Tesco financial management

Document Type:Coursework

Subject Area:Finance

Document 1

Arguably, several stances have been made that are working to rejuvenate this international institution. According to the 2016 annual report, the management has taken actions to reaffirm their market positioning and competitiveness, protect the balance sheet, and rebuilding enthusiasm, trust and transparency in order to stabilize their function in a deflationary, challenging and uncertain market. This report paper covers some of the turnaround strategies that are a smooth road to recovery and a build of momentum across the divides of the business. Any company operates under different environments and thus facing different challenges. From the Tesco’s annual 2016 report, there are a number of items that have been highlighted, all aimed at upholding the retail shop values meant to prioritize customers at all levels. The sections of the company that are captured in this report include; the retail’s environmental and social review, the corporate governance report and details on the financial statements of the company. Generally, all these scrutiny is aimed at scaling the business against other competitors as well as ensuring that the retail is a going concern business. This report also covers the bit on stakeholders of the company. It provides the basic understanding of a stakeholder. Financial analysis has also been captured to illustrate the performance of the company. In addition, this report has also covered the process of letting a contract through scrutiny and analysis of the applicant’s financial documents. This has been explained using Benedict Co. Contents Introduction 4 Tesco stakeholders 4 Benedict Company 9 3. Liquidity ratios 10 3. Profitability ratios 12 3.

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Market value ratios 13 Conclusion 14 References 15 Appendix 17 Introduction In determining the going concern of a company, there are a number of things to consider. Financial analysis is the key determiner of the company’s performance. Therefore, the financial statements provided for the two companies; Tesco and benedict co illustrates the financial health and the eligibility of the two companies to perform in future. These statements are also vital in helping the companies plan ahead. Barnes (2011) explained that they are so imperative to investors since they guide them on the best investment deals to seal with the companies. They have a direct relationship with the business for stance, in Tesco there are a number of suppliers or investors who own shares through subscriptions and other equity acquisition methods. They are directly involved in the businesses of this retailer company and hence internal stakeholders.

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On the other hand, external stakeholders are those stakeholders that are indirectly involved in the affairs of the business or the company. They are rather affected by the activities of the company and may be noticed through their indirect interactions with the business or the company. They include the general public or neighbors within a company. All companies work to maintain a good rapport with the customers. As well, you can only increase a market base through increasing the number of customers. In a competitive market, top companies remain distinct due to its contributions and sacrifices in broadening customer base. The aspect of Tesco appearing as one of the top retailers in the world, is evidencing a retail shop that has secured a stable customer base. III. Elsewhere, Tesco has been on the limelight through participation of similar community projects through their initiative “sale of Tesco bags” an initiative that is hailed for its stance in improving environment.

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Tesco has also gone a mile further, through reporting and being at the helm of building a nation that is socially responsible; joined United Nations Global Compact (UNGC). This was an important gesture that is encouraging other businesses to adopt such strategies and policies as well as reporting on their implementations. To as well strengthen such functions and roles, the retailer has set up a task force that is mandated to offer governance internally and externally. Internal governance is done through board committees and externally through and feedback and critical advices. With the past years’ reported cases of mishandling food waste, Tesco has come up with a program that is aimed at preventing such wastages from farm to shop. This policy has been enrolled to the suppliers, through flexible ordering and ensuring that they are provided with an analyzed food range capacity for purposes of curbing wastage.

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Tesco has also joined Community Food Connection (C. F. C), which has partnered with FareShare Food Cloud, in order to distribute the food that could be eaten. Benedict Company In order to meet some common tender qualification thresholds, a company should meet eligibility criteria for selection and allotment. In determining such companies, traits such as; a healthy balance sheet, the number of completed or processed tenders and many others (Ohlson, J. Benedict Co. eligibility was evidenced by the balance sheet provided below. This was done through analysis of the company’s assets and the general performance of the company. In short term, the company should use their monies efficiently. Financial leverage ratios This ratios are indicative of the company’s ability to clear or honor long term debts. The ratios deductible from the balance sheet above include; Description 20X1 20X0 Change Total debt ratio 0.

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Debt equity ratio 0. Equity multiplier 1. Receivable turn over 4. Total asset turnover 0. Table 4 From the table above, the inventory turnover decreased in 20X1. This is indicative of how inefficient benedict company has been their inventory. All the other ratios are showing a decrease and hence, the concern on how the Co has been managing its stock. Price sale ratio 0. Market to book ratio 0. Table 6 From the table shown above It was concluded that, the per share earnings of benedict company decreased by 20x1 and this is due to the company’s net income that is seen to decrease afterwards. On the other side, the price earnings ratio increased by 20X1 a thing that would lead the investors to build up interest with the company. Conclusion It was a smart initiative for the Tesco Company to invest in the employees and its supplier’s relationship.

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No. Retailer in Britain Uses' Clubcard'to Thwart Wal-Mart. Wall Street Journal, (June 6). Lindgreen, A. and Hingley, M. and Fearne, A. Analyzing the Impact of Supermarket Promotions: A Case Study Using Tesco Clubcard Data in the UK. In The Sustainable Global Marketplace (pp. Springer, Cham. Rowley, J. A. Financial ratios and the probabilistic prediction of bankruptcy. Journal of accounting research, pp. Appendix Balance sheet Assets 20X1 20X0 Non-current assets 38,000 32,600 Current assets Inventory 5200 2600 Trade receivables 7600 3800 12,800 6,400 Total assets 50,800 39,000 Owners’ equity Capital and reserves 18,000 18,000 Share capital 10,000 7900 Non- current liabilities 6% bonds 12,000 8,000 Current liabilities Trade payables 6800 4300 Overdraft 4000 800 Total C. L 10,800 5100 Workings. in debt. Debt-equity ratio = Total assets / Total equity = $ 0. times Equity multiplier = Total assets / total equity How rapidly can the firm grow? Instant growth rate = ROA x b 1-ROAxb We have seen that the retention ration is 31.

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or 3-Feb b = 31. x31.

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