Financial Analysis of Sainsbury's and Tesco
Added on 2020-01-21
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MANAGING FINANCIALRESOURCES AND DECISIONS
TABLE OF CONTENTSMANAGING FINANCIAL RESOURCES AND DECISIONS.....................................................1INTRODUCTION...........................................................................................................................3LO 1:................................................................................................................................................31.1 Identify the sources of finance available to a business.....................................................31.2 Assess the implications of different sources....................................................................31.3 Evaluate appropriate sources of finance for a business project........................................6LO 2:................................................................................................................................................62.1 Analyze the cost of different sources of finance..............................................................62.2 Explain the importance of financial planning..................................................................72.3 Assess the information needs of different decision makers.............................................72.4 Explain the impact of finance on financial statements.....................................................8LO 3:................................................................................................................................................83.1 Analyze budgets and make appropriate decisions............................................................83.2 Explain the calculation of unit costs and make pricing decisions using relevantinformation.............................................................................................................................93.3 Investment appraisal techniques.....................................................................................10LO 4:..............................................................................................................................................124.1 Discuss the main financial statements............................................................................124.2 Compare appropriate formats of financial statements for different types of business.. .124.3 Interpret financial statements using appropriate ratios and comparisons, both internal andexternal.................................................................................................................................13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
Index of TablesTable 1: Calculation of profit margin..............................................................................................9Table 2: calculation of ratio...........................................................................................................11
INTRODUCTIONSainsbury is the second largest chain of supermarkets in the United Kingdom. It isheadquartered in London, United Kingdom. It was founded in the year 1869 by John JamesSainsbury. Finance is the lifeblood to any organization. For easy execution of work finance isone of the most important component. The contents are aimed at identifying the sources offinance available to a business and which is a small scale business. It also defines the importanceof financial planning and also the information needs of the decision maker. Further it deals withthe calculation aspect of the unit costs and making the pricing decisions accordingly and ratiocalculation.LO 1:1.1 Identify the sources of finance available to a business.For any business to grow, it could do so only when there are sources of finance availableas finance is the lifeblood of any business. The finance available to a business are of varioussources and can be categorized into two broad categories of Internal and External sources.Internal sources of finance are those funds which are found internally to a business whereasexternal sources of finance includes the sources which are outside the business. Internal sourcesincludes the finance coming from the personal sources of entrepreneur which may be his owninitial capital or else it may also includes the sources such as Retained Earnings which thecompany has not distributed as dividend and retained in the business for future contingencies andalso includes the finance coming form the friends and family (Kennedy, 2015). On the otherhand, external sources of finance includes the finance coming from outside the business whichare bank loan, bank overdraft, loans and grants etc. This can be long, medium and short termfinance. In long term finance basically is for capital budgeting and which is required for theperiod of more than 5 years and which can extend to 20 years such as issuing equity sharecapital, preference share capital, debentures etc. Medium term finance includes financing for 3-5years and includes lease finance, hire purchase finance etc (Board, 2015). Short term finance isfinancing for a period of less than 1 year and involves trade credit, fixed deposits, factoringservices, creditors, bill discounting etc. 1.2 Assess the implications of different sources.Following are the implications of different sources of finance:
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