FINANCIAL MANAGEMENT

Financial Management



Table of Contents

1. Analysis of Financial Data3

1.1 Obtaining and Assessing the Financial Data for Validity3

1.2 Analytical Tools and Techniques for Financial Documents and Performance Levels and Needs of Stakeholders3

1.3 Comparative Analysis of Financial Data4

1.4 Reviewing and Questioning of Financial Data5

2. Assess Budgets based on Financial Data for Organizational Objectives9

2.1 Production of Budget based on Financial Constraints and Achievement of Targets, Legal Requirements and Accounting Conventions9

2.2 Analysis of the Budget Outcomes against Organizational Objectives10

3. Evaluation of Financial Proposals for Expenditure Submitted by Others12

3.1 Criteria for Judging Proposals12

3.2 Analysis of the Viability of a Proposal for Expenditure13

3.3 Strengths, Weaknesses and Feedback on the Financial Proposal14

3.4 Evaluation of Impact of the Proposal on the Strategic Objectives of the Organization14

Financial Management

1. Analysis of Financial Data

1.1 Obtaining and Assessing the Financial Data for Validity

For obtaining the financial information about the companies, annual reports are used for the assessing the validity of the financial data of the selected companies that include Tesco and Marks & Spencer. For the purpose of this study, financial data is obtained from the annual reports of Tesco and Marks & Spencer from 2010 to 2011 respectively for both companies which reflect the validity of the data.

1.2 Analytical Tools and Techniques for Financial Documents and Performance Levels and Needs of Stakeholders

The analytical technique for financial documents and performance levels that is used in the study is the ratio analysis. This paper focuses on the financial status of Marks and Spencer and Tesco for 2 years that is from 2010 to 2011. This study includes various factors that particularly include analysis of financial data, assessing the budgets based on financial data in order to support organisational objectives and evaluating the financial proposals for expenditure purpose which will help in describing the importance of choosing the right strategy. In addition to this, the performance levels, needs of stakeholders and financial documents are also incorporated in the analysis through the analysis of the financial ratios that affect all the stakeholders of Marks and Spencer and Tesco. For that reason, analysis of different ratios play vital role in the analysis of the performance levels of companies and also the needs of the stakeholders.

1.3 Comparative Analysis of Financial Data

Marks & Spencer

Tesco

Profitability Ratios

4/2/2011

4/3/2010

2/26/2011

2/28/2010

ROA % (Net)

8.47

7.19

5.73

5.05

ROE % (Net)

25.35

24.36

17.15

16.9

ROI % (Operating)

15.15

15.37

12.27

10.76

EBITDA Margin %

9.46

8.8

6.71

6.73

Calculated Tax Rate %

23.32

25.57

24.84

26.73

Liquidity Ratios

4/2/2011

4/3/2010

2/26/2011

2/28/2010

Quick Ratio

0.41

0.42

0.43

0.51

Current Ratio

0.74

0.8

0.67

0.73

Net Current Assets % TA

-7.74

-5.18

-12.42

-9.23

Debt Management

4/2/2011

4/3/2010

2/26/2011

2/28/2010

LT Debt to Equity

0.72

1.05

0.59

0.8

Total Debt to Equity

0.94

1.27

0.67

0.91

Interest Coverage

5.63

5.87

7.04

5.38

Asset Management

4/2/2011

4/3/2010

2/26/2011

2/28/2010

Total Asset Turnover

1.35

1.3

1.31

1.24

Receivables Turnover

44.33

44

36.47

36.78

Inventory Turnover

9.27

10.3

18.97

19.38

Accounts Payable Turnover

11.41

16.33

11.28

11.58

Accrued Expenses Turnover

143

156.63

122.41

138.64

Property Plant & Equip Turnover

2.08

1.96

2.52

2.4

Cash & Equivalents Turnover

22.3

22.64

26.13

17.99

Per Share

4/2/2011

4/3/2010

2/26/2011

2/28/2010

Cash Flow per Share

0.76

0.77

0.5

0.6

Book Value per Share

1.69

1.37

2.05

1.83

1.4 Reviewing and Questioning of Financial Data

Marks & Spencer

Profitability Ratios

The profitability ratio of Marks & Spencer is satisfying as the past trend that is from 2010 to 2011 reflects that the profitability situation of Marks & Spencer is adequate, which can be confirmed through the evaluation of the profitability ratios. From the ratios, it can be observed that the return on equity of Marks & Spencer is showing that the structure of profitability from 2010 to 2011 of the company is increased from ...