Business Management Assignment - Tesco Plc

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Name: Stephen Ndubuisi-KanuStudent ID: SNDUBU200Programme: Business ManagementModule: Fundamentals in Financial ManagementTutor: Divine KangamiModule: Fundamentals in Financial ManagementDue Date: November 20thInclude the question here and plagiarism statement. Ensure to get the right cover page
Fundamentals in Financial Management: Tesco Plc.Tesco Plc. is a multinational grocery company headquartered in Welwyn Garden City, England.Ken Murphy currently leads the company as the Chief Executive Officer (CEO), oversees over450,00 employees. The company’s brands include Booker, Makro, Premier, Jack’s, One Stop,and the Subsidiaries are Tesco Mobile, Tesco Ireland, and Tesco Bank (Tesco Plc., 2020). Thepurpose of the report is to conduct a financial ratio analysis for the two financial years, 2019 and2020. To know the financial health of the company, the five ratios selected for the analysis arecategorised into profitability, liquidity, management, leverage and valuation ratios. The report notonly calculates and interprets the ratios but also indicates the users, both internal and external,who can benefit from the information provided in the financial ratios.Table 1: Data adopted from Tesco Plc. (2020)1.Profitability ratios20202019Gross Profit Margin = Gross Profit / Net Sales4889/64760 = 7.55%2554/63911=7.18%Return on Assets = Net Income / Average TotalAssets971/52302=0.02or2%647/56898 =0.01or 1%2.Liquidity RatiosCurrent Ratio = Current Assets / CurrentLiabilities12879/17927= 0.7212480/20973=0.6Quick Ratio = Current Assets- Closing Inventory /Current Liabilities12879-2433/17927 =0.5812480-2617/20973
=0.473.Management Efficiency RatiosReceivables Turnover = Net Credit Sales /Average Accounts Receivable64760/1396 = 46.3963911/895 =71.41Inventory Turnover = Cost of Goods Sold /Average Inventory59871/2433 =24.6189325/2617=34.134.Leverage RatiosDebt Ratio = Total Liabilities / Total Assets39027 /52302 = 0.7543442/ 56898=0.76Debt-Equity Ratio = Total Liabilities / TotalEquity39027/13275 =2.9443442/13456=3.235.Valuation and Growth RatiosEarnings Per-Share = (Net Income-PreferredDividends)/ Average Common Shares Outstanding971/ 9793.50 =0.1647/9793.50=0.07Dividend Pay-out Ratio = Dividend Per Share/Earnings Per Share0.09/0.17 = 0.530.07/0.11 =0.64Users of Financial InformationBoth internal and external stakeholders can use the financial information provided in either thestatements or ratios. The internal user of financial information is the company’s management,while the external users are creditors, government, investors, employees, customers, and thegeneric public (Das and Pandit, 2020).
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