Essay - Name Stephen Ndubuisi-Kanu Student ID SNDUBU200 Programme Business Management Module Fundamentals in Financial Management Tutor Divine

# Essay - Name Stephen Ndubuisi-Kanu Student ID...

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Name: Stephen Ndubuisi-Kanu Student ID: SNDUBU200 Programme: Business Management Module: Fundamentals in Financial Management Tutor: Divine Kangami Module: Fundamentals in Financial Management Due Date: November 20th Include the question here and plagiarism statement. Ensure to get the right cover page
Fundamentals in Financial Management: Tesco Plc. Tesco Plc. is a multinational grocery company headquartered in Welwyn Garden City, England. Ken Murphy currently leads the company as the Chief Executive Officer (CEO), oversees over 450,00 employees. The company’s brands include Booker, Makro, Premier, Jack’s, One Stop, and the Subsidiaries are Tesco Mobile, Tesco Ireland, and Tesco Bank (Tesco Plc., 2020). The purpose of the report is to conduct a financial ratio analysis for the two financial years, 2019 and 2020. To know the financial health of the company, the five ratios selected for the analysis are categorised into profitability, liquidity, management, leverage and valuation ratios. The report not only calculates and interprets the ratios but also indicates the users, both internal and external, who can benefit from the information provided in the financial ratios. Table 1: Data adopted from Tesco Plc. (2020) 1. Profitability ratios 2020 2019 Gross Profit Margin = Gross Profit / Net Sales 4889/64760 = 7.55% 2554/63911 =7.18% Return on Assets = Net Income / Average Total Assets 971/52302=0.02or 2% 647/56898 =0.01 or 1% 2. Liquidity Ratios Current Ratio = Current Assets / Current Liabilities 12879/17927= 0.72 12480/20973 =0.6 Quick Ratio = Current Assets- Closing Inventory / Current Liabilities 12879-2433/17927 = 0.58 12480- 2617/20973
=0.47 3. Management Efficiency Ratios Receivables Turnover = Net Credit Sales / Average Accounts Receivable 64760/1396 = 46.39 63911/895 = 71.41 Inventory Turnover = Cost of Goods Sold / Average Inventory 59871/2433 =24.61 89325/2617 =34.13 4. Leverage Ratios Debt Ratio = Total Liabilities / Total Assets 39027 /52302 = 0.75 43442/ 56898 =0.76 Debt-Equity Ratio = Total Liabilities / Total Equity 39027/13275 =2.94 43442/13456 =3.23 5. Valuation and Growth Ratios Earnings Per-Share = (Net Income-Preferred Dividends)/ Average Common Shares Outstanding 971/ 9793.50 =0.1 647/9793.50 =0.07 Dividend Pay-out Ratio = Dividend Per Share/ Earnings Per Share 0.09/0.17 = 0.53 0.07/0.11 =0.64 Users of Financial Information Both internal and external stakeholders can use the financial information provided in either the statements or ratios. The internal user of financial information is the company’s management, while the external users are creditors, government, investors, employees, customers, and the generic public ( Das and Pandit, 2020) .