Financial Performance Management

Financial Performance Management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
QUESTION 1..................................................................................................................................3
Evaluation of financial performance of organizations by using ratio analysis............................3
QUESTION 2................................................................................................................................10
Evaluation of Kaplan and Norton’s Balanced Scorecard as a Strategic Management System. 10
QUESTION 3................................................................................................................................13
Brief description regarding benefits & challenges adopting integrated reporting.....................13
CONCLUSION..............................................................................................................................15
REFERENES.................................................................................................................................17

INTRODUCTION
Financial performance is systematic procedure which used by manager in order to measure
and evaluate their entity’s performance. This report is formulated for the purpose of find out
tools and technique which develop for the purpose of recognize the performance of business
organization.
Tesco has been taken, thus organization run business in supermarket sector and it is
considering as one of the famous multination entity. Headquarter of Tesco is situated at
London. Balance scorecard is help in measuring performance and able to find out value of
organization by using effective tools and formulation of policies.
It is defining how balance scorecard use as system of strategic management. This
report defines use of financial ratio in order to determine the financial performance of
Tesco and its rival business organization Sainsbury.
On the basis of calculating of various ratio position of organization within the market
determine. This report defines the relevance of Kaplan and Norton’s Balanced Scorecard,
its meaning, impact of perspective of customers, shareholders, and use of tools which
help in measuring growth and success rate of organization define in systematic manner.
This report also includes use if integrate report as well as benefits and challenges
organization face while implementation of this report. All these information is defining
in systematic format.
MAIN BODY
QUESTION 1
Evaluation of financial performance of organizations by using ratio analysis.
Tesco: It is considering as one of the most popular organization of UK, which deals in
super market sectors. It is multinational retailer organization which market is spread all over the
world. It proved best quality of merchandise groceries product and services. This organization is
help in contribute towards the economy of UK by providing employment and through selling
their products in market. Sainsbury is one of the major competitive organization which give
toughest competition to this entity.
Sainsbury: This organization contain its position as the 2nd largest retail organization of
UK. Which chain of supermarket spread more than of 16 % of market share of this country. At

present time by using effective marketing policies this organization gave strong competition to
Tesco.
Financial ratio: The term ratio is used to determine relation between 2 or more then
of 2 variables, thus this tool consider as one of the useful and reliable tool of financial
management. With the computation of following ratio performance of Tesco and Sainsbury
can be determining:
Calculation of ratio
Particular Formula Tesco Sainsbury
Current ratio Current assets/ Current liabilities 0.92 0.63
Quick ratio Liquid assets/ Current liabilities 0.5 0.48
Net profit ratio Net profit/ Sales*100 1.5 0.44
Operating profit ratio operating profit / Sales*100 3.95 2.24
Inventory ratio Cogs/ Average inventory 23.83 14.74
Account receivable
ratio
Net credit sales/ Average account re-
ceivables 42.66 204.18
Debt to equity ratio Debt / Equity 1.36 0.97
Dividend pay-out
ratio Total dividend/ Net income 0.1 0.007
Current ratio: This ratio is calculated for the purpose of identify the relation between
current asset and short term lability of organization The main purpose of recognize relationship
in order to find out the ability of organization to pay their short term liability by using their
current assets (Zainudin and Hashim 2016).