Financial Analysis Management & Enterprise FAME A1

FINANCIAL
ANALYSIS
MANAGEMENT AND
ENTERPRISE

Table of Contents
INTRODUCTION.................................................................................................................................................. 3
MAIN BODY........................................................................................................................................................ 3
1. RATIO ANALYSIS OF FINANCIAL RECORDS OF TESCO AND WALMART COMPANY FOR 4 YEARS...................................................3
2. STATE THE NECESSITY AND IMPORTANCE OF EXAMINATION OF WORKING CAPITAL FOR BOTH ORGANISATIONS BEFORE TAKING ANY
DECISIONS................................................................................................................................................................ 10
3. CRITICAL EVALUATION OF ANNUAL CASH FLOW RECORD OF BOTH FIRMS...........................................................................13
CONCLUSION.................................................................................................................................................... 14
REFERENCES...............................................................................................................................................................15

INTRODUCTION
The report prepared above takes in account examination and evaluation of two companies
i.e. Tesco and Walmart. It gives a detailed description related to computation of ratios, financial
records, statements of two organisation chosen (Abdulloevich, 2021). It states necessity towards
analysing the working capital before any decision-making process. It must also include a critical
assessment of cash flow on annual basis and search for evidences that would provide support
towards the arguments expressed. It displays an quality to measure business issues that are
complicated and complex in nature. It also provides recommendation and suggestions in an
autonomous way that rely on informed examination and critical assessment. The report prepared
takes in account calculation of liquidity ratios such as current ratio, quick ratio and in case of
profitability ratios gross profit, operating ratio, operating profit ratio and net profit ratio are
computed. It helps to understand the positioning and solvency of a business in competitive
environment. Assessment of working capital ratio and finding related cash flow generated in
related companies over a period of time helps to understand whether the business is sound or not.
It further serves as a base in decision making for investors and customers that are thinking of
investing in business.
MAIN BODY
1. Ratio analysis of financial records of Tesco and Walmart company for 4 years.
Profitability ratios of Tesco
Gross profit ratio:
Year Formula Calculation Results
2017 (Gross profit/ Net sales)*100 (4098/58091)*1
00
7.05%
2018 (Gross profit/ Net sales)*100 (3352/54141)*1
00
6.19%
2019 (Gross profit/ Net sales)*100 (4144/59767)*1
00
6.93%
2020 (Gross profit/ Net sales)*100 (4889/59871)*1 8.17%

00
Operating ratio:
Year Formula Calculation Results
2017 (Operating expense/ Net sales)*100 (1885/53015)*1
00
3.55%
2018 (Operating expense/ Net sales)*100 (1513/53015)*1
00
2.79%
2019 (Operating expense/ Net sales)*100 (2010/59215)*1
00
3.39%
2020 (Operating expense/ Net sales)*100 (1884/59871)*1
00
3.15%
Operating profit ratio:
Year Formula Calculation Results
2017 (Operating profit/ Net sales)*100 (1017/53015)*1
00
1.20%
2018 (Operating profit/ Net sales)*100 (1837/54141)*1
00
3.39%
2019 (Operating profit/ Net sales)*100 (2649/59215)*1
00
4.47%
2020 (Operating profit/ Net sales)*100 (2518/60180)*1
00
4.18%
Net profit ratio:
Year Formula Calculation Results
2017 (Net profit/Total revenue)*100 (- -0.10%