FINANCIAL ANALYSIS MANAGEMENT

Financial Analysis Management



Executive Summary

The main purpose of this paper is to make a financial statement analysis of a UK based company Tesco. This paper discusses that how financially stable is Tesco and whether it is feasible for the investor to invest in Tesco or not. The financial analysis will be interpreted by taking out the result from different tools like the ratio analysis through which we will calculate the profitability analysis, the debtors and creditor's analysis and the liquidity ratios. Also through the beta analysis the stock of the company will be evaluated. In this paper, the comparison of Tesco will also be made to check the position of the company. Ratios are considered to be the most important tool in order to get the knowledge about the company's financial position. Ratios helps in understanding the present situation of the company, and the trend that whether it is growing or in a negative trend. It is also an essential and important tool in order to understand the position of the rival companies. The paper makes discussion on the findings and analysis from the literature review, and the research methodologies. Later on, the recommendations have been made in this paper for the chosen organisation.

Table of Content

Introduction4

Research Literature7

Return on Shareholder's Fund (ROSF)8

Return on capital employed (ROCE)8

Operating Profit Ratio9

Gross profit margin9

Efficiency Ratios9

Average stock turnover period ratio10

Liquidity Ratios10

Current ratio10

Gearing Ratio11

Findings11

Tesco's Profitability12

Tesco's Return on Shareholder's Fund (ROSF)13

Tesco's Return on capital employed (ROCE)13

Tesco's Operating Profit Ratio14

Tesco's Gross profit margin14

Tesco's Efficiency Ratios14

Tesco's Liquidity Ratios15

Tesco's Current ratio15

Tesco's Gearing Ratio16

Conclusion and Recommendations18

Post Report Reflection20

References22

Financial Analysis Management

Introduction

Tesco is a significant international retailer. As a global business, the company perceives itself as having a vital role to play in helping to minimize its environmental impacts. Although based in the United Kingdom, Tesco PLC has developed into an international grocery and general merchandising chain, employing 440,000 staff worldwide and with sales exceeding £59 billion (in the year ending February 2009). Operating income exceeded £3 billion. These figures make Tesco the largest British retailer in terms of both combined sales and domestic market share, and the third largest in the world after Wal-Mart (United States) and Carrefour (France). It is claimed that £1 in every £7 of UK retail sales goes the way of Tesco (Aaker, 2009, p. 137). The company is engaged in retail and related activities, in the United Kingdom, the Republic of Ireland, Hungary, Poland, the Czech Republic, Slovakia, Turkey, Thailand, South Korea, Malaysia, Japan, China and the United States. The company also provides retail banking and insurance services through its subsidiary Tesco Personal Finance PLC (formerly Tesco Personal Finance Group Limited) (FPT). The company has two business segments, retail and financial services. Services retail channels including online purchases of the company, tesco.com and Tesco Direct, Telecommunications, Tesco Personal Finance (TPF) and dunnhumby, the business consumer research. Today, Tesco is the third largest global retailer based on revenue, behind Wal-Mart and French Carrefour, but the second largest based on profit, ahead of ...