10 Principles of Financial Management -

Running head: FINANCIAL MANAGEMENT PRINCIPLES
Financial management principles
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1FINANCIAL MANAGEMENT PRINCIPLES
Executive summary
Purpose of the task is to concentrate on the financial performance of Tesco Plc over the past 4
years and compare the performance of latest year with its major competitor Sainsbury Plc. For
analysing the financial performance the task will cover the liquidity position, debt position,
activity status, profitability position and market position of the entity’s shares. The task will
further carry out the trend analysis to evaluate the trend of performance over the last 4 years and
trend for the ratios from the investor’s view point. Finally, in accordance with the performance
the task will recommend required suggestion.

2FINANCIAL MANAGEMENT PRINCIPLES
Table of Contents
Section A.........................................................................................................................................3
Introduction......................................................................................................................................3
Ratio analysis...................................................................................................................................4
(i) Comparing financial position over past 4 years...................................................................4
(ii) Comparing Tesco Plc’s performance against Sainsbury Plc............................................6
Trend analysis..................................................................................................................................7
Movement in ratios..........................................................................................................................8
Conclusion and recommendation....................................................................................................9
Reference.......................................................................................................................................10
Appendix........................................................................................................................................12
Section B........................................................................................................................................14
Problem 2.......................................................................................................................................14

3FINANCIAL MANAGEMENT PRINCIPLES
Section A
Introduction
Tesco Plc is considered among leading retailers within the UK retail industry and is one
of the largest retailers in food sector around the world. The entity was established in the year
1919 with a grocery store and expended into market consequently along with wide range of retail
services including travel agency, telecom, financial, insurance and other associated products. It
has influential business for petrol retailing. However the organization is present predominantly
within the supermarket as well as hypermarket that have been diversified widely through re-
evaluation period (Tesco PLC 2020).
Considering the financial performance of the entity over the last 4 years it can be stated
that the sales revenue of the entity are in increasing trends and reached to £56,883 million in
2019 against £47,859 million in 2016. In the same way the net profit of the entity has been
reached to £1320 million in 2019 against £129 million in 2016. The entity was further able to
reduce its indebtedness to £12,200 million in 2019 from £15,536 in 2016. In 2017 the entity
decided to sell the Turkey operations and hence the same treated as discontinued since 2017. It
has determined that new segment the new segments as well as defined measures of new non-
GAAP since 2015/16 onwards. During 2018 the entity reassessed the reportable segments and
established that retailing as well as associated activities those were disclosed previously inside
international segment shall be differentiated among Asia segment and Central Europe (Tesco
PLC 2020).