Business Studies: Financial Management Report on Tesco's Performance

This report provides a detailed analysis of financial management practices, focusing on the case of Tesco. The introduction outlines the significance of financial management in business operations, emphasizing its role in optimizing business processes and maintaining financial stability. The report then provides background information on Tesco, a major multinational retailer, highlighting the importance of effective financial management for its global expansion and market performance. Key aspects of financial management are defined, including its objectives of profit maximization, financial requirement estimation, and cash flow maintenance. The report then explores crucial elements of financial management such as investment, financing, and dividend decisions, illustrating how these impact Tesco's financial strategies. The report also discusses various financial strategies, including strategic and tactical approaches. Furthermore, it examines different financial statements, including the income statement, balance sheet, and cash flow statement, along with a review of profit and loss and balance sheet data. The report concludes with several recommendations for enhancing Tesco's financial management and maintaining a strong financial position.

Business 1
Introduction to business studies

Business 2
Contents
Introduction......................................................................................................................................4
Chosen organizational background..................................................................................................5
Define Financial management.........................................................................................................6
Objectives and importance of FM...................................................................................................7
Elements of FM...............................................................................................................................8
FM strategies...................................................................................................................................9
Different Financial statements.......................................................................................................10
Recommendations..........................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

Business 3
Introduction
The report outlines the process of financial management used in business process management.
As financial management is too effective in the organizational process as it improves the overall
aspects of the business. Financial management is also used for maintain the funds required for
the business management. The report includes the objectives of financial management and
importance of financial management. The several strategies and elements of FM will also be
discussed in this report. manager is responsible for maintaining all relations with the employees
and their trade. The report describes the various aspects related to financial management which
helps the business in proper manner. Tesco organization is selected in this report to analyse the
financial process of the organization. The various financial statements will be discussed in this
repot that helps in the proper financial management. The several recommendations regarding the
financial management in the organization will be discussed in the report.

Business 4
Chosen organizational background
The organization selected in this report is Tesco and the financial management of Tesco will be
evaluated in the further parts of the report. Tesco is a British multinational groceries and general
merchandise organization. It is one of the largest supermarkets in UK that needs proper financial
management in their business management. Tesco includes as a third largest retailer in the world
as per the revenues. The financial management improves the overall strategies of the business
and maintain the retailing process of the business. Tesco needs proper management of financial
aspects as the company expands itself at global level as this management needs proper
improvement in the business (Salikin, et al., 2014). The business expanded rapidly and improves
overall process of the business by maintaining various financial aspects of the business.

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Define Financial management
Financial management focuses on the ratios, equities and dents that are essential aspects of the
business. It is used for portfolio management and fluctuations in foreign currency and product
cycles (Dzhandzhugazova, et al., 2015).This management includes the proper management of
overall funds of the organization. Financial management also includes as an operational activity
that is responsible for obtaining the use of funds that are important for the business operations
(Mazzarol, 2014).
Financial management is the particular area of business management which involves the proper
use of capital and proper selection of the source of capital that helps in achieving the desired
goals of the organization.

Business 6
Objectives and importance of FM
The financial management include several objectives that helps in making management proper.
Some of the main objectives of financial management are discussed as below-
 Maximize the profit
The main aim of any financial and economic activity is related with the earning of profit.
The proper profit of the business increases its effectiveness and it can be increased by
maintaining proper activities of finance (Karadag, 2014).
 Proper estimation of financial requirements
This is one of the important objectives of the financial management. The fiancé manager
needs to estimate the total financial requirements of the overall company.
 Proper mobilization
The mobilization of finance is also including as an important objective of financial
management. The sources of finance are included in this process.
 Maintenance of cash flow
The maintaining of cash-flow includes as a short-term objective of financial management.
The company needs to maintain proper cash flow for the proper financial management.
The financial management is too important for the business and it has been analyzed that the
proper financial management improves the overall growth of the Tesco. To run a successful
business in the market, the proper management of finance is necessary for each and every
business organization (Mien, et al., 2015). The financial decision-making is important for the
financial management. The proper management of finance is essential for the Tesco to make the
business global.

Business 7
Elements of FM
Investment Decision
Investment decisions are the important part of the financial management. It relates to the
decision made by investors for the proper amount of fund used in the process of investment. The
investment decisions of Tesco are too effective that’s why the business increases its growth in
the global and domestic market (Rahman and Radzi, 2015). The several type of assets in which
the funds will be invested is called as investment decision. Tesco includes the several investment
decisions that improve the overall investment of the company.
The financial position of the company is good and their market value also good. They have the
good reputation in the market so the investors like to invest in this company they are earning the
good profit in the market so investors also invest to get the good dividend. The company Tesco
also giving the good returns to their investors so investors takes decision to invest in the
company.
Financial Decision
Financial decisions are the important part of financial management and it includes all the
liabilities and stockholder’s equity of the company as well as the issuance of bonds. The
financial decisions are able to meet the financial goals that meet the several requirements of the
business. Tesco made the financial decision to manage the overall funds of the organization. All
the financial goals can be achieved by the overall aspects of the financial management.
The financial position of the company Tesco is very stable in the market as they have the enough
cash to operate their daily functions in the market. The debt of the company is also not high so
their burden of obligation is not high. The company revenues are declining from the previous
years but still they are earning the profits. The company Tesco has good retained earning and the
reserves to repay any obligation.
Divided decision
Divided decisions include the various financial policies that pays the cash dividend in the present
or paying an increased dividend at a later stage. The several decisions related to the financial
policies are included in this process (Wolmarans and Meinties, 2015). All the dividend decisions

Business 8
are made by the finance manager that manages the stockholders of the company. The dividend
decisions of Tesco get impacted by the finance manager of the company and it create some
problems in the overall business.
The interim dividend paid by the Tesco Company is 1.67 pence per share. The final dividend
paid on the ordinary share was 4.10 pence per share which was reflecting the improvement in the
business functions. The final dividend paid by the Tesco company in the year 2019 was 5.77
pence per share.

Business 9
FM strategies
Strategic FM Strategy
This strategy is one of the important strategies of financial management. It refers to the study of
finance which helps in achieving all the strategic goals of the business. The Strategic financial
management is an approach that uses financial tools and techniques to make the several decisions
related to the strategic decision (Arnold, 2012).
Tactical FM Strategy
The tactical financial strategy is one of the important strategies used in the management of cash
flow and the revenues of the business. This strategy includes the two important analysis that are
cash flow analysis and monthly budget variance analysis. Cash flow analysis tracks actual
income against outflows of cash. This strategy helps the company in taking several financial
decisions.
Maintenance FM Strategy
The maintenance FM strategy manages the overall process of financial management. The
maintenance of finance is essential for the overall process of the organization. The maintenance
FM strategy includes the overall management of the finances in the organization.

Business 10
Different Financial statements
Income Statement
Income statement is one of the three important financial statements that includes the financial
performance of the company in a proper accounting period. This process shows the financial
statements of the company (Hiebl, 2012). In income statement the profit of the company is
mentioned which was 1791 in the year 2019. The profit has declined from previous year 2018 as
it was 4002.
Balance Sheet
Balance sheet is also including as a financial statement that includes the assets, liabilities and
shareholders of the company at a specific point in time. This statement gives proper returns and
analyse the capital structure. The balance sheet of the company Tesco reflects that the current
assets of the company have declined from the previous year and the liabilities of the company
has increased. The obligations in the company Tesco was increasing and the liquidity position
was declining which was not stating the good position in the market from the previous year.
Cash flow statement
This statement is all about the cash including in the business. This statement shows the changes
in balance sheet, accounts and income affect cash and different cash equivalents (Fatoki, 2012).
The flow of cash in the business is included in the cash flow statement. The operating activities
of the company Tesco has declined from the previous year 2018 as it 2642 earlier it was 3309.
The investing activities also declined from the previous year but the financing activities of the
company Tesco has enhanced from the previous years.
Review of profit and loss
The review of profit and loss is done by the profit and loss statement. It gives the information
related to the revenues, costs and expenses in a specific period of time. The profit of the
company has declined from the very high rate in the company Tesco and it is due to the revenues
of the companies are declining and their expenses are increasing.
Review of balance sheet

Business 11
The review of balance sheet shows the overall review of the assets, liabilities and equity. The
business owner first reviews this report of the balance sheet. From the balance sheet it is
evaluated that the current asset of the company is declining and their obligation of paying the
debts is increasing.

Business 12
Recommendations
There are several recommendations related to the financial management need to followed by the
company. By adopting these recommendations, the company achieves better goals in the
financial management.
Some of the main recommendations are discussed as below-
 The company needs to have a clear business plan
 Monitors the financial position
 Know day to day costs
 Meet tax deadlines
 Control stock
 Become more efficient and control overheads
 Monitor the financial position

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Conclusion
From the above report, it has been analyzed that financial management is essential for the overall
organization as it improves overall aspects of the business. The several aspects of financial
management have been described in the above information. The different information regarding
the financial aspects has been described in the report. The report includes the various statements
of the fiancé and it improves the overall financial management. Financial management is the
particular area of business management which involves the proper use of capital and proper
selection of the source of capital that helps in achieving the desired goals of the organization.
The different statements of the finance have been described in the report.

Business 14
References
Arnold, G., 2012. Corporate financial management. Pearson Education.
Dzhandzhugazova, E.A., Zaitseva, N.A., Larionova, A.A. and Petrovskaya, M.V., 2015.
Chaplyuk, VZ Methodological aspects of strategic management of financial risks during
construction of hotel business objects. Asian Social Science, 11(20), pp.229-234.
Fatoki, O., 2012. An investigation into the financial management practices of new micro-
enterprises in South Africa. Journal of social sciences, 33(2), pp.179-188.
Hiebl, M.R., 2012. Peculiarities of financial management in family firms. International Business
& Economics Research Journal (IBER), 11(3), pp.315-322.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A
strategic management approach. EMAJ: Emerging Markets Journal, 5(1), pp.26-40.
Mazzarol, T., 2014. Research review: A review of the latest research in the field of small
business and entrepreneurship: Financial management in SMEs. Small Enterprise
Research, 21(1), pp.2-13.
Mien, N.T.N. and Thao, T.P., 2015, July. Factors affecting personal financial management
behaviors: evidence from vietnam. In Proceedings of the Second Asia-Pacific Conference on
Global Business, Economics, Finance and Social Sciences (AP15Vietnam Conference) (pp. 10-
12).
Rahman, N.A. and Radzi, R.M., 2015. Determinants of effective financial risk management in
small business: A theoretical framework. Information Management and Business Review, 7(2),
pp.87-92.
Salikin, N., Ab Wahab, N. and Muhammad, I., 2014. Strengths and weaknesses among
Malaysian SMEs: Financial management perspectives. Procedia-Social and Behavioral
Sciences, 129, pp.334-340.
Wolmarans, H.P. and Meintjes, Q., 2015. Financial management practices in successful Small
and Medium Enterprises (SMEs). The southern African journal of entrepreneurship and small
business management, 7(1), pp.88-116.