Dissertation: Financial Reporting and Analysis of Tesco's Performance

This dissertation delves into the significance of financial reporting and analysis within a business context, using Tesco as a case study. The research encompasses a thorough examination of financial statements, including balance sheets, income statements, and cash flow statements, to assess their impact on business performance. The study explores various financial analysis methods, such as ratio analysis, to evaluate Tesco's financial health and investment decisions. The dissertation includes a comprehensive literature review, detailing the concepts, objectives, and methods of financial reporting, along with ethical considerations and limitations. Data collection involves both primary and secondary sources, with a focus on analyzing Tesco's financial data. The research employs both qualitative and quantitative data analysis techniques to derive meaningful conclusions and recommendations regarding the importance of financial reporting and analysis in business management. The dissertation aims to provide insights into how financial reporting influences investment decisions and overall business success.

DISSERTATION

Table of Contents
PART 1- RESEARCH PROPOSAL ...............................................................................................4
Title - “Importance of Financial reporting and analysis in a business" - A case study on Tesco....1
CHAPTER 1 : INTRODUCTION ..................................................................................................1
Background of the study ........................................................................................................1
Research questions.................................................................................................................2
Problem statement .................................................................................................................2
Rational ..................................................................................................................................2
CHAPTER 2 : LITERATURE REVIEW .......................................................................................3
CHAPTER 3 : RESEARCH METHODOLOGIES ........................................................................4
CHAPTER 4 : DATA COLLECTION............................................................................................4
CHAPTER 5 – DATA ANALYSIS................................................................................................4
CONCLUSION AND RECOMMENDATION...............................................................................5
TIME SCALE AND ACTIVITIES ...............................................................................................5
PART 2 – RESEARCH PROJECT.................................................................................................7
CHAPTER 1 - INTRODUCTION ..................................................................................................1
1.1 Background of the study ..................................................................................................1
Breaking Down Financial statement analysis ........................................................................2
1.2 Aims and Objectives ........................................................................................................3
1.3 Rational for the research...................................................................................................3
1.4 Significance of the study .................................................................................................4
CHAPTER 2 – LITERATURE REVIEW ......................................................................................5
2.1 Introduction .....................................................................................................................5
2.2 Concept of Financial reporting and Analysis...................................................................6
2.3 Importance and objectives of financial reporting.............................................................7
2.4 Role of useful financial reporting in crisis ......................................................................8
2.5 Methods of financial analysis...........................................................................................9
2.6 Impact of Financial reporting or statements ..................................................................10
2.7 Comparative statement analysis.....................................................................................11
2.8 Limitation of financial statements .................................................................................12

CHAPTER 3 – RESEARCH METHODOLOGIES......................................................................14
3.1 Introduction ...................................................................................................................14
3.2 Research design..............................................................................................................14
3.3 Research type..................................................................................................................15
3.4 Research philosophy.......................................................................................................15
3.5 Data collection................................................................................................................16
3.6 Sampling.........................................................................................................................17
3.7 Ethical considerations.....................................................................................................17
3.8 Limitation of study.........................................................................................................17
CHAPTER 4 : DATA COLLECTION..........................................................................................19
4.1 Introduction....................................................................................................................19
4.2 Data collection ...............................................................................................................19
4.3 Secondary Data analysis ................................................................................................19
Ratio analysis of Tesco.........................................................................................................25
CHAPTER 5 : CONCLUSION AND RECOMMENDATIONS .................................................30
REFERENCES .............................................................................................................................33

PART 1- RESEARCH
PROPOSAL

Title - “Importance of Financial reporting and analysis in a business" - A case
study on Tesco.
CHAPTER 1 : INTRODUCTION
This research is in context to financial reporting and analysis and its impact on business
performance. Financial reporting or statements are very useful for an organisation to examine
and identify its income or expenses. It helps to determine current financial position of a company
, in the present study examiner will analyze Tesco to measure impact of financial reporting on
business performance. The report will include implementation of various research methodologies
such as Research approach, data collection and analysis etc to achieve aim and objectives of this
examination. It will also include primary and secondary collection of information and data
related to the subject or topic of this research.
Background of the study
In the modern era many businesses or organizations are operating their business activities
in order to achieve more success as compared to their competitors (Santi, Puspitasari and Ghani,
2017). There are various departments which are essential for effective functioning or working of
an organization or business, including marketing, human resources, operations and finance
department (Bushee, Goodman and Sunder, 2018). In order to achieve success it is very
necessary to control and manage each of these areas so that the business activities can be
performed in a most effective manner. This research will focus on identifying the importance of
financial reporting and analysis in a leading supermarket Tesco in UK. This company is
operating in many countries all around the world, Tesco sells more than 40000 food products in
its supermarket stores. Tesco Personal Finance Tesco Personal Finance (TPF) was launched in
July 1997 and is a joint venture with Royal Bank of Scotland (Naranjo, Saavedra and Verdi,
2017). Products consist Clubcard Plus, a grocery budgeting account. Financial statements
demonstrate the status of an organization's expenses, assets, liabilities and revenues. Tesco sells
branded products and own brand products. Tesco label products are at three levels, Value normal
and Finest products. Own brand accounts for around 50% of sales. In 2001-2002 the company
introduced over 3,500 new food lines. Tesco also stocks more than 1,100 organic lines, its owned
brand can now be found in various Groups International Stores (Akins, 2017). Tesco Petrol is
one of the largest independent retailers in Britain, with more than 340 petrol stations, including
Express sites that sells one in every 8 gallons (12.5%) of petrol sold in the United Kingdom.
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Within the next 2 years Tesco will accomplish its aim of establishing more than 150 Tesco
Express stores. Tesco was the first petrol retailer to introduce low benzene unleaded petrol in line
with the Royal Commission on environmental pollution (Krishnan, Myllymäki and Nagar, 2018).
The overall financial health of a business can be determined from analysis of financial statements
that serves as the complete record for financial records for an organisation. It can also be referred
as a internal business tool that helps in tracking the intake and outflow of finance or money. The
increasing financial concerns of businesses encourage and motivate entrepreneurs to develop an
effective financial reporting system for their organizations (Fernández, Arrondo and Pathan,
2017).
Aim - “ To examine importance of Financial reporting and analysis in Tesco”
Objectives :
 To examine the concept of financial reporting and analysis
 To determine various types of financial statements or reports
 To understand relationship between financial reporting and decision making
 To provide recommendations related to financial reporting
Research questions
1. What is financial analysis and reporting?
2. How financial reporting affects a business?
3. What is the relationship between financial reporting and business performance?
Problem statement
According to the current situation or market conditions investment decisions in
organizations have been very slow due to the improper system or negligence on the utilization of
financial statement and other essential financial records. Many companies are still not familiar
with the benefits of financial statement, therefore limiting their understanding and knowledge
about their financial position as well as their quality to utilize financial statement to make
essential decisions related to investment.
Rational
Financial reporting and analysis is a essential part of every business or organization, it
helps to determine financial position of a company including its income and expenses.
Researcher has a interest in this subject due to its increasing significance in businesses and the
ways it is influencing an organization or company such as Tesco. The financial reporting and
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analysis needs to be examined in detail to get a better understanding of this functions and
determine its importance for managing business income or expenses effectively.
CHAPTER 2 : LITERATURE REVIEW
This chapter views primary ideas defined in the study, a review of theoretical literature
which gives an perception of the basis of research and eventually links literature to current study
by considering what researchers have written with the conclusions arrived at as far as this study
in concerned. Investment decisions enables corporate leadership to examine different investment
opportunities and to show how departments should make good commercial bets. Improving
financial statement can positively affect a company or business, on the other hand some
examiner also implies that there is impact of developing finance actions on performance of an
organisation. Making financial analysis of a business organization is not a simple job, there are
diverse financial reports and records that is important to be examined and there are also a lot of
elements with financial statements that are required to be cautiously measure, review and
interpret. It is essential to assure that the accountants are aware of proper techniques or methods
to analyse financial statements. This chapter therefore seeks to display the views relating to the
effect of financial statements on investment decisions in a company (Laitinen, 2018). A business
financial health is reported in three financial statements. The balance sheet, which shows a
record of the business assets and liabilities of an organization at a particular time. The income
statement or the profit and loss statement shows a record of its expenses and income for a given
time period. The cash flow statement determined the effect of its business activities on the cash
balances (Lara, Osma and Gazizova, 2018). Each of this required to make informed business
investment decisions, this study will include a literature review based on various secondary
sources and previous studies on the similar topic. If an organization is interested in making
investment within a small business, its financial professionals will likely to analyse the
organization's current and past financial statements. The objective of these financial statements is
to identify possible weaknesses and areas of problems that needs to be discussed with the owners
of the company. The financial professionals look for unusual movements in items from year to
year and for patterns in profits and revenue. Steady growth and development if generally positive
or negative which may be a sign of disorder. Cash flow statements must demonstrate the way in
which a business generally obtains and utilizes cash. The management team of a small business
may conduct a similar analysis as a part of an annual business review. The company's financial
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accountants and adviser should participate in such reviews. Ratio analysis compares values
within the organisation from year to year and against other organisations or industry. Liquidity
ratios such as the current ratio present the organisation's ability to pay its short term obligations
on time. The debt ratio shows value of organisation's assets provided by debt. The lower
percentage depicts a lower dependence on debt and higher percentage shows higher risk taken by
the company.
CHAPTER 3 : RESEARCH METHODOLOGIES
A research can be defined as a organized process of gathering and analysing information
or data affiliated to chosen subject. The methodologies utilized in an research or investigation are
the ways in which examiner collects relevant data and analyses it so that appropriate conclusion
can be drawn. There are various research methods which can be used in an examination related
to any subject or topic. These methodologies helps in making a specific design, structure and
technique that can help in collecting as well as analysing data in a most appropriate way
possible. These methods will include research approach, themes, data collection, data analysis
etc.
CHAPTER 4 : DATA COLLECTION
The researcher will use both primary and secondary sources to gather relevant data related to
financial reporting and its impact on businesses. In the present research examiner will use
secondary data collection method. It will help in collecting most appropriate, reliable and data
related to the topic. The data will collected through various sources such as previous studies,
books, articles and journals which are used by other researchers as well. This data collection
method is not much reliable as comp red to primary techniques but helps in providing a huge
data relate to the topic chosen for the research.
CHAPTER 5 – DATA ANALYSIS
This part of the research include a statistical and brief analysis of each and every
information or data collected through primary & secondary sources. The data analysis consist
two methods Qualitative and Quantitative. The Qualitative data analysis is a tool that helps to
analyze or examine data on the basis of various themes, on the other hand by using Quantitative
method researcher can study data statistically. Statistical analysis can be descriptive that consist
graphical representation of data along with interpretation and thematic analysis included
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concepts, words, models etc. In this research, examiner will use a combination qualitative and
quantitative data analysis to get the most effective outcomes of the study. The data collected
through interview and secondary sources will be analyses in thematic and statistical methods.
CONCLUSION AND RECOMMENDATION
This is the last part of every research or examination, that includes a overall result of the
study conducted. The researcher summaries results gathered from data analysis part, it drives a
specific meaning of the research related to the subject. Furthermore, it also includes
recommendations to overcome challenges and issues as identified in the research. The examiner
will examine and provide most appropriate solutions for overcoming challenges related to
financial reporting and analysis in Tesco that can positive affect its business activities.
TIME SCALE AND ACTIVITIES
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Illustration 1: Gantt chart
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PART 2 – RESEARCH
PROJECT
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CHAPTER 1 - INTRODUCTION
Financial report have been accepted by investors and other external stakeholders as the
primary window into an organization's financial position and performance. In addition to being
critical source of data for a company's financial health, the financial reports are also considered
an essential technique to for maintaining the integrity of capital markets all around the world.
This research study is in context to financial reporting and analysis and its impact on business
performance. Financial reporting or statements are very helpful for an administration to analyze
and determine income or expenses. It assist to find out the current financial position of an
organization. In the present study, examiner analyzed Tesco to measure impact of financial
reporting on business performance. This part of the research includes execution of different
research methods such as research approach, data collection and analysis, etc. to achieve aim and
objectives of present study (Santi, Puspitasari and Ghani, 2017). It also involves primary and
secondary collection of information and data related to the subject or topic of this research.
1.1 Background of the study
Financial reporting or statement is the mirror image of organization's real financial
position and health. Stakeholders and shareholders can get a precise ideas with regards to a
business or company by effectively analyzing its financial reports. It also helps the investors to
determine financial profitability, feasibility and growth of a specific organisation. Financial
reports can also have a big effect on financing a business. The investor who render business loan
to an organization examine its financial statements to identify its position, performance and
financial health. The lenders are more attracted towards organizations having good financial
statistics. Accounting department within a company is responsible to develop a financial
statements related to the business transactions, assets and liabilities. It assist stakeholders and
management of a company to take relevant decisions for the business and evaluate pricing
strategy, production trends and efficiency of the operations. Tesco is one of a leading
supermarket chain operating its functions in different countries in the world, it is essential to
record and manage financial elements are linked to the company so that profitability of each and
every unit can be maintained effectively.
Annual financial reports are still of corporate reporting with organizations investing
important effort and time in their preparation. Although, there has been criticism recently that
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