Investigatory Business Report on Tesco's Financial Performance

Investigatory Business
Report

Executive Summary
This report pertains to analyse and investigate business performance of Tesco to identify the
issues that its financial performance analysis reflects. This report undertakes financial ratio analysis
using figures from the declared statements of the last two years by the company. Further,
information obtained from ratios has been visually presented so that comment on Tesco’s
profitability, liquidity and efficiency can be made as well as issues related to them can be identified.
Further, solutions and recommendations have been presented.

Contents
Executive Summary...........................................................................................................................................2
Introduction.......................................................................................................................................................4
Main Body.........................................................................................................................................................4
Ratio Analysis...............................................................................................................................................4
Problem Identification and investigation.......................................................................................................9
Solutions and recommendations..................................................................................................................10
Conclusion.......................................................................................................................................................11
References.......................................................................................................................................................12

Introduction
Companies are an artificial entity that performs commercial business activity under their
name (Raiborn and et. al., 2017). This report pertains to analyse and investigate business
performance of Tesco to identify the issues that its financial performance analysis reflects. Tesco is
a British multinational company that operates in general merchandise and retail industry. It was
founded in 1919 and is headquartered at Welwyn Garden City, Hertfordshire, England. This report
undertakes financial ratio analysis using figures from the declared statements of the last two years
by the company. Further, information obtained from ratios has been visually presented so that
comment on Tesco’s profitability, liquidity and efficiency can be made as well as issues related to
them can be identified. Further, solutions and recommendations have been presented.
Main Body
Ratio Analysis
Ratio analysis is a manner of assessing company performance in easy terms. Ratios present
financial information of the company in an easy form so that it can be understand by even those
who does not have knowledge of accounts and finance. For assessing financial performance of the
Tesco, two years’ comparative ratio analysis is being demonstrated. Figures have been extracted
from the annual report of TESCO PLC (Tesco – Annual Report and Financial Statements 2020,
2021) and represent information of the company as stated for 28th February, 2019 and 29th February,
2020. To analyse financial business performance of Tesco, multiple financial ratios such as
liquidity ratios, profitability ratios and efficiency ratios have been calculated and analysed below:
 Current Ratio
Current Ratio is one of the liquidity ratios and is a metric that is used to measure capability
of current assets of the business to meet its short-term obligations (Chen and Komal, 2018).
Particulars 2020 (£m) 2019 (£m)
Current Assets 12879 12480
Current Liabilities 17927 20973
Current Ratio = Current Assets / Current Liabilities 0.72 times 0.60
times