logo

Recommendation to the senior management of LMU Plc regarding investment appraisal

   

Added on  2020-02-05

8 Pages985 Words57 Views
Management and Finance
Recommendation to the senior management of LMU Plc regarding investment appraisal_1
Table of ContentsTASK 1............................................................................................................................................3Analyzing and evaluating the liquidity and financial structure of Tesco over the period of threeyears.............................................................................................................................................3TASK 2............................................................................................................................................4a. Writing a report to the senior management of LMU Plc regarding the advantages anddisadvantages of investment appraisal.........................................................................................6b. Recommending the senior management of LMU Plc which machine prove to be morebeneficial......................................................................................................................................7CONCLUSION................................................................................................................................7
Recommendation to the senior management of LMU Plc regarding investment appraisal_2
TASK 1Analyzing and evaluating the liquidity and financial structure of Tesco over the period of threeyears Liquidity ratio analysis: The below mentioned graph shows that current ratio of TescoPlc inclined from .73 to .75 at the end of 2016. However, as compared to ideal ratio suchas 2:1, current ratio of Tesco was highly lower. It presents that business unit does nothave enough funds for meeting the obligations. Thus, Tesco is required to make controlon expenses and focuses on the maintenance of current assets. Further, quick ratio of firmalso shows inclining trend from .56 to .63 times. Hence, by converting quick assets intocash Tesco can fulfill obligations in an effectual way. 20142015201600.10.20.30.40.50.60.70.8Current ratioQuick ratio Solvency ratio analysis: From financial statement analysis, it has been identified thatgearing ratio of Tesco Plc accounts for 110.8%, 415.7% & 235.6% during the period of2014 to 2016. Gearing ratio shows that Tesco had generated or raised more funds throughthe means of debt instrument rather than equity shares. This in turn enhance financialburden because in debt business unit is obliged to make payment of fixed interest (Gaunt,2014). By considering the overall position and performance it can be said that capitalstructure of company is not sound.
Recommendation to the senior management of LMU Plc regarding investment appraisal_3

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Business Finance
|10
|2584
|421

Business Decision Making: Investment Appraisal Techniques and Tesco's Performance
|13
|2063
|251

Business Finance: Case Study, Ratios, Non-Financial Indicators, Pricing Strategy Impact
|10
|2559
|249

Corporate Finance Information 2022
|10
|2684
|23

Business Finance: Investment Appraisal, Non-Financial Factors, and Pricing Policies
|13
|2699
|75

Investment Appraisal Techniques and Financial Ratios Analysis for Jessica Ltd
|10
|2422
|93