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Tescos explained

Perhaps the clearest explanation for the mess Tescos find themselves is within this well written article


To quote

Take a situation where managers face a £50m shortfall. They “encourage” suppliers to offer extra rebates, in effect pulling forward income from the following period. If the slump is temporary, all may yet be well. The “borrowed” rebates and discounts can be repaid with investors no wiser. But if the following year brings another £50m hole, the total shortfall of £100m must then be borrowed from the next period and so on. It is double or quits.

However, as I understand it, “encourage” is a very diplomatic term. Allegedly they would simply deduct substantial sums from payments to suppliers, to be subsequently fought over. Most especially close to the end of each quarter I would suspect

The question yet again arises has to how clear disputed sums with suppliers could be booked into profit? At even a very basic level you would have thought that there was a requirement for credit note at least?

The finger has to strongly be pointed at their so called auditors. PWC

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