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Analysis of Financial Statements of Tesco and Sainsbury - Report

Added on - 15 Jan 2020

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FINANCIAL STATEMENTANALYSIS
Table of ContentsINTRODUCTION...........................................................................................................................3Tesco and Sainsbury financial statements analysis.........................................................................4Methodology applied...................................................................................................................4Profitability analysis....................................................................................................................4Liquidity analysis.........................................................................................................................6Share price analysis.....................................................................................................................7Cash flow analysis.......................................................................................................................7Z score model on Tesco...............................................................................................................8Conclusion......................................................................................................................................9Recommendations.........................................................................................................................10REFERENCES..............................................................................................................................12
INTRODUCTIONFinancial statement analysis terms as the process of analyzing company's financialposition with through evaluating profit and loss account and balance sheet of the firm. Itindicates entity's strengths and position in competitive markets also useful for effective decisionmaking and further strategic planning activities (Ebrahimi and Talebnia, 2016). Analysis offinancial statement permits measuring cash, profitability and assets and liabilities of theorganization. It is beneficial to compare industry's position on the basis of present and paststatements involves income statement, balance sheet and profit and loss account.This report would be focused on the analysis of financial statements of two well knownretail companies of UK named: Tesco and Sainsbury supermarket. Both companies are famous toachieve maximum profit with customer satisfaction that's why these two industries selected foranalyzing of t their financial statements. Tesco as well Sainsbury have strong financially positionand provides goods and services to its customers in effective and efficient manner. The reportwill show liquidity ratio, income statements, customer feedback and also unique facilities'advantages (Karaibrahimoglu and Tunç, 2014). Tesco is third largest retail company producesgrocery products to customers by means of physical as well as online medium. Sainsbury alsoproduces its goods and services in qualitative way to its customer in online and way.Both Tesco and Sainsbury's advertises their products and pulls customers t increase indemand quantity. They follow marketing concept to accomplish the task to fulfill customers'needs and demands and then supply products (Brochet, Jagolinzer and Riedl, 2013). Financialposition in UK market can analyses through this report in wide range with various forms. Thisconcept approaches to other small and retail businesses of UK in grocery and other food items.In reference to analyze financial position several ratios will be showed in comparing and similarway. Both are global and wide spread market for UK competitive supermarkets.Tesco is international grocery and one of the fifth largest retailer in the world, whoprovides facilities to its customers. Its products are well qualified and brand. It targets for longterm profit and producing more and more products (Cantoni, 2012). The vision of Tesco viewsas guidance of the direction in grocery and different products. It makes strategic and strongplanning framework to gain extra quality of products. This growing business remains full ofopportunities to grab ideas and opinions to encourage its employees and customers. It is helpful
to maintain harmony in relationship between organization and its employees. Tesco is high levelbrand company to reach the target of better performance.Sainsbury remains as second largest supermarket chain in UK market produces facilitiesof grocery products. Its financial position is very strong same as get succeed to fulfill customerneeds and desires (Brochet, Jagolinzer and Riedl, 2013). It aims to expand its business on longterm basis plans. Same as Tesco, it views its growth through focus honest feedback of customersaccording to its goods and services. Products are also popular as Sainsbury products andadvertises in unique way and always grab opportunity to sustain and maintain its position in UKgrocery market at high level.Thus, this report is able to analysis financial statements of UK largest grocery markets.This report will also be able to show all kinds of qualities and maximization of products insystematic manner.TESCO AND SAINSBURY FINANCIAL STATEMENTS ANALYSISMethodology appliedFinancial statement's analysis is one of the process of reviewing and analysing thefinancial statements of the company in order to make better economic decisions. The financialstatements include income statements, balance sheets and the cash flow statements which isregarded as the standard statements prepared by an entity. The financial statements are analysedin order to ascertain several factors such as assessing the trend and proportion analysis of all thecomponents of the financial statements.There are various methods of analysing the financial statement's such as vertical andhorizontal analysis of this company. The current analysis of the financial statement is based onapplying the technique of ratio analysis. The technique of ratio analysis is used by an entity asthis defines the ability of an enterprise by categorising bin different variety such as profitability,liquidity and financial performance in making the best suitable decisions in an entity.Horizontal analysisIt is used as historical method of comparing the financial performance of the businessover series of different reporting periods. This analysis will aggregate the information in theexisting financial statements by defining percentage changes from the previous years. It is
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