Financial Management and Analysis

FINANCIAL MANAGEMENT AND ANALYSIS

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...........................................................................................................................................3
Task 2...........................................................................................................................................7
Task 3.........................................................................................................................................10
Task 4.........................................................................................................................................11
Task 5.........................................................................................................................................13
REFERENCES..............................................................................................................................17

INTRODUCTION
Financial governance is one of the most relevant and necessary aspects for any company as it
supports the corporation in the proper management and allocation of the most important finance
capital, so as to contribute to the long-term value of the business (Shapiro and Hanouna, 2019).
For the first task the report is based on a company which is Tesco plc located in UK and listed in
London stock exchange. The report contains detailed information about ratio analysis of
company and guidance to them as per the analysis in task one. While in rest of task, there is
different kinds of requirement like investment appraisal approaches, guidance to investors as per
the scenario and many more.
MAIN BODY
Task 1
1. Critically analysis of variations in financial condition and health during previous two years.
Financial performance analysis- For firms, this is necessary to carefully evaluate financial
factors to make the financial health of firms inside and outside stakeholders aware of different
aspects (Prihartono and Asandimitra, 2018). In order to evaluate the tax arrangements of
businesses, a number of factors have to be considered. As for Tesco plc, for two years, for
instance, those items are covered below:
Ratio analysis- The measurement of ratios is a quantitative approach of analysing its financial
statements, such as a balance sheet and a statement of sales, for an insight into liquidity,
operations performance and performance of a company. Ratio analyses are a central pillar of an
appraisal of equity (Yuniningsih, Pertiwi and Purwanto, 2019). The ratio study compares line
data from the accounting records to offer insights into performance, liquidity, operating efficacy
and solvency. Ratio analysis may indicate how a company performs over time and compare a
business in the same market or field with yet another company.
(Amounts are in GBP thousand except ratios) Tesco PLC
Year 2018 Year 2019
Current Ratio
Current Assets 13726000 12668000
Current Liabilities 19238000 20680000

Current Ratio = Current Assets / Current Liabilities 0.713484 0.612573
Quick Ratio
Quick Asset 11463000 10051000
Current Liabilities 19238000 20680000
Quick Ratio = Quick Assets / Current Liabilities 0.595852 0.486025
Net Profit Margin
Net Profit 1206000 1322000
Sales 57491000 63911000
Net Profit Margin = Net Profit / Sales *100 2.09772 2.068502
Gross Profit Margin
Gross Profit 3350000 4144000
Sales 57491000 63911000
Gross Profit Margin = Gross Profit / Sales *100 5.826999 6.484017
Earnings per share
Total net profit 1206000 1322000
Total no. of outstanding shares 2731000 3253000
EPS = Net Profit / Total no. outstanding shares 0.441596 0.406394
Return on capital employed
EBIT 1564000 2077000
CE 10480000 14858000
ROCE = EBIT / CE 14.92366 13.979
Average inventories turnover period
Net Sales 57491000 63911000
Average inventories 2282000 2440000
Average inventories turnover period = Net Sales / Average 25.19325 26.19303