Financial Performance: Evaluating TESCO and Sainsbury's Ratios

Financial performance

Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1........................................................................................................................................3
Calculating the ratios of TESCO (company A) and Sainsbury (Company B) ...........................3
Question 2 .....................................................................................................................................11
Critically evaluate Kaplan and Norton’s Balanced Scorecard as a Strategic Management
System and formulating for the TESCO...................................................................................11
Question 3......................................................................................................................................14
Analysing the benefits and challenges for adopting integrated reporting by Tesco and
International Integrated Reporting framework..........................................................................14
CONCLUSION..............................................................................................................................17
REFERENCES................................................................................................................................1

INTRODUCTION
Financial performance is concerned with evaluating the effectiveness of the firm to
generate the profitability v and revenue by using the available resources. In the current era,
having effective financial performance is important as it offers the crucial intimation that are
required to be taken into considerations for gaining competitiveness. The present study is based
on TESCO (company A) which is one of international organization that is offering products in
the retail sector. The one of the major competitor of the firm is Sainsbury that as well operates in
international platform of retail sector as achieving the good outcomes from the enterprise. It is
important for the TESCO to give emphasis on evaluating the organizational financial outcome as
compared to its competitor in turn prevailing lacking areas to make improvement can become
possible. There is higher competition in the retail sector at international level so compliance with
the prevailing rules and regulation of reporting has been focused by business.
The present study will give focus on calculating the ratios of both the mentioned
company for evaluating the financial performance with usage of graphs and charts. Current
investigation will provide emphasis on getting the appropriate evaluation of Kalpan and Norton's
balance scorecard to induce critical factors for the TESCO so that depth understanding can be
obtained. Recent report will emphasize on benefits and challenges of adopting integrated
reporting of TESCO with using the academic literature. This will permit to gather the appropriate
information about the prevailing financial performance of enterprise.
Question 1
Calculating the ratios of TESCO (company A) and Sainsbury (Company B)
Profitability ratios
Gross Profit Ratio
Particulars Formula TESCO Sainsbury
2019 2020 2019 2020
Gross Profit 4696 4580 2288 2016
Sales revenue 63911 64760 29007 28993
GP ratio Gross profit / sales * 100 7% 7% 8% 7%

Gross profit refers to the ability of the company to reduce the cots of goods sold in respect to
incline profitability. From the assessment of the above given information it can be interpreted
that there are various stakeholders such as financial institutions, lenders, etc. who pay attention
on developing de scion on the basis of gross profitability possessing by firm. The gross
profitability of TESCO is constant for the two years. Sainsbury's performance is declining in
the current period as considered to previous outcome. GP of TESCO's and Sainsbury is 7 & 7
respectively which is depicting that company A has ineffective ability to reduced its cost. There
is requirement to make significant modifications by TESCO such as eliminating irrelevant cost,
appropriate pricing strategy, etc. so that grater GP than Sainsbury to get greater attractiveness in
industry.
Net Profit ratio
Particulars Formula TESCO Sainsbury
2019 2020 2019 2020
Net profit 1270 973 186 152
Sales revenue 63911 64760 29007 28993
NP ratio Net profit / sales * 100 2% 2% 1% 1%