Finance in Tesco Essay

2607 Words Jul 5th, 2011 11 Pages
Liquidity plays an important role in the success or failure of business. In UK, 75-80% businesses collapse not because they are unprofitable but because of liquidity. For running a business successfully, plans have to be prepared to cope with the changing needs and these must be capable of modification. It is not good to wait until the end of the financial year to discover that the plan started to go wrong 11 months ago. For this purpose managers need information quickly, accurately and this information must reach to the concerned persons directly. They require financial analysis carried out weekly or monthly at least.
Availability of funds is prerequisite to start any business. Most important sources of funds available to the
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Tesco is known as one of the fastest growing retail giant over the last decade. According to Microsoft 2011, the sale growth of Tesco is slowed from 3.5% in 2008 to 3% in 2009, 2.6% in 2010 and just 1.2% in the first few weeks of 2011. The expansion in Tesco business and minor downfall in sales growth despite recession are interesting factors that forced me to select Tesco Plc for the said assignment

Financial Analysis of Tesco plc 3.1 Economic Growth of Tesco
The worldwide economic conditions have directly influenced the Tesco performance. But UK’s economic condition has played the principal and major role in its slowed down growth of sale that is indicated by the growth of GDP (Gross domestic product) that has fallen continuously in the years 2008 and 2009 with a slight recovery in 2009.

3.2 Operational Performance of Tesco
Any company’s operational performance is usually measured by its financials. By looking at its Grocery market share which has been decreased recently in the UK. In 2010 it was 31% last year there was no increase in this growth. Overall Sainsbury grew faster than the period while the market leader Tesco’s share was stagnant (Hall, 2009)
3.3 Sales Growth
Sales growth ratio is defined as the rate of growth in sale viewing inflation rising. It is described in percentage; the formula for sale growth is,
Sales growth = Current year sales - last year sales/last year sales
Tesco’s sales growth can be shown

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