only worth 50% of its value, but its liabilities have to be paid in full. In addition, Graham believed that preferred stock belongs on the liability side of the balance sheet, not as part of capital and surplus. This is a conservative way of estimating the companys value.

Tesco PLC's net-net working capital per share for the quarter that ended in Aug. 2016 was \$-14.72.

Definition

Tesco PLC's Net-Net Working Capital (NNWC) per share for the fiscal year that ended in Feb. 2016 is calculated as

 Net-Net Working Capital Per Share (A: Feb. 2016 ) = (Cash And Cash Equivalents + 0.75 * Acct. Receivable + 0.5 * Inventory - Total Liabilities - Preferred Stock) / Shares Outstanding = (9601.42857143 + 0.75 * 708.571428571 + 0.5 * 3471.42857143 - 50397.1428571 - 0) / 2713.69 = -14.20

Tesco PLC's Net-Net Working Capital (NNWC) per share for the quarter that ended in Aug. 2016 is calculated as

 Net-Net Working Capital Per Share (Q: Aug. 2016 ) = (Cash And Cash Equivalents + 0.75 * Acct. Receivable + 0.5 * Inventory - Total Liabilities - Preferred Stock) / Shares Outstanding = (10618.6107471 + 0.75 * 2245.08519004 + 0.5 * 3283.09305374 - 54052.4246396 - 0) / 2724.75 = -14.72

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

In calculating the Net-Net Working Capital (NNWC), Benjamin Graham assumed that a companys accounts receivable is only worth 75% its value, its inventory is only worth 50% of its value, but its liabilities have to be paid in full.

In addition, Graham believed that preferred stock belongs on the liability side of the balance sheet, not as part of capital and surplus. In "Security Analysis", preferred stock is dubbed "an imperfect creditorship position" that is best placed on the balance sheet alongside funded debt.

This is a conservative way of estimating the companys value.

Explanation

One research study, covering the years 1970 through 1983 showed that portfolios picked at the beginning of each year, and held for one year, returned 29.4 percent, on average, over the 13-year period, compared to 11.5 percent for the S&P 500 Index. Other studies of Grahams strategy produced similar results.

Benjamin Graham looked for companies whose market values were less than two-thirds of their net-net value. They are collected under our Net-Net screener. GuruFocus also publishes a monthly Net-Net newsletter.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Tesco PLC Annual Data

 Feb07 Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 NNWC -9.02 -11.16 -14.40 -15.09 -15.33 -16.30 -16.47 -18.44 -18.33 -14.20

Tesco PLC Semi-Annual Data

 Feb12 Aug12 Feb13 Aug13 Feb14 Aug14 Feb15 Aug15 Feb16 Aug16 NNWC -16.30 -16.26 -16.47 -16.45 -18.44 -18.42 -18.33 -18.54 -14.20 -14.72
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)