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Financial Performance Analysis

   

Added on  2020-02-03

16 Pages4254 Words64 Views
MANAGERIAL FINANCE1
Financial Performance Analysis_1
Table of ContentsINTRODUCTION................................................................................................................................3QUESTION: 1 PORTFOLIO...............................................................................................................3Calculation of ratio and its analysis through graphical presentation................................................3Recommendation to poorly performing business.............................................................................7Limitations of financial ratios...........................................................................................................8QUESTION: 2 CAPITAL INVESTMENT APPRAISALS.................................................................9Application of different investment appraisal techniques................................................................9Limitations of using investment appraisal techniques....................................................................12CONCLUSION..................................................................................................................................13REFERENCES...................................................................................................................................142
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Table of figures Figure 1 Calculation of cash flows from project A..............................................................................9Figure 2 Calculation of cash flows from project B............................................................................10Figure 3 Calculation of payback period.............................................................................................10Figure 4 Calculation of net present value...........................................................................................11Figure 5 Calculation of internal rate of return....................................................................................113
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INTRODUCTIONIn the present times of wide market volatility and fierce level of competition, it becomesessential for the establishments to manage their funds in an effective manner. The present projecthighlights the financial performance analysis of two well-known retail stores of UK, Tesco Plc andJ. Sainsbury Plc. The central aim of evaluation and examination of both the company’s performanceis to suggest Ross Hill Ltd’s Chief Financial Officer for his portfolio construction. Moreover, many-times, companies are also require to make investment in various capital projects like introduction ofnew product, acquisition of advanced technology, upgraded machinery etc. Henceforth, the reportwill apply different capital budgeting tools i.e. payback period, net present value and internal rate ofreturn to suggest Midway Limited (ML) about the best project. QUESTION: 1 PORTFOLIOCalculation of ratio and its analysis through graphical presentationRatio calculation attached in AppendixTesco Plc is one of the largest UK-based retail organizations that operate in 12 countries aroundthe world, but still, it generates around 86% of total turnover from UK. On the other side, JSainsbury is operating in the market through more than 1200 supermarkets and convenience stores.Both the company’s financial performance has been analyzed here as under:Liquidity narratives: Both Tesco and Sainsbury require managing their liquidity position tomake their deferral payments tothe suppliers on right time. CRand QR are very usefulmeasurement to evaluate andexamine liquidity position of thefirm, calculated below: Current ratio: It measure thatfirm has enough resources ofcurrent assets (inventory,accounts receivable, cash etc.) ornot to pay timely to their short-term obligations. Tesco Plc’s CR got declined from 0.73 to 0.60 that is an adverse sign of businessability to make payment to their suppliers. However, Sainsbury’s ratio turned down from 0.64 to0.65 which indicates that it improved its current assets (CA) so as to pay timely their current4
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