An Investigation of 11 Tesco Financial Performance and its Business Environment ABSTRACT Financial Statement Analysis
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Added on 2020-06-04
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INTRODUCTION 1 1.1 Overview of the study 1 1.2 Research aim and objectives 1 1.3 Rationale of the study 1 1.4 Significance of the study 2 2. LITERATURE REVIEW 2 Theme 1: Tools and techniques that help in analyzing financial performance 2 Theme 2: CSR initiatives and its importance for the business organizations like Tesco Plc 4 3.
An Investigation of 11 Tesco Financial Performance and its Business Environment ABSTRACT Financial Statement Analysis
Added on 2020-06-04
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Tesco’s Financial Performance and its Business Environment
ABSTRACTFinancial statement analysis may be served as tool, which indicates monetary position ofthe firmpertaining to the specified time period. By using such tool business unit can assesswhether firm’s financial performance is improved or deteriorated over the time frame. Thisreport is based on Tesco Plc., which is the leading supermarket of UK. The main objective of thepresent study is to analyze financial position,CSR initiatives and business conditions of TescoPlc. In this, mixed research type has been selected by the researcher to attain the aim andobjectives. In this, to analyze the business research issue secondary data sources has beengathered by the researcher through the annual reports of Tesco Plc, books, journals and scholarlyarticles. The scholar to present suitable solution of issue has conducted ratio, horizontal andbusiness analysis. . It can be summarized from financial evaluation that monetary position andperformance of Tesco Plc is not good.It can be seen in the report that political and economiccondition in the context of UK retail environment is good. However, for attaining success andbuilding distinct image in the mind of customers firm is required to lay focus on technologicaladvancements and aspect of environment sustainability.
TABLE OF CONTENTS1. INTRODUCTION.......................................................................................................................11.1 Overview of the study............................................................................................................11.2 Research aim and objectives..................................................................................................11.3 Rationale of the study............................................................................................................11.4 Significance of the study.......................................................................................................22. LITERATURE REVIEW............................................................................................................2Theme 1: Tools and techniques that help in analyzing financial performance...........................2Theme 2: CSR initiatives and its importance for the business organizations like Tesco Plc......43. RESEARCH METHODOLOGY................................................................................................53.1 Research type.........................................................................................................................53.2 Data collection.......................................................................................................................53.3 Data analysis..........................................................................................................................5FINDINGS AND ANALYSIS........................................................................................................6Business analysis.........................................................................................................................64. FINANCIAL EVALUATION.....................................................................................................84.1 Ratio analysis.........................................................................................................................84.2 Horizontal analysis..............................................................................................................154.3 Tesco’s corporate social responsibility initiatives...............................................................185. CONCLUSION AND RECOMMNENDATIONS...................................................................205.1 Conclusion...........................................................................................................................205.2 Recommendations................................................................................................................21REFERENCES..............................................................................................................................23
TOPIC: To assess business environment and investigate financial performance and position ofretail firm: A study on Tesco Plc.1. INTRODUCTION1.1 Overview of the studyFinancial evaluation may be served as a process of evaluating or summarizing annualreports of firm through the means of ratio analysis. In the recent scenario, business units laidhigh level of emphasis on evaluating financial performance with amotive to develop highcompetent and strategic framework for the near future. Now, before makinginvestmentdecisionstakeholders make assessment of financial aspects. Outcomes of financial statement or ratioanalysis providein-depthinsight to the investors and stakeholders about extent to whichprofitability, liquidity as well as solvency position of company is sound (Financial evaluation,2017). Further, internal and external environmental factors also havesignificant impact on thebusiness operations as well as functions. The present report is based on Tesco Plc, whichis one ofthe leading British multinational grocery and merchandise retailersof UK (TESCO Plc, 2017). Inthis, report will shed light on the extent to which external environmental aspects of UK retail isgood. Besides this, it also entails the level to which financial performance of Tesco is improvedor deteriorated over the time frame. Report also depicts CSR policies and initiatives, which areundertaken by firm for the welfare of others. 1.2 Research aim and objectivesAim: Mainaim behind carrying out present study is to assess the extent to which financial andnon-financial position of Tesco Plc is good. On the basis of above aim,the researcher has drafted following objectives: To analyze the financialperformance ofTesco using horizontal and ratio analysis.To perform business analysis using SWOT and PESTELanalysis. To analyze theTesco’s policy regardingCorporate SocialResponsibility.1.3 Rationale of the studyRationalebehind doing present investigation is to evaluate the business andfinancialperformance as well as CSR policies of Tesco Plc. It is considered as an issue becauseafter scandal,investors and other stakeholders believe that monetary position of Tesco Plc is not
good.Earning higher returns from investment is one of the main motives of firm. Thus, thecurrent research will highlight on the extent to which financial position of Tesco Plc issoundthrough ratio and horizontal analysis. 1.4 Significance of the studyThe present study and its outcomes will prove to be highly fruitful for Tesco that in turnhelps it in developing competent policies for the upcoming time period. Along with this, businessand financial evaluation also assists stakeholders in taking suitable investment decisions. Further,such study will also help other scholars in gaining understanding about such issue. 2. LITERATURE REVIEWLiterature review is the process that helps in preparing brief report as per the aims andobjectives of research. In this, scholar presents and summarizesthe findingsof other researchersby making focus on both positive as well as negative aspect. In this, the researcher on ratioanalysis, external analysis and CSR has prepared several themes. Thus, for doing literature in aprominent way, several books,journals and scholarly articles have been evaluated by theresearcher.Theme 1:Tools and techniques that help in analyzing financial performanceAccording to the views of Temtime (2016), ratio analysis technique is highly effectualwhich in turn helps in doing analysis of financial statements in a structured way. By using suchtechnique firm can getquick indication about the monetary performance in several areas such asprofitability, liquidity, solvency, efficiency and investment.However, on the critical note, Heikal,Khaddafi and Ummah (2014) found that business conditions highly vary from one year toanother. Thus, in this, it is not possible to evaluate financial performance over the years byconsidering the technique of ratio analysis. Further, Jami and Bahar (2016)identified that ratioanalysis technique enables firm to assess the areas of business operations that requireimprovements. Hence, by using ratio analysis techniques firm can take strategic measure andwould become able to enhance monetary performance as well as position. Kastalli and Van Looy(2013) argued that ratios arehistorical in nature because in this past data set is used or consideredfor the purpose of evaluation. On the other side, the main motives of firm behind doing ratioanalysis are to take decision about the near future or upcoming time period.
Laitinen (2017)assessed that by doing or performing ratio analysis firm can capture thewide view and becomes able to get information about the extent to which performance of firm isimproved over the time frame. In contrast to this, Storey (2016)criticized ratio analysis techniqueon the basis of the aspect that different companies pursue varied accounting rules. In this, it isnot possible for the business organization to evaluate its performance in against to the rival firm.Sattar and et.al., (2017) entails that by doing analysis of profit margin, financial capabilities anddebt-equity position firm would become able to develop competent plan for the near future.Hence, there are several ratios that can be undertaken by business organization to measurefinancial performance isenumerated below:Profitability ratios:It includes both gross and net margin, which in turn helps in analyzingreturn that is generated by the firm during the accounting year over expenses. Hence, by dividinggross profit from sales business unit can assess the margin earned in against to direct expenses.In addition to this, NP margin helps in ascertaining the profit level over indirect expenses such assalaries, rent etc. Liquidity ratios:Nortey and et.al., (2016) stated in their study that liquidity ratio assists inevaluating the capability of firmin relation to meeting obligations. Current and quick ratio is themost effective measures that help in assessing howefficiently firm has managed its workingcapital aspect or position. Hence, by using the following formulas firm can measure or evaluateliquidity position. Current ratio: Current assets / current liabilities Quick ratio: Current assets – (stock + prepaid expenses) / current liabilities Solvency ratios:In the study,Smith and et.al., (2017)depicted that solvency ratio helps inascertaining the extent to which financial needs are met by the firm through debt and equity.Thus, by dividing total debt from the shareholders equitycompany can assess how solvent thecompany is. In other words, it can be stated thatthrough calculating such ratio firm can assess orevaluate its debt-equity mix. Efficiency ratios: This measure helps firm in identifying the extent to which businessunit has made effective or optimum use of assets. The main motives of business organization isto generate high revenue by making use of stock, fixed and total assets to a great extent (Tsai and
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