Name: Stephen Ndubuisi-KanuStudent ID: SNDUBU200Programme: Business Management Module: Fundamentals in Financial Management Tutor: Divine KangamiModule: Fundamentals in Financial Management Due Date: November 20thInclude the question hereand 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 notonly 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 ratios20202019Gross Profit Margin = Gross Profit / Net Sales4889/64760 = 7.55%2554/63911 =7.18%Return on Assets = Net Income / Average Total Assets971/52302=0.02or 2%647/56898 =0.01 or 1%2.Liquidity RatiosCurrent Ratio = Current Assets / Current Liabilities12879/17927= 0.7212480/20973 =0.6Quick Ratio = Current Assets- Closing Inventory / Current Liabilities12879-2433/17927 = 0.5812480-2617/20973
=0.473.Management Efficiency RatiosReceivables Turnover = Net Credit Sales / Average Accounts Receivable64760/1396 = 46.3963911/895 = 71.41Inventory Turnover = Cost of Goods Sold / Average Inventory59871/2433 =24.6189325/2617 =34.134.Leverage RatiosDebt Ratio = Total Liabilities / Total Assets39027 /52302 = 0.7543442/ 56898 =0.76Debt-Equity Ratio = Total Liabilities / Total Equity39027/13275 =2.9443442/13456 =3.235.Valuation and Growth RatiosEarnings Per-Share = (Net Income-Preferred Dividends)/ Average Common Shares Outstanding971/ 9793.50 =0.1647/9793.50 =0.07Dividend Pay-out Ratio = Dividend Per Share/ Earnings Per Share0.09/0.17 = 0.530.07/0.11 =0.64Users of Financial InformationBoth 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).