logo

Tesco's Financial Management Strategies

   

Added on  2020-01-07

16 Pages3874 Words166 Views
 | 
 | 
 | 
Mohammad Zubair
Tesco's Financial Management Strategies_1

CONTENTSINTRODUCTION...........................................................................................................................4TASK 1............................................................................................................................................4Sources of finance that can be used by firm and evaluating their appropriateness.....................4TASK 2............................................................................................................................................5Impact of finances on financial statements..................................................................................5TASK 3............................................................................................................................................6Importance of financial budgeting and planning.........................................................................6Information needs of different decision makers..........................................................................6TASK 4............................................................................................................................................6Calculation of variances...............................................................................................................6TASK 5............................................................................................................................................7Pay back period............................................................................................................................7Accounting rate of return (ARR).................................................................................................8Net present value (NPV) and Internal rate of return (IRR).........................................................8TASK 6..........................................................................................................................................101. Calculation of gross profit and net profit ..............................................................................102. Calculation of most profitable plan........................................................................................103. Profit computation on dealing with ASDA............................................................................11TASK 7..........................................................................................................................................12Comparison of appropriate formats of financial statement for different types of firms............12TASK 8..........................................................................................................................................12Interpretation of 2012 annual reports for Tesco Plc using suitable ratios.................................12Conclusion ....................................................................................................................................15REFERENCES..............................................................................................................................162
Tesco's Financial Management Strategies_2

Index of TablesTable 1: Calculation of pay back period of Bend it Well BiW36....................................................7Table 2: Calculation of pay back period of Turn it Fast TiF21......................................................8Table 3: Calculation of NPV and IRR of Bend it Well BiW36.......................................................9Table 4: Calculation of NPV and IRR of Turn it Fast TiF21.........................................................9Table 5: Calculation of profits under both the proposals...............................................................11Table 6: Computation of profit with dealing with ASDA.............................................................113
Tesco's Financial Management Strategies_3

INTRODUCTIONManaging financial resources is a crucial business activity that assists in attaining business goalsin an effective manner. It is important for the business to make allocation of resources as per theneed of finances (Caglayan and Demir, 2014) This is because it ensures proper management ofcash. In the present study, management of financial resources will be discussed with respect toTesco plc. This study includes sources of finance and their implications. Furthermore it coversimportance of financial planning and information needs for different decision makers. TASK 1In the scenario given, Tesco, one of the major retailers, is planning for expansion of itsoperations. In regards to this, the points below have been discussed: Sources of finance that can be used by firm and evaluating their appropriatenessThere are various sources of finance that can be used by Tesco. These includes Factoring: This is considered as one of the sources available within the business. It is referred toas financial transaction among the owner of the business and a third party that offers cashinstantly on the exchange of account receivables of the firm. It is sales of receivables of theorganisation (Fabregat-Sanjuan, Ferrando and De la Flor, 2015). It is appropriate in the sensethat it gives Tesco quick cash. In addition to this it minimizes the risk associated with bad debt. Overdraft: Under this source of finance, the organisation can withdraw more amounts incomparison to the existing one in the bank. This facility can be availed by Tesco in order to meetits working capital requirements. Bank loan: Tesco can also borrow funds by taking loans from financial institutions. This requiresthe business to keep some assets as security (Gertler and Kiyotaki, 2010). This acts as an aid forthe company in meeting its long term need for finance. Debenture: Furthermore, the corporation can issue debentures to the public in order toborrow funds for the purpose of accomplishing its long term obligations. 4
Tesco's Financial Management Strategies_4

End of preview

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

Related Documents
Financial Management & Decision Making
|18
|5254
|105

Capital Expenditures & Business Financing
|25
|5255
|266

Sustainability in Business and Finance
|14
|3756
|153

Desklib Business Report: Investment Appraisal, CVP, Long-term Finance, and Procurement
|17
|4210
|490

Importance of Capital Investment Appraisal Process for S plc
|18
|4124
|406

Source of Finance in Business : Report
|21
|4810
|55