ACCOUNTING & MANAGERIAL FINANCE

Accounting and Managerial Finance

Table of Content

TABLE OF FIGURESIV

ACCOUNTING AND MANAGERIAL FINANCE1

INTRODUCTION1

DISCUSSION1

SECTION 11

Overview of the Companies1

Tesco PLC1

J Sainsbury PLC2

Morrison PLC2

a. Working Capital Trade-Offs2

Concept of Working Capital2

Working Capital Accounts and Companies Analysis2

Analysis of Cash Management3

Analysis of Receivables4

Analysis of Payable4

Working Capital Management Ratios4

Analysis of Working Capital Ratios5

b. Financing Working Capital5

Strategy for financing Working Capital Morrison5

Strategy for financing Working Capital Tesco5

Strategy for financing Working Capital Sainsbury6

c. Working Capital Efficiency6

Total Asset Turnover Analysis7

Receivables Turnovers Analysis7

Inventory Turnover Analysis8

Account Payable Analysis8

Cash and Equivalents Analysis9

Cash Conversion Cycle Analysis9

d. Working Capital Management10

Theory of Working Capital Management10

Liquidity Analysis11

Profitability Analysis11

Risk Analysis12

Working Capital Management Summary12

Implementation of Working Capital Management Theory on Companies13

SECTION 214

a) Balance Sheet Analysis14

Value of Shareholder Analysis14

b) Share price analysis of each firm15

Analysis of Historical Share Price16

c) Finance news for each company17

Daimler news On Company's Performance17

Volkswagen AG News On Company's Performance17

Renault SA News On Company's Performance18

d) Best Investment Decision18

Investment Decision for Volkswagen AG18

Other Reasons Investment Decision for Volkswagen AG19

CONCLUSION20

REFERENCES21

Table of Figures

FIGURE 1: WORKING CAPITAL MANAGEMENT3

FIGURE 2: WORKING CAPITAL MANAGEMENT RATIOS4

FIGURE 3: WORKING CAPITAL EFFICIENCY 20126

FIGURE 4: CASH CONVERSION CYCLE9

FIGURE 5: OPERATING CYCLE FOR COMPANY10

FIGURE 6: BALANCE SHEET ITEMS14

FIGURE 7: SHARE PRICES15

Accounting and Managerial Finance

Introduction

The importance of Accounting and Managerial Finance has been increasing for improvement process. Through this, companies are able to manage, control and able to take appropriate decisions. This paper has been divided into two sections. In first section, FTSE100 three companies from same industry will be analyse on company's working capital policy and recommending which policy might be useful for profitability and for entire structure. Second section will focus on investment decision on Volkswagen AG, Daimler AG and Renault SA.

Discussion

Section 1

The companies which have been chosen for this part are leading supermarkets - Tesco, Sainsbury and Morrison. These companies belong to Retailing industries and have been listed on FTSE100.

Overview of the Companies

Tesco PLC

Tesco is one of leading food retailer in Ireland and United Kingdom with the 2715 stores in the country. Tesco's plc has an ultimate product ranges those are Groceries, Telecoms, Financial service and Consumer good (Tesco Annual report, 2012, pp. 5). \

J Sainsbury PLC

Sainsbury is the third largest chain of supermarkets in the United Kingdom. After Tesco the share of Sainsbury in UK supermarket sector of 16.5%. Currently, there are 890 stores and 547 supermarkets and 343 convenience stores of Sainsbury.

Morrison PLC

Wm Morrison Supermarkets plc is the fourth supermarket in UK (Sainsbury Annual report, 2012, pp. 3). The company shares market share 11.8% behind Tesco and Sainsbury. They engaged in manufacturing and distribution of fresh food products. They have 439 stores throughout UK (Morrison Supermarkets plc annual report, pp. 7).

a. Working Capital Trade-Offs

Concept of Working Capital

Working capital measures the company's efficiency along with the company's short term financial health. Working capital can either be a positive or negative that specifies the ability or inability of the company to meet their short term obligation.

Working Capital Accounts and Companies Analysis

Working Capital Accounts and Trade-Offs comprises of Cash, Receivables, Inventory and Payables between these three companies (Bhattacharya, ...