Financial Performance Analysis

This report analyzes the financial performance of Tesco through ratio analysis, balance scorecard, and integrated reporting. It examines the company's current and quick ratios, net profit margin, gross profit margin, gearing ratio, price earnings ratio, earning per share, return on capital employed, average inventories turnover ratio, and dividend pay out ratio. The report also discusses the benefits and challenges of adopting Integrated Reporting (IR) for Tesco. The analysis provides insights into Tesco's financial and non-financial aspects and its overall performance.

Financial
Performance
Analysis

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Ratio analysis for businesses:......................................................................................................3
TASK 2............................................................................................................................................8
Balance score card:......................................................................................................................8
TASK 3..........................................................................................................................................11
Integrated reporting:..................................................................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
The aspects in which a firm controls and tracks financial statements within an entity are
referred to as financial performance management (Gartenberg, Prat and Serafeim, 2019).
Financial performance management's key objective is to equate real outcomes to projections and
predictions and make corrections as required. Firms are well able to accomplish their targets by
help of proper management of outcomes. Basically, financial performance is a subjective
indicator of a company's ability to produce money from its primary mode of operation. The
concept is often used as a broad indicator of a company's overall financial performance over
time. The report is based on different kinds of tasks which have been performed. The main
organization which has been chosen for report is Tesco. This company was founded in year 1919
and operates at a global level. This company offers different kinds of grocery items with wider
portfolio of products. The objective of project report is to analyze financial performance of
chosen company with financial and non-financial aspects. There are three main tasks in report
under which first task is based on analyzing financial performance of company by help of ratio
analysis. In the second task, detailed analysis of balance scorecard matrix has been done. In the
end of report, critical analysis of the benefits and challenges of adopting Integrated Reporting
(IR) for selected organization has been done.
TASK 1
Ratio analysis for businesses:
Ratios Formula Tesco Sainsbury
Particulars 2018 2019 2018 2019
Current ratio
Current
assets
Current
assets /
current
liabilities 13600 12570 7857 7581
Current
liabilities 19233 20680 10302 11417
Results 0.71 0.61 0.76 0.66

Quick ratio
Quick
assets
Quick
assets /
current
liabilities 11336 9953 6047 5652
Current
liabilities 19233 20680 10302 11417
Results 0.59 0.48 0.59 0.50
Net profit margin
Net profit
Net profit /
revenues *
100 1210 1320 309 219
Revenues 57493 63911 28456 29007
Results 2.10 2.07 1.09 0.75
Gross profit margin
Gross profit
Gross
profit /
Revenues *
100 3352 4144 1882 2007
Revenues 57493 63911 28456 29007
Results 5.83 6.48 6.61 6.92
Gearing ratio
Debts
Debts /
Equity 34404 34213 14590 15085
Equity 10480 14834 7411 8456
Results 3.28 2.31 1.97 1.78
Price earning ratio

Share price
Share price
/ EPS 189.55 255.2 264.9 229.9
Earning per
share 4.96 6.14 2.49 1.86
Results 38.22 41.56 106.39 123.60
Earning per share
Total
earnings
Total
earnings /
outstanding
shares 1210 1320 309 219
Outstandin
g shares 244 215 65 54
Results 4.96 6.14 4.75 4.06
Return on capital employed
Operating
profit
Operating
profit /
capital
employed
* 100 1566 2639 518 601
Capital
employed 25502 28269 11699 12097
Results 6.14 9.34 4.43 4.97
Average inventories turnover ratio
Cost of
goods sold
Cost of
goods
sold /
average
inventories 54141 59769 26574 27000

Average
inventory 2282 2440 1792.5 1869.5
Results 23.73 24.50 14.83 14.44
Dividend pay out ratio
Dividend
Dividend /
Net profit *
100 82 357 235 247
Net profit 1210 1320 309 219
Results 6.78 27.05 76.05 112.79
Calculation
of capital
employed
Tesco Sainsbury
particulars 2018 2019 2018 2019
Total assets 44735 48949 22001 23514
Less:
Current
liabilities 19233 20680 10302 11417
25502 28269 11699 12097
Gearing
ratio
Tesco Sainsbury
2018 3.28 1.97
2019 2.31 1.78

Current ratio: It is about which views how much ability businesses has for paying debt.
It is about current assets, current liability. It is about which views how much cash businesses has
for pay debt. It is known for working capital ratio. This data is about Tesco, Sainsbury. This data
views about Tesco has 0.71 for 2018, 0.61 for 2019. Sainsbury has 0.76 for 2018, 0.66 for 2019.
It is about Sainsbury has better performance for 2018, 2019.
Quick ratio: It is about which views how much cash businesses have for pay debt. It
includes liquid assets which is cash, it not includes inventory, prepaid expense for pay debt (Le,
Du and Tran, 2018). It is about how much ability businesses has for pay debt. This is about
Tesco, Sainsbury. This data views about Tesco 0.59 for 2018, 0.48 for 2019. Sainsbury has 0.59
for 2018, 0.50 for 2019. it is about Sainsbury has more cash for pay it debt. Sainsbury has better
performance which helps for generating more profit.
Gross profit ratio: It is about which views how much profit businesses generate for
gross profit by sale. It views relation for gross profit, sale. It is about profit which businesses
generate for their sale. This is about Tesco, Sainsbury. This data views about Tesco has 5.83 for
2018, 6.48 for 2019. Sainsbury has 6.61 for 2018, 6.92 for 2019. it is about Sainsbury has better
performance for 2018, 2019.
Net profit ratio: It is about which views how much profit businesses generate for net
profit by sale. It views relation for net profit, sale. It is about profit which businesses generate for
their sale. This is about Tesco, Sainsbury. This data views about Tesco 2.10 for 2018, 2.07 for
2019. Sainsbury has 1.09 for 2018, 0.75 for 2019. Tesco has better performance for 2018, 2019.
Gearing ratio: It is about which views equity, debt, fund which borrow by the
businesses. Gearing ratio is financial ratio which helps for knowing businesses leverage, amount
for fund borrow by investor which helps for running businesses activities. It is about equity, debt,
fund which businesses borrow for generating profit. It is about Tesco, Sainsbury. Tesco has 3.28
for 2018, 2.31 for 2019. Sainsbury has 1.97 for 2018, 1.78 for 2019. Tesco has better
performance for the 2018, 2019.
Price earnings ratio: It is about how much amount investor invests for businesses for
achieving businesses earning. This is price earnings ratio which views various prices. It is about
which views how much investor willing for pay for earning. This is about Tesco, Sainsbury.
Tesco has 38.22 for 2018, 41.56 for 2019. Sainsbury has 109.39 for 2018, 123.60 for 2019.
Sainsbury has better performance for 2018, 2019.

Earning per share: It is about how much profit businesses earn for their share. It views
business profit which it earns for share (Alexander, 2018). It is about which views how much
profit businesses earn for share which it gives for shareholder. It is about Tesco, Sainsbury.
Tesco has 4.96 for 2018, 6.14 for 2019. Sainsbury has 4.75 for 2018, 4.06 for 2019. Tesco has
better performance for 2018, 2019 for businesses.
TASK 2
Balance score card:
Balanced Scorecard- Balanced Scorecard refers to a framework in which the
implementation and management of the strategy can be done so that the measures are taken in
order to boost the overall level of performance effectively and efficiently in the right manner
(Albuhisi and Abdallah, 2018). Therefore, it is important for the organizations that the use of this
particular framework can be made so that the attainment of the short-term, medium-term and
long-term goals and objectives can be made in a proper manner. This model was developed by
Kaplan and Norton in the year 1992 and is one of the most famous frameworks which are used in
order to assess the overall level of performance effectively and efficiently and therefore help in
the attainment of the goals and objectives.
In the context of Tesco and Sainsbury's it is an important system which is required to be
implemented within the processes and systems and therefore this will help the management in
ensuring that the strategic implementation can be made effectively and efficiently. Therefore, the
use of this system is essential for both of the organizations because through it the measurement
of the overall performance level has to be done and therefore the attainment of the goals and
objectives in the future can be made.
There are multiple perspectives which are concerned with the Balanced Scorecard. The
analysis of these particular perspectives can be explained in the following manner-
Financial- These are the higher-level of financial perspectives which are required to be
considered by the organizations and therefore this can be quite helpful for them in ensuring that
they can manage their position of funds in the right manner (Maqbool and Zameer, 2018). This
will be helpful in the attainment of the overall goals and objectives. Here, the management of
Tesco and Sainsbury does both have to consider these perspectives and this will lead towards the
better management of the finances within both of the companies.

Customer- These are the perspectives which are directly linked with the customers of the
organization. Therefore, it is crucial for the firms that they are able to give adequate importance
to the customers and thus in this way it can be helpful for the management of both Tesco and
Sainsbury's so that they can make sure that the application of a wide range of strategies and
methods can be made so that the satisfaction level of the customers can be enhance in a right
manner.
Internal processes- These are the wide range of measures which are required to be
undertaken so that the organizations can make sure that the improvement in the overall level of
internal processes can be made effectively and efficiently (Mahrani and Soewarno, 2018). Thus,
in this way it can be said that for both Tesco and Sainsbury's it is important that the internal
processes can be given priority so that the attainment of a higher-level of performance can be
done in a proper manner. Therefore, for the overall level of improvement in both of the
companies it is crucial to bring improvement in these processes.
Organizational capacity- These are the wide range of measures which can be
undertaken in order to ensure that there can be a substantial increase in the overall organizational
capacity. Thus, In this way it can be said that the management of Tesco and Sainsbury's are
required to make sure that they are able to bring an overall level of improvement in the
organizational capacity in a proper manner.
There are various types of advantages and disadvantages of making the use of the
Balanced Scorecard Model. Therefore, In this way there are following advantages and
disadvantages of making the use of this particular model-
Advantages-
 Visual picture of the strategy- The use of the Balanced Scorecard model can be made in
order to ensure that a visual picture of the strategy can be made effectively and
efficiently. Thus, In this way the managers of Tesco and Sainsbury's are able to make
sure that they can provide an appropriate picture of the strategy they will use.
 Easier data collection- Use of the Balanced Scorecard model is quite helpful in ensuring
that the data collection can be done effectively and efficiently. Therefore, for the
managers of Tesco and Sainsbury's it will be helpful in ensuring that the collection of the
data can be done in a proper way.

 Easier strategy reporting- Balanced Scorecard model is helpful in leading towards
easier strategy reporting (Chen, 2018). In the context of Tesco and Sainsbury's, it can be
helpful so that the strategy reports can be prepared properly and therefore the appropriate
actions can be taken accordingly.
 Easier to train- Using Balanced Scorecard model can help a lot in ensuring that the
training can be provided in an appropriate manner. For the management of Tesco and
Sainsbury's, this can be quite useful so that the proper training is provided to the various
types of employees.
Disadvantages-
 Less focus on the external factors and competitors- The use of Balanced Scorecard
model leads towards less focus on the external factors and competitors. This is so because
the use of this model is helpful for the analysis of the internal situation within an
organization. Thus, In Tesco and Sainsbury's this creates a disadvantage.
 Lack of risk analysis- With the use of Balanced Scorecard model there is a very less
focus of the organizations on the overall risk analysis (Chowdhury, Rana, Akter and
Hoque, 2018). This is so because using this model can lead towards improper assessment
of the level of risks which are present within the company. Therefore, In Tesco and
Sainsbury's a disadvantage is created due to this particular reason.
 Strategy Map/KPIs are hard to maintain- Using the Balanced Scorecard model can
create a lot of problems and difficulties because the Strategy Map and KPIs cannot be
maintained easily within the organization. Thus, In this way the management of Tesco
and Sainsbury's can find it difficult to appropriately make the use of Strategies effectively
and efficiently.
 Cannot work without cultural shifts- The use of the Balanced Scorecard model is not
helpful when the organization's employees are not cooperating in the cultural shift. In this
way, the managers of Tesco and Sainsbury's can find it difficult because their employees
will have to adjust according to the change which is required to be implemented within
the organization.

TASK 3
Integrated reporting:
Integrated reporting is about which is corporate communication which is process for
communication, which is about value creation (Bontis, Ciambotti, Palazzi and Sgro 2018).
Integrated report is concise communication about how businesses strategy, governance,
performance lead for creation for value for short, medium, long. It is about integrated views for
business performance for both financial, value relevant data. Integrated reporting gives greater
context for performance data which views relevant information which fit for businesses which
helps businesses for strategic decision making. It is about while communication views
performance by IR it will be benefit for shareholders, it is necessary for them to gives financial
capital allocation. IR helps for financial, sustainability. It is framework which investor,
shareholder using for running businesses activities. Capitalism is about efficient allocation for
capital for return for investor.
Integrated reporting refers to the coordination between the company and the production process.
There is succinct detail about how corporate management, governance and results contribute for
the short and long-term objectives (Cho, Chung and Young, 2019). The portrayal in single
instance of the enterprise's financial as well as non results. In the light of non-financial data like
the way companies perform the economic, social, and leadership criteria, this is more useful.
This will help to assess the key market performance and productivity of the shareholders and the
various parties involved. This is crucial in assessing the organization's longevity and overall
success. It aims to improve the development of reports in order to provide holistic reporting in
order to provide business value. Many considerations other than the financial facets of the
business often take this into consideration. The IIRC, the world's powerful association of
regulators, investors and enterprises, supports this in order to exchange more information on
business reporting developments. In the form of the Tesco survey, the proposal for businesses to
understand the problem in several respects depends not only on a corporate report.
It is about which businesses manage for financial capital which investor gives for
generate value for generate by other financial data, trademark, natural resource. IR is about
growing realization which is for wide range factor which view for value businesses, these are
financial, tangible for nature which is easy for account for financial statements while intellectual
capital, competition. IR is growing which is for wide range for element for value for the

businesses. These are financial for nature which is easy for account for financial statements
which is about intellectual capital, competition. IR which broad, large consequences for decision
for businesses which is base for factor, in order for create sustains value for businesses. IR
enable for businesses for communicate for clear, articulate way how it is for resource, which is
using for generate value which helps investor for manage risk, allocate resource for most
efficiently. It is necessary, for increasing reporting for financial data for ecological data.
Integrated report is about which is necessary communication about how businesses strategy,
governance, performance generate for investor, shareholder for businesses. It helps businesses
for improving their communication for various activities.
It is about achieving knowledge about businesses which helps for better performance
which helps for higher profitability for businesses (Paniagua, Rivelles and Sapena, 2018). In
context to Tesco, Sainsbury these businesses using IR for knowing how businesses has better
performance. It views about various activities for the businesses. It is about which businesses
using for their strategic decision. This is about businesses using these data for knowing for
investor about businesses strategy. Investor is who invest their fund for running activities for
businesses. Investor views businesses strategy which helps for knowhow businesses has better
performance. Investor views how businesses using fund which helps them for generating profit.
IR is about which helps for knowhow businesses generate their profitability. Investor using these
data for knowing how much profitability businesses generate for running their activities. These
businesses using financial statement which includes cash flow. Balance sheet, income statement.
Cash flow which includes cash outflow, inflow for various activities which includes operating,
investing, financial activities for businesses.
Benefits-
• This aims to demonstrate seriously the enterprise to have sustainability in its main market. This
is beneficial in Tesco to increase the company's net profits. •• It also helps communicate the
environmental and societal impacts of the company's activities, which contribute to minimising
the organization's influence and dedication. In Tesco, this allows forming the main form of
productivity in order to manage many other advantages and has the right outcomes. This explains
how the organisation needs to learn and is helpful in achieving improved results (Kim, Kim and
Qian, 2018).

• Integrated monitoring also assists in analysing intelligent decision to enhance optimal
efficiency, while improving the company's competitive advantage to reduce the capital cost in a
longer term. Under the Tesco sense, this allows to lower capital costs and increase performance
over longer periods, as well as helps to analyse risk and the potential to boost revenue and define
the ESG correctly. This provides the best way to maximise performance.
• This further enhances brand awareness and consumer satisfaction for interpreting the
organization's better reputation, as this tends to maximise efficiency and meet targets and goals.
In the Tesco sense, it helps to improve the efficiency of creating improved customer ties to
increase productivity.
• This enables the various stakeholders to be engaged more effectively by consistent, balanced
reporting that can contribute to building trust with the shareholders. This is crucial to preserve
the performance of the organization and helps to maintain an improved partnership with it. In
Tesco, this is helpful in attracting the customer's efficiency and addressing the company's
efficiency to get the organisation improved outcomes.
Challenges:
• This addressed the issue of ensuring the provided results to the enterprise and the company has
been assured by such well-established organisations. Within Tesco, it is very rare in the business
world and needs to be done by the organisation to recognise that they have faced the lack of trust
between organisations in using the integrated reporting as their application (Salehi, DashtBayaz
and Khorashadizadeh, 2018).
• Uncertainty exists in calculating and translating the quantification of non-financial measures
into the firm's earnings results and developing the inefficient way of operating. In Tesco, the
need to measure the efficiency of the performance and to manage the various data sources for
organisational survival is challenging.
Compared with the financial measures when it creates the difficulty. Integrated monitoring is
very difficult to assess the company's success because it is a challenge that determines the
organization's exact productivity. The need to consider the achievement of the aims and priorities
in the sense of Tesco. The company's success is impossible to measure and has an awful job.
• The need to be achieved in the organisation must also be established as standard. The
implementation of the business. This is important in the light of Tesco becomes complicated and

complex plans and structure. This is essential in order to consider the company's performance
and to provide the company with a proper plan through the consolidated reporting.

CONCLUSION
The aforementioned report concludes that the monitoring of financial output helps analyse the
financial outcomes of the whole organisation and controls the total productivity and monitor it.
The main goals are to compare and modify the current performance with the projected budget.
This defines the main performance metric of the group, formulates strategic strategies and
manages the reporting performance. From the report above, the financial success management
helps analyse and track and control total quality financial outcomes across the organisation. The
main goal is for the real outcomes to be compared and adjusted to the budget and foreseen. This
defines the core success metric of the organisation, formulates strategic strategies and manages
monitoring performance. There are essential elements that must be focused and improved in
order to enhance organisational performance. Besides the integrated review, the threats and
advantages to the enterprise were examined and evidence was seen as an important means of
identifying the organisation's financial and non-financial indicators. This is a single type of
report that incorporates several aspects and prevents the corporation from judging its results.

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