Management of Risk: Financial Analysis and Evaluation of Tesco Company

RUNNING Head: Management of Risk 1 | P a g e
Name of the student
Topic- Management of Risk
University Name-

Management of Risk 2 | P a g e
Table of Contents
Introduction...........................................................................................................................................2
Critically evaluate the various types of risks faced by Tesco.................................................................3
Managing these all types of risk by using different strategic plans and procedure by Tesco Company 6
Financial analysis of Tesco Company.....................................................................................................8
Working capital analysis of Tesco Company........................................................................................14
Earnings Management and transfer pricing could affect the quality of the financial information........15
Conclusion...........................................................................................................................................16
References...........................................................................................................................................17

RUNNING Head: Management of Risk 3 | P a g e
Introduction
This report focuses on the risk and financial analysis of a company. In this report,
Tesco Company has been taken into consideration. There are various financial tools such as
ratio analysis, cash flow analysis and capital budgeting tool which may influence the business
of an organization. In this report, various types of risks which would be faced by a company
on the global scale have been evaluated. This company has used various strategies to
overcome or manage these risks. After that, ratio analysis has been used to evaluate the
financial performance of a company.
Description of Tesco Company
It is British international general merchandise and Grocery Company. The main head
quarter of company is in Welwyn Garden city, England, United Kingdom. The Dave Lewis is
present CEO of company. This Tesco Company has several subsidiaries such as Tesco Bank,
Tesco Mobile, and Tesco Lotus.
Vision
It has the vision to create strong position in client’s mind through its integrity and
commitment (Brigham and Ehrhardt, 2013).
Mission
It has the mission to generate core competency in selling products and services through its
advanced supply chain.
It is evaluated that company has been facing several kinds of risks in its business which may
cause serious loss of profit or even bankruptcy. There are several risks such as operational

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risks, financial risks, reputational risks, compliance risk and strategic risks. The annual
report and other business functioning of the company have been assessed to evaluate all the
possible risk of business (Tesco Plc, 2014).
Critically evaluate the various types of risks faced by Tesco
It has been undertaking various strategic alliance and investment decisions. However,
business plan of Tesco Company is based on the well-structured comprehensive business
plan. Ideally, the strategic decision of company is highly influenced by competitors offering,
clients demand, and technologies changes. For instance, Tesco Company was having the
strong position in the market. However, due to the increased use of technologies and online
business models, Tesco faced high destruction in its retails products selling (Tesco Plc,
2017).
Compliance risk
This compliance risk arises when company fails to comply with the applicable rules
and regulations. These are the main risk which arises due to the non-compliance program of
Tesco Company. It is evaluated that it has faced high amount of penalties due to the non-
compliance of international rules and regulation. It has the international business and may
fail to establish proper harmonization in its international and domestic reporting framework
(Tesco Plc, 2016).
Operational risk
Operational risk refers to an unexpected failure in the company in its daily operations.
It may be technical failure, server outrage and other value chain activities problems.
Operational risk issue arises due to the failure of its operational activities. For instance, if the
payment department of Tesco wrote a check of $ 1, 00,000 instead of 10,000 by mistakes