Tesco's Financial Management: Functions, Role of Manager, & Sources

This report provides a detailed analysis of Tesco's financial management practices. It covers key aspects such as the functions of financial management, including investment decisions, financial decisions, dividend policy, and liquidity decisions. The report also elaborates on the crucial role of the financial manager in raising and allocating funds, and focusing on profitability. Furthermore, it identifies various sources of finance available to Tesco, including commercial loans, trade credit, and share capital, highlighting the importance of choosing the right sources for financial stability and productivity. The report references academic books, journals, and online resources to support its findings.

The Report

Table of Contents
The Report.......................................................................................................................................1
TASK-4- Financial management report...........................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Financial management ................................................................................................................3
Importance of Finance functions.................................................................................................4
The role of the Financial Manager in a company........................................................................4
Sources of Finance.......................................................................................................................5
REFERENCES................................................................................................................................6

TASK-4- Financial management report
INTRODUCTION
Financial management is practice of managing organization's fund and capital in order to
allocate it in appropriate way with better regulation. In order to elaborate this report company
chosen as Tesco, it is the brand in retail market under UK. This report will cover information
about financial management, importance of financial management, role of management and
manager and sources of finance.
MAIN BODY
Financial management
Financial management refers to organizing, planning, directing and controlling the
financial practices such as obtain and utilization of fund in efficient way, of the company.
Basically, it is part of management where handing of financial resource of the company takes
place. Fundamental duties of the financial management is to obtaining, distributing and
regulating financial resources of respective company (Al Breiki and Nobanee, 2019).
There are some objectives of Financial management in following :-
 To make availability of enough supply of fund and on regular period frame, which makes
easier to run operations of the company fluently. Tesco is having adequate operations and
each operation want some cost, for that company's management procure adequate funds.
 To confirm sufficient returns for the shareholder are available in the company, which is
interlinked to productivity, market share and expectations of the shareholders.
Distributing in proper way, so productivity get increases rapidly. Shareholder have more
expectations to Tesco (Brigham and Houston, 2021).
 Balancing is the critical objective for the financial management, manage between debt
and capital with proper utilization with plan makes effective financial practices. For that
proper planning is essential, through making effective plans to make balance between
them.
 After obtain funds from various sources, distribution should be in effective way is
necessary, using that funds in maximum possible functions with low cost. Low cost
makes more options and ways for distributing funds (Chang, McAleer and Wong, 2020).

Importance of Finance functions
Financial management performs different functions such as finance sources decision and
control, planning funds, acquisitions, investment, regulates rates of interests and returns, capital
budgeting and many others. It is very essential part of business organization, it makes process
easier to raise funds and allocation of that respective resources.
Important finance functions are mention below:- Investment Decision:- It is most important function of finance management, in this
function management distributes capital to long term assets, which is generally known as
capital budgeting. It allows organization to earn returns to the future through investing in
appropriate way. In this not only allocation involves, through selling sick units and those
assets which are less productive and not giving expecting returns (Finance Function –
Concept, Approaches, Aims, Classification, Objectives, Importance & more. 2022.). Financial Decision:- Financial decision it is another important function that is performed
by management, in this function management decide from where, when and how should
business obtain funds. Tesco is brand in the market, they are having number of resource
to raise fund, but planning allows them to get it from the best way. Perfect financial
planing is that, in which management aims to increase return with less risk. Dividend Decision:- Earning revenue and get expected return is general objective of
every organization, but the vital function of financial management is proper allocation of
profit to the shareholders. This function makes market share of the company, dividend
policy that decides part of profit distribute to shareholder and retain them.
 Liquidity decision:- Liquidity plays a vital role in business, it avoids insolvency of the
firm. Liquidity, profitability and risk all are interlinked through investing in current
assets. Disposing and selling current assets which are not giving benefits to company on
time and on regular basis is essential to manage liquidity issues (Alkaabi and Nobanee,
2019).
The role of the Financial Manager in a company
Financial managers basically head of the financial management of the company, the role
of manager is to analyse financial health of company and monitor other financial functions such

as cash flow, expenses, profitability and returns. This person is one who regulates all essential
functions of an enterprise.
There are several roles of the Financial manager, in the following :- Raising of Funds:- It is the general role of the manager to raise manager, to raise fund
from better source. Duty of the manager to decide balance between equity and debt.
Funds that are essential for each operation in the company. Managers under Tesco is
making appropriate plans and strategies for procuring funds for the company. Allocation of Funds:- After raising funds from different sources, next role for manager is
to distribute it in perfect manner. Before allocation of funds manager monitors,
profitability of respective department, returns from investment and nature of source is
also been admired to before distribution.
 Focuses on more earning:- Profit is the benchmark that used to measure company's
success. More earning and profit means company is more successful, they focused on to
get earn more returns from investment and allocation of funds in aggressive productive
operations or department (Kembauw and et.al., 2020).
Sources of Finance
In the company there are lots of sources to raise fund, choice of funds makes more
profitability, financial stable, productivity etc. There are internal and external sources of finance
for company, long-term and short-term finance are also available in the businesses. Commercial loans:- It is most using source of finance for each business, through get
loans on some percentage. There are many types of loans, bank loans, cash credits, credit
unions. Bank loans are huge amount are giving by bank against of property or any value
assets. Tesco is having huge operations, so they are basically got loans on against of their
some assets, through which they get use of that assets as well. Trade credit:- It is short-term finance way, in this company expand their capital and
funds through delay in payment and get credit from supplier of raw material or
consumable. Tesco have reputation in the market which enable its supplier to give them
small-term trade credit.
 Share capital or Equity share:- It is primary source to raise fund for any business, it is
long-term financing pattern. Shares of capital are distributes by company on the basis of

their investing ratio, company give share of profit to investors. Tesco is the public listed
company and it favourable for raising fund for long term.

REFERENCES
Books and journals
Al Breiki, M. and Nobanee, H., 2019. The role of financial management in promoting
sustainable business practices and development. Available at SSRN 3472404.
Alkaabi, H. and Nobanee, H., 2019. A study on financial management in promoting sustainable
business practices & development. Available at SSRN 3472415.
Brigham, E.F. and Houston, J.F., 2021. Fundamentals of financial management. Cengage
Learning.
Chang, C.L., McAleer, M. and Wong, W.K., 2020. Risk and financial management of COVID-
19 in business, economics and finance. Journal of Risk and Financial Management.
13(5). p.102.
Kembauw, E. and et.al., 2020. Strategies of Financial Management Quality Control in Business.
TEST Engineering & Management. 82. pp.16256-16266.
Online
Finance Function – Concept, Approaches, Aims, Classification, Objectives, Importance & more.
2022. [online]: available through
<https://top10stockbroker.com/financial-planning/finance-function/>