FINANCIAL ANALYSIS

Financial Analysis

[Name of the Author]

Financial Analysis

Task # 1

Financial Ratios Analysis

A.

Profitability Ratios20112012

Tax rate %23.7322.92

Net Margin %4.394.35

Asset Turnover %1.301.32

Return on Assets %5.705.73

Financial Leverage %2.842.85

Return on Equity %16.9616.30

Return on Invested Capital %16.9616.30

Liquidity Ratios20112012

Current Ratios%.68.67

Quick Ratios or Acid Test Ratio %.14.12

Financial Leverage %2.842.85

Debt/Equity Ratio %0.570.58

Efficiency Ratios

Cash Conversion Cycle

Receivables Turn over23.02

Inventory Turnover16.61

Fixed Asset Turn over2.54

Asset Turn over 1.29

Tesco PLC

B. Business Structure of Tesco

The business structure of Tesco follows a hierarchical structure, and have many layers due to which there are many person involved for the purpose of reporting before reporting the information get to the boss as each layer is controlled by one person. It tends to be very big company as the hierarchical system is being followed in Tesco. The hierarchal system is being followed hence the instruction is being transformed from the upper level management to the middle and the middle level management to the lower level management. In the case of the problem the hierarchical structure is followed, it would move up through the structure again from one person to another until it gets supported to where it is. The staff in the Tesco knows their responsibility exactly, that what they have to do and therefore they don't wait around until they are asked to do. In other businesses like Marks and Spencer there is no hierarchal structure hence there are many barriers, because all the layers are controlled by one person, or many, not a single person is responsible for controlling the one layer hence there are many barriers for the communication due to which profit decreases. The hierarchal system is being followed hence the instruction is being transformed from the upper level management to the middle and the middle level management to the lower level management. The business strategy of the Tesco remained the same and it has expanded more than ever for the last six years period. Tesco have gone for the faster growth during last six years and also due to which more areas of opportunity were accessed and they are still looking forward for the expansion of business further in the challenging market. Tesco has expanded more profit non food lines like clothing and growing overseas as the domestic or the local market was slowed down. In United Kingdom the confidence of the consumer is slipping, but the sales growth of Tesco was 4.1% and the volume growth was 5 %.

Advantage of Organization Structure of Tesco

Tesco is following the hierarchal structure so that there would be a clear authority to make sure that what everyone is doing, what are their responsibilities and also knows that what the consequences are if the work is not finished and this helps Tesco to fulfill its purpose. The promotional path is clearly defined, if the person works harder than can get promotion, which is the great incentive to those people that are working below and is clearly defined that they will work harder to achieve that position. In consequence the Tesco provide benefits to all their workers because everyone there ...