Financial Theory and Practice Analysis

This assignment requires students to analyze and understand key concepts in financial theory and practice. Using the provided list of academic articles and textbooks, students will explore topics such as financial literacy, the role of monetary policy, and the dynamics of financial markets. The analysis should demonstrate a clear understanding of the theoretical frameworks and their practical applications in the real world.

Running Head: Financial statement analysis
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Project Report: Running Head: Financial statement analysis

Financial statement analysis
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Que 1)
Introduction:
This report depicts about the various economic concept of business which could be
used for preparing and planning the successful implements and changes to manage the better
policies and strategies and a good business diversification plan for a company. Amazon.com
has evaluated the economy position and has accepted various plans and strategic policies that
could offer the best market place too the company as well as the profitability position of the
company could also be higher in the market. For this report, the analysis has been done over
the international market to reach over a conclusion. Further, the various studies have also
been done to identify and evaluate the business position of amazon.com in international
economy.
Position of Amazon.com:
An organization is always concerned with the various set of numerous activities and set
of plans to manage the operations of an organization which has been connected with mission
and vision of the company to achieve the goals. It is required for every profit making
company to generate profit and enhance the profitability rate in each year. The mission and
vision f every company is connected with various studies over the market place, economy,
clients of the company, suppliers of the company, nature of the business etc. this assists a
company to manage the great position on the market as well as it also helps the company to
enhance the profitability rate and diverse the market (Airaudo, Nisticò and Zanna, 2015).
Amazon.com is a global company with an international portal through which the B2B
Business and B2C business activities are performed by the business. Headquarter of the
company is in UK. The main activities of this online portal are to connect the various
businesses to the clients so that it becomes easy for the client to buy the products easily. This
company has been founded in 1955 by Jeff Bezoz (Bandy, 2013). Currently, it is the largest e
business company in international market. Ample varieties of products are offered by this
company such as gifts, computer software, prime videos, CDs, DVDs, toys, furniture,
apparels etc.
Through the study, it has been found that the main core competency of Amazon.com is to
trade the worthy products and services in the market. Further, the study has been done over

Financial statement analysis
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the competitive position of the company and it has been found that the competitive position
of the company is much better (Borio, 2014). No company has such place into the
international market which has been grabbed by Amazon.com. Moreover, it has also been
evaluated that the main customers and clients of this company are qualitative. Through
which, the revenue of the company is enhancing rapidly and thus the market share of the
company is highest in the industry (Brigham and Ehrhardt, 2013).
Further, it has also been found that the company takes a concern over PLC method and
thus various new products and the segment is launched by the company continuously so that
the position of the company could not be grabbed. Through the analysis, it has been found
that after few changes into the segments of the company, the revenue of the company has
been enhanced more (Fernandes, Lynch and Netemeyer, 2014). The study over market
structure of the company depict that the promotional policies of the company are quite
attractive. Most of the revenue of the company has been enhanced by the new marketing
tactics of the company.
Conclusion:
Thus, through the above analysis, it has been found that the economical, performance
and profitability aspect of the company depict that due to this portal, it has become easy for
the customers to select few products from multiple options and buy it easily. And thus the
performance of the company has been enhanced in the international market.

Financial statement analysis
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Que 2)
Introduction:
This report has been prepared to analyze the concept of demand and supply. Demand
and supply are connected to each other. The supply of a product must be decided by an
organization according to the demand in the market. The more the demand of the products
would be the more the supply of the products must be. It would help the company to generate
the more profit and pricing could also be decided by the company according to the choice.
Supply and demand:
From the given statement of UK department for environment and rural affairs, it has
been analyzed that the index of potato prices are quite higher than the price index in 2016.
The total difference among both the year price index was 27%. It depicts that the supply of
the potatoes have been lowered than the demand of the potatoes and thus the pricing of the
potatoes has been enhanced (Gambacorta and Signoretti, 2014).
Further, through the given case, it has been analyzed that it is required for an organization or
the government to make a control over the supply according to the demand so that the best
price of the product could be got. More, it has been analyzed that the demand and supply are
connected to each other. The supply of a product must be decided by an organization
according to the demand in the market (Grinblatt and Titman, 2016). The more the demand of
the products would be the more the supply of the products must be. It would help the
company to generate the more profit and pricing could also be decided by the company
according to the choice (Jaumotte, Lall and Papageorgiou, 2013).
Through this, it has been found that the economical concept of demand and supply could be
affected by various economical policies, financial policies or political policies. These policies
differ from the product to product and market to market (Kiran and Singh, 2014). According
to the market of UK, it has been found that the production of potatoes were lower in
comparison of the last year whereas the demand of the product has been enhanced and thus it
becomes important for the government to set the new pricing to set a connection and relation
among the demand and supply of the product (Gali, 2015).
This concept could be clear from a hypothetical example such as if the demand of a pen in the
market is 10 and at the same time, manufacturers are ready to supply 8 pens in the market

Financial statement analysis
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than the pricing of the pen could be higher as every customer would like t buy that pen and
they would be ready to pay higher whereas if the demand of a pen in the market is 8 and at
the same time, manufacturers are ready to supply 10 pens in the market than the pricing of the
pen could be lower as the main motto of the producer to sell all the products and thus they
would sell the product in lower price to the customers (Kurov and Stan, 2016). More, it has
also been found that the demand, supply and the pricing has direct connection with each
other. Changes in one variable would affect other variables of the product as well.
Conclusion:
To conclude, it has been found that the demand, supply and the pricing has direct connection
with each other. Changes in one variable would affect other variables of the product as well.
The government is required to set a connection in all the variables to get a better result.

Financial statement analysis
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Que 3)
Introduction:
This report has been prepared to analyze the concept of business economic over an
organization. It is required for an organization to expand its business on various levels so that
the fiscal policies and the competition policies of the organization could be managed in a
proper way. It is required for an economy to set up all the aspects to enhance the position of
the economy and the country in the international market. Further, in this report, various
aspects of the company have also been analyzed to maintain the position of the economy.
Business economics concept:
The extension of an association and the economically position of a country mainly
depends over the various policies of the government such as fiscal policies, competition
policies and supply side policies. Through the analysis and advantage of individuals is
enormously incriminate upon the company’s policies and methods of management that has
been implemented by the government over the business and companies in UK with the
assistance and business policies of central bank of UK. Further, it has also been found that
various changes have taken place into the position and performance of the UK in few years.
The country, government, central bank and various authorities of the UK have impacted over
the position and policies of the company (Lee and Epstein, 2012).
Further, it has been found that the expansion of UK economic position and GDP rate of
UK economy depends over various prices, supply, demand, the fiscal policies, competition
policies and economic condition of the country. For instance, if government of UK substance
regarding the society expansion with the assistance of huge budget then surely the
development of the investment and job opportunity would enhance in UK state and it would
also enhance the economic position and the state of the economy in the international market
(Lütkepohl, and Netšunajev, 2014). If a tycoon or an entrepreneur has engaged or taken the
coinage and debts for their organization then their improvement ideas and development
surely would impact over the jobs and employment opportunity directly for those individuals
in the society.

Financial statement analysis
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More, it has been found that every policy performs the different operations and
functions to enhance the economy position of the company. It is required for the economist
and the administrators of the UK to develop the policies and Performa of the new policies and
changes in the policies in such a manner that the position of every industry could be enhanced
(Lütkepohl and Netšunajev, 2014). It also considers the state of every individual and makes it
clear for the individuals to get an opportunity in corporate. It also takes the concern of
various other internal and external factors of the country to enhance the level of the economic
position in the international market.
Conclusion
Thus through this study it has been analyzed that the government of the UK takes the
concern of various policies, internal factors and external factors to manage the performance
of the company. It has been found through various policies and strategies that the specific UK
government and their various policies and the strategic plans and vision and mission play an
essential role in the development of country. Though, the various prices, supply, demand, the
fiscal policies, competition policies and monetary policies which have been equipped by the
UK government.

Financial statement analysis
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Que 4)
Financial management and development of a company is most important and significant
aspect of an organization. It is required for chief financial manager and the financial
department of a company to analyze various methods and the techniques to evaluate the
financial position of the company and make various better decisions about the position,
proposal and stability of the company. A financial manager must evaluate every factor with
full of efficiency and effectiveness to enhance the process and the performance of an
organization (Reifschneider, Wascher and Wilcox, 2013).
Financial statement is the key statement to analyze the changes in the position of the
company, profitability position, stability position and efficiency position of a company.
Further, it has also been analyzed that the financial planning and control method asset the
company to manage and identify the better position and the competition level of the
company. More, various other techniques such as capital budgeting technique assist the
company to manage the various opportunity of investment and make a better decision about
the various available investment opportunities (Odell, 2014). For instance, following are the
methods of capital budgeting:
Calculation of Net present value (Project
A)
Y
ear
Pro
ject A
Pv
Factor
Present
value
0
-£
50,000 1
-£
50,000.00
1
£
17,000
0.90702
9478
£
15,419.50
2
£
17,000
0.82270
2475
£
13,985.94
3 £ 0.74621 £

Financial statement analysis
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17,000 5397 12,685.66
4
£
17,000
0.67683
9362
£
11,506.27
5
£
17,000
0.61391
3254
£
10,436.53
NPV= (cash outflow- cash
inflow)
£
14,033.90
Calculation of Net present value (Project
B)
Y
ear
Pro
ject B
Pv
Factor
Present
value
0
-£
50,000 1
-£
50,000.00
1
£
-
0.90702
9478
£
-
2
£
-
0.82270
2475
£
-
3
£
-
0.74621
5397
£
-
4
£
-
0.67683
9362
£
-
5 £ 0.61391 £

Financial statement analysis
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99,500 3254 61,084.37
NPV= (cash outflow- cash
inflow)
£
11,084.37
Thus through the above table, it has been found that the Project A is more profitable for the
company, as it would offer higher return to the company.

Financial statement analysis
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Que 5)
Further, the studies have been done over the financial instruments, financial intermediation,
concept of risk and return to analyze that how the above factors make an impact over the
decisions of the financial manager of the company about the operations and the performance
of the company. Through this study, it has also been evaluated that the profit making
company generates and evaluate every aspect of the investment and analyze their risk and
return to analyze the total return and the profitability position of the company (Odell, 2014).
Further, it has also been analyzed that the risk and return of a project is analyzed through
evaluating various internal and external factors of the company and the economy position so
that a better decision could be made over the investment of the company. Further, it has also
been analyzed that the financial instruments and intermediation method assist the company to
manage and identify the better position and the risk and return level of the investment (Wood,
Wrigley and Coe, 2016). More, various other techniques such as capital structure and market
position assist the company to manage the various opportunity of investment and make a
better decision about the various available investment opportunities according to the risk and
return level of those investments.
Thus through this study it has been analyzed that the risk and return factors of a comapny
is very important to analyzed by the chief financial officer of the comapny. It has also been
found through various methods and techniques of finance and vision and mission play an
essential role in selecting the best investment proposal (Reifschneider, Wascher and Wilcox,
2013).

Financial statement analysis
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Que 6)
Tesco’s Ratio Analysis:
Profitability Ratios 2013 2014 2015 2016
Operating Profit Margin 0.037551059 0.041412298 -0.0929919 0.0192163
Net Profit Margin 0.000378507 0.015262131 -0.0921731 0.0025352
Return on Capital
Employed 0.1 0.1 -0.2 0.043
Return on Equity 0.00144049 0.065887787 -0.8119078 0.0159981
Return on Total assets 0.000484868 0.02034524 -0.12984575 0.003143222
Debt equity ratio
Capital structure ratio 2012 2013 2015 2016
Debt- equity 2.50205179 2.739665856 5.25286381 4.089728727
Intrest coverage ratio 4.605415861 4.666666667
-
11.60721443 2.100401606
Efficiency ratio analysis
Particular 2013 2014 2015 2016
Receivable tunrover 26 26 9.17 10.06
Creditor turnover 6.02 5.4 12.4 11.9
Inventory turnover 17.02 16.02 20.52 19..81
Assets turnover 1.31 1.3 1.31 1.22

Financial statement analysis
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Future value:
Present
value 50000
Interest
rate 8%
Time 5
Future
Value
₹
73,466.40
Year
Present
Value Balance Interest
Interest
Amount
Total
Amount
1 400 400 5.05% 20.2 420.2
2 300 720.2 5.05% 15.15 735.35
3 250 985.35 5.05% 12.625 997.975

Financial statement analysis
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Future
Value 2153.525
Net present value:
Year
Project
A
Project
B
0
−
$50,000
−
$50,000
1 25,000 0
2 15,625 0
3 5,000 0
4 12,000 0
5
32,000 99,500
Calculation of Net present value (Project A)
Year Project A Pv Factor Present value
0 $ -50,000.00 1 -£ 50,000.00
1 $ 25,000.00 0.907029478 £ 22,675.74
2 $ 15,625.00 0.822702475 £ 12,854.73
3 $ 5,000.00 0.746215397 £ 3,731.08
4 $ 12,000.00 0.676839362 £ 8,122.07
5 $ 32,000.00 0.613913254 £ 19,645.22
NPV= (cash outflow- cash inflow) £ 17,028.84
Calculation of Net present value (Project B)
Year Project B Pv Factor Present value
0 $ -50,000.00 1 -£ 50,000.00
1 $ - 0.907029478 £ -
2 $ - 0.822702475 £ -
3 $ - 0.746215397 £ -
4 $ - 0.676839362 £ -
5 $ 99,500.00 0.613913254 £ 61,084.37
NPV= (cash outflow- cash inflow) £ 11,084.37

Financial statement analysis
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Thus through the above table, it has been found that the Project A is more profitable for the
company, as it would offer higher return to the company (Ahrendsen and Katchova, 2012).