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Financial Analysis and Management : Assignment

Added on - 15 Jan 2020

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Financial Analysis and Management1
Table of ContentsINTRODUCTION................................................................................................................................3Assignment 2........................................................................................................................................3TASK 1.................................................................................................................................................3Presenting the report on the financial performance of Tesco and Sainsbury..................................3TASK 2.................................................................................................................................................4Giving advise upon the level of disclosure which is used by both the companies in the publishedannual reports...................................................................................................................................4TASK 3.................................................................................................................................................5Stating the extent to which both the retail organizations have addressed the need of the differentstakeholders by presenting the report.............................................................................................5CONCLUSION...................................................................................................................................7REFERENCES.....................................................................................................................................82
INTRODUCTIONFinancial analysis is the tool which enables business entity to evaluate the level to whichfirm is liquid, solvent, stable and profitable. In this way, financial analysis and its outcomes providehigh level of assistance to the firm in framing competent strategic policies which aid in increasingproductivity and profitability of business. Further, business organization can also take strategicactions by conducting financial analysis of competitors. In this context, report will describe themanner through which financial report can be drafted and presented in a structure way. Besides this,it will also describe the aspects of annual report which satisfy the information need of decisionmaker to a large extent.ASSIGNMENT 2TASK 1Presenting the report on the financial performance of Tesco and SainsburyRatio analysis of Tesco and Sainsbury for the five years from 2012-2016Profitability ratiosGross profit ratio:The above mentioned ratio analysis presents that GP ratio of Tesco in2013 and 2014 was 6.31%. On contrary to this, gross profit margin of Sainsbury increasedfrom 5.48% to 5.75% at the end of accounting year 2014. However, in comparison to Tesco,GP margin of Sainsbury is lower. This aspect shows that Tesco had generated high amountof sales and also, effectively maintained its direct expenses in against to Sainsbury. From theperiod of 2012-2016 GP ratio of the firm is showing decreasing trend. On the contrary to it,net profit margin of the firm inclined from 5.4% to 6.2% at the end of the accounting year2016.YearTescoSainsbury20128.4%5.4%20136.6%5.5%20146.3%5.8%2015-3.9%5.1%20165.2%6.2%3
Net profit ratio:Net margin of Tesco inclined from .19% to 1.53% in the financial year2014 but it is highly lower in comparison to the market trend. Besides this, in 2014, netmargin of Sainsbury also increased from 2.63% to 2.99%. Hence, by considering suchaspect, it can be said that Tesco had incurred high level of expenseson promotional andother business activitieswhich in turn resulted in reduced growth in the profit margin.Further, with an aim to enhance the sales, Tesco offered more discount to the customerswhich resulted in decreasing its net profit. Hence, it can be stated that profitability aspect ofSainsbury is sound in comparison to Tesco. On the basis of this aspect, Tesco needs to framecompetent strategies to exert control on expenses (Ozsoylev and et.al., 2014). Through this,business unit would become able to enhance its profit margin to a great extent. The belowmentioned graphical presentation states that net profit margin of Sainsbury is higher thanTesco.YearTescoSainsbury20124.35%2.68%20130.19%2.63%20141.53%2.99%2015-9.22%-.70%20160.25%2%420122013201420152016-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%8.00%10.00%
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