Financial Analysis of Tesco: Performance, Liquidity, and Financial Structure

Financial
Accounting

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Analysis of performance, liquidity and financial structure of Tesco along with financial
structure for years 2017 to 2020..................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Financial accounting could be described as the technique which is used to analyse
performance of a company so that future decisions could be formulated. It is very important for
all the enterprises to make sure that they are having proper information about the financial status
of company as it may facilitate the attainment of all the long-term business goals (Akman, Acar
and Kızıl, 2020). The organisation which is selected for this report is Tesco which is one of the
largest retailers of the United Kingdom. It is operating its business all around the world. It was
founded by Jack Cohen in year 1919 and since then the operations are executed by it
successfully. The Present report is focused with “financial analysis” of Tesco which covers
various topics such as evaluation of performance, liquidity and “financial structure” of the
enterprise for three years. Apart from this, financial ratios are also used for the purpose of
analysing these aspects in the context of the organisation and along with this, limitations of using
financial ratios are also covered in this assignment.
MAIN BODY
Analysis of performance, liquidity and financial structure of Tesco along with financial structure
for years 2017 to 2020
For all the companies it is very important to analyse financial position and performance
of business so that strategic decisions for the future could be formulated as it can help to reach all
the desired objectives of business. In order to assess the actual position of business managers can
use different types of ratios which can facilitate the assessment of performance, liquidity and
financial structure of business. By using these ratios, enterprises will be able to formulate
effective decisions for successful execution of all the operations. With the help of ratio analysis,
the enterprises can determine the weaknesses that are required to be overcome so that the
financial strength could be improved. There are various types of ratios which could be used for
purpose of the assessment of the performance of company (Foabeh and Achaleke, 2020). A
description of the position of the company on the basis of them is as follows:
Profitability ratios: These ratios are focused on analysis of profitability of the
organisation so that the ability of the enterprise to generate profits during the accounting year
could be analysed. Some of the main profitability ratios are Return on shareholder’s fund, return
on capital employed, return on total assets, profit, gross, EBIT and EBITDA margins. While
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