Financial Position Assessment of Tesco Company

Accounting and finance

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Financial position assessment......................................................................................................3
REFLECTION...........................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Accounting for finance is defined as identifying the financial transactions of the
organisation that can meet all the needs and requirements of the stakeholders. This is about to
project the exact financial position of organisation. This report is based on the case study of
Tesco Company in respect to its financial position. The organisation was established in the year
1919 by the founder Jack Cohen. Headquarter of the company is located in London, United
Kingdom. Company is currently operating at approximately 6800 business locations at a global
level. This project would assess the financial position of the company in market. Henceforth, this
report would emphasis over different ratios that can reflect the financial position of the
organisation. On the basis of the analysis of the ratios the financial stability of the company will
be measured and analysed. Furthermore, this project would also reflect the experience of the
assessor in order to complete the project and assessing about the financial position of the
organisation.
MAIN BODY
Financial position assessment
Financial position is denoted as the current financial situation of the company in order to
achieve the overall objectives behind the business functions. Ratio analysis is denoted as on the
basis of various rations financial position of the organisation can be identified easily. This
project how effective the organisation is capable of meeting the needs and requirements of the
financial situation of the organisation. Tesco Company is one of the fastest growing
organisations in the retail sector at a global level. Following is the projection of the financial
situation of organisation based on different ratios comprises with profitability ratio, efficiencies
ratio, liquidity ratio and financial gearing ratios.
Gross profit ratio (GPR)
Gross profit ration denote the gross profitability of the organisation. This ratio denote the
actual outcome company could generate against the trading activities undertaken by organisation
(Marsha, N. and Murtaqi, 2017). Gross profit is the net profitability company could entertain
again the trade it has done with customers.
GPR = Gross profit / sale * 100
This ratio compares the gross profitability of the company with the sales of the
organisation.
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2016 = 2020 / 53933 * 100
= 3.75%
2017 = 1966 / 55917 * 100
= 3.52%
2018 = 2995 / 57493 * 100
= 5.21%
2019 = 4514/ 63911 * 100
= 7.06%
The gross profit ratio of past four years is denoting the increasing trend in the
profitability of the Tesco Company. Its important for the organisation to entertain the increasing
trend in the gross profitability of the organisation. The increasing trend in the gross profit
margins denotes that Tesco Company is channelizing its business operations and functions in
right direction. The approaches of the company in doing business operations are effective and
favourable in respect to the business and retail market. Gross profit is the true indicator of the
trading situation and condition of organisation as it denote the revenue generated out of the
trading operations company has undertaken. In the last four financial year the gross profitability
has improved allot and the last year profit margin reported as 7.06% as compare to the fourth
previous year which register the profitability as 3.75%. Profitability of the company is
approximately double
Net Profit Ratio
Net profit denotes the net income of the company. This is the net outcome company
could generate in the respective financial year against the business operations undertaken. The
exact profitability of the organisation is denoted with the net profit company has entertained in
the respective financial year (Zorn and et.al., 2018). Net profitability projects the actual
outcomes against the business operations entertained by the Tesco Company. This is the actual
revenue company is generating against the business operations undertaken by organisation.
NPR = Net profit / sales * 100
2016 = 256 / 53933 * 100
= .474%
2017 = 58 / 55917 * 100
= .103%
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