ACCOUNTING ANALYSIS

Accounting Analysis of Tesco

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Statement of principal stakeholder group2

Strategic issues facing the company and their likely financial implications3

Analysis of the performance and financial position of the company4

Income Statement for the year ended 20135

Ratio Analysis6

Ability to meet such challenges9

Accounting Analysis of Tesco

Statement of principal stakeholder group

Anyone who is affected by the decision making of the company will be called a stakeholder. Stakeholders have various types that comprises of the shareholders of the company, consumers of the company's product and services, the government, and various pressure groups and the list still continues. This analysis will be conducted through the perspective of an investor, in other words a shareholder (Cornell, B., & Shapiro, A. C. 1987).

There are two types of investors that have financial information needs. Firstly, it is the current investor of the company, who wants to develop an understanding of the company's future prospects and wants to know the dividend potential of the company. Secondly, a prospective investor wants to know whether or not the company is worth investing, so that he does not make an ill informed decision regarding the investment (Cludts, S. 1999).

Financial information is of great use to a current investor. As a result he will be able to get a view of what is going on inside the organization. Normally a shareholder is concerned about the efficient utilization of resources; he feels that this should be done in an effective and efficient manner. Therefore, shareholders make use of financial statements in order to assure themselves. Otherwise, if the shareholders feel that there is some king of inefficiency taking place, he will be able to take the required action which is normally selling the share.

Secondly, prospective investors would also make use of the finical analysis. As a consequence, they will be able to come to a conclusion regarding the investing decision. Normally, new investors are interested in the dividend policy and its company's growth prospects. Dividend is important due to the fact that it is a return on the investor's investment. The company's future prospects have a significant part to play on the prospective investor, as it shows whether the company has the potential and capability to grow. Growth has a direct impact upon the share price. With growth taking place, the company's share price would also go up, meaning a capital gain for the investor.

Strategic issues facing the company and their likely financial implications

I have chosen Tesco as the company for the analysis, over the last couple of years it has shown consistent levels of performance. However, over the last year, a number of strategic issues have taken place, most important of which is the horsemeat scandal. As a consequence, Tesco's financial performance has been affected. Tesco is the largest retailer in the UK and has a strong presence all over the world; its business is mainly dependent upon its brand and the maintenance of customer relationships (Marketline. 2013).

The horse meat scandal has taken Tesco's financial performance by storm, with an impact upon its ...