Financial Management and Analysis

FINANCIAL MANAGEMENT AND ANALYSIS

Table of Contents
Introduction......................................................................................................................................4
TASK 1............................................................................................................................................4
1. Analysis of financial performance...........................................................................................4
2. Limitation of analysis..............................................................................................................4
3. Recommendation.....................................................................................................................4
TASK 2............................................................................................................................................4
1. Payback period.........................................................................................................................4
2. NPV.........................................................................................................................................4
3. IRR...........................................................................................................................................4
4. Recommendation for the choice..............................................................................................4
TASK 3............................................................................................................................................4
A. Theoretical ex-right price........................................................................................................4
B. Value of rights.........................................................................................................................4
C. Effects on the wealth...............................................................................................................4
TASK 4............................................................................................................................................5
A). Market capitalisation.............................................................................................................5
B). Net assets value......................................................................................................................5
C) Price/earning ratio method......................................................................................................5
D) Historic dividend growth rate.................................................................................................5
E) How much it should offer to buy the shares of this company................................................5
TASK 5............................................................................................................................................5
A) Difference between systemic and unsystematic risk as used in the Capital Asset Pricing
Model (CAPM)............................................................................................................................5
B) Difference between the capital market and the money market...............................................5
C). Difference between risk and uncertainty...............................................................................5
D). Reasons whether a bank overdraft is suitable to finance the purchase of this property........5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

Introduction
Financial management is indeed a company management field dedicated to the selective need for
resources and the appropriate examination of the means of funding to allow the investment unit
to step in the course of achieving its objectives (Masini and Menichetti, 2012). Long-term
financial decisions or financing decisions involve committing money, or capital equipment, for a
prolonged period of time. The financial practises and results of an organisation are decided by
these judgments. In this report, different aspect of financial management are discussed.
TASK 1
1. Analysis of financial performance:
Liquidity ratio analysis: This ratio shows how much liquidity is going on in the company. If
look at the liquidity ratio in Tesco company then a lot has been low in the year 2019 as compared
to this year 2018. This ratio is determined by dividing the total liabilities on the total assets.
Similarly, the quick ratio will also be calculated when the company subtracts the inventory from
the formula of total assets total current liabilities. Like current ratio, it is working in year 2019 as
compared to year 2018.
2. Profitability ratio analysis: Profitability ratio is seen in how the company has a tendency to
make a profit. In the Tesco Company the trend of earning gross profit of the year 2019 has been
found more than in the year 2018.
3. Efficiency ratio analysis: This ratio is seen in the company that how well the company is using
its assets and liabilities. This ratio makes good calculations of debtors and inventory.
4. Capital structure: The capital structure of the company is built in such a way that all the assets
to be financed. It is extracted as follows:
5. Stock market performance: The stock market performance of Tesco company has changed
many times in the year 2018 and 2019.