Managing Financial Resources

Managing Financial Resources

Table of Contents
INTRODUCTION...........................................................................................................................3
Ratio Analysis .............................................................................................................................4
Income statement analysis ..............................................................................................................7
Balance sheet Analysis ...................................................................................................................8
a. Liquidity analysis ....................................................................................................................9
b. Efficiency analysis ..................................................................................................................9
c. Solvency analysis ..................................................................................................................10
Key performance Indicators...........................................................................................................10
(1) The company’s historical record and position in the market.....................................................1
(2) What might appear to be the value drivers and/or the key performance indicators in the
company?.........................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Managing financial resources refers to planning, directing, organizing and controlling
financial activities like acquisition of the funds, optimum utilization of the funds of an
organization. It means application of general principles of the management towards the financial
resources of the firm. Financial resources could be managed effectively by developing a clear
plan, reviewing the financial position, ensuring that the customers are paying on the time,
knowing the routine costs, keeping updated accounting records, meeting the tax deadlines and
controlling the stock. The present report is based on Tesco, a largest or leading retailer across the
globe operating as a grocery retailer with different outlets around Europe, Asia and USA.
Furthermore, the study involves income statement and balance sheet analysis that reflects
performance and the position of the firm within the industry. Moreover, the study highlights key
performance indicator that are adopted by the company for the purpose of reaching the goals as
per the set standards.
Company position in the UK market
Tesco have largest share in the UK retail sector. In present time period company maket
share in the UK retail sector is 27% which was 27.4% a year ago. Major rival of Tesco Lidl
market share increased to 5.9%. This percentage grow by 7% which can be consdidered
excellent. Aldi market share is 7.6% which grew from 6.8%. It can be said that control of Tesco
on the market become weak as shrunk of its market share get started (Haddock-Millar. and
Rigby, 2015). This happened because Lidl and Aldi as well as other rivals are offering products
at more cheaper price to the people then Tesco. Thus, now more and more people are preferring
to make purchase from the discount retail stores. Tesco currently is operating its business in the
14 nations of the world. It have 68000 stores globally. In year 2008 Tesco stores number was
3,751 which now increased to 6,966 which reflect that firm expand its business at rapid pace
anad due to this reason it successfully maintain its market share. Tesco in order to maintain its
position also open diversified stores like Tesco homeplus, Tesco metro etc. Company is also
diversifiying its product line and under this it make available varied items like cloths, homeware
items, mobile phone and music etc (TESCO SWOT analysis 2019). Thus, it can be said that firm
current position is not so good but it hold largest market share. It is taking multiple measures to
secure its position in the market.

Ratio Analysis
TESCO PLC
Ratio Analysis
Particulars Formula 2018 2017
Profitability
Ratios
Return on
capital
employed
Net operating
profit/Employe
d Capital 15.80% 1.27%
Employed
Capital
Total assets –
Current
liabilities (13726-5512) 8214 (15417-3988) 11429
Net operating
profit 1298 145
Return on
Equity
Net Income /
Shareholder's
Equity 11.55% -0.84%
Net Income 1208 -54
Shareholder's
Equity 10458 6414
Gross profit
margin
Total Sales –
COGS/Total
Sales 5.83% 5.19%
COS 54141 53015