Financial Management Report

Topics: Stock, Stock market, Dividend Pages: 24 (5144 words) Published: September 15, 2011
1. Introduction

Tesco plc is one of the largest store retails chains in Britain; it is a British-based international grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share. Over 30% of the grocery market in the UK has been control by Tesco, nearly to the combined market share of its closest rivals had Asda and Sainsbury's. In 2007, the Tesco supermarket chain announced over £2.55 billion in profits (Caroline, 2007). Their business is mainly food and grocery, and also varied into areas ,for example: discount clothes, consumer electronics, consumer financial services, DVDs, GAME, VIDEO selling and renting, CDs selling and music downloads on Internet , broadband dial-up Internet service, telecoms service (mobile top-up & landline), consumer health insurance, consumer dental plans and budget software. From now on, Tesco is going through to family housing market, with a self-advertising website on internet ( to promote their products such as Online Shopping. (Wikipedia).

And this report will concentrate four aspects of Tesco to investigate and reflect the company’s financial performance and business conduct. First of all, there are some key indicators of the firm’s financial performance, such as dividend policy, capital market efficiency, and raising finance and risk, return and investments decisions. Second, it is the review of company’s financial statements. Third, is the external information could influence the performance of its business. Finally, are the conclusion and the recommendation of whether or not the current share price of Tesco Plc represents a ‘fair’ value. All these critical evaluation are help to expatiate the financial management policies of Tesco whether the shareholder’s wealth is to be maximized successfully or not.

2. Situation Analysis

Tesco plc is the biggest retail organization in United Kingdom and also is one of UK’s most successful retailers in global world. Tesco has forceful and strong growth in UK market in 2001; its increase 7.5% based on like for like strategy in UK sales, to reach £30 billion in the year to February 2006, and the operating profit up by 15% to £1.8 billion. Tesco also already gets constructive accomplishment in non-food development; total non-food sales grew 13%, and reaching £6.8 billion. Tesco plc has owned over 20% share non-food sales of whole grocery market and it has been identified also. (Mintel, 2006).

Tesco plc is continue its market share through its multi-format and multi-channel approach to growing up, that provide the chance making more customers satisfy according to being unlike way and use different ways to handle different needs . Also, with fairly good low price policy with better value coupled with more choose leeway and convenience to customers, which are already built up the successful basis. Now, Tesco has managed 1,779 shops according to four forms, which included Express, Metro, Superstore and Extra. Moreover, Tesco is developing adopted Homeplus banners be the non-food stores, and the first non-food store has already opened in last October (Mintel, 2006).

SWOT Analysis

|Strengths |Weaknesses | |Market leadership |Too depend on UK market | |Strong self-advertising of |Low returns | |Growing operations in South Korea |Some categories may not mature as many of its more focused and | |Strong brand image |specialized competitors (books, mobile phone and broadband, etc) | |Overseas operations |In-store TV (Farey,...

Bibliography: Caroline, S (April, 2007) Tesco announces profits of £2.55bn. Farmers Weekly. Retrieved April 17, 2007.
Stephen H.Penman(2004),Financial Statements Analysis and Security Valuation ,Second Edition ,Mc Graw-Hill Education
Richard A.Brealey and Stewart C.Myers, (1996), Principles of Corporate of Finance, fifth Edition, Dartmouth Publishing
Food Retailing – UK. (2006) Full-text [online]. Mintel. URL:
Tesco Annual Report
Tesco PLC (2006) [online]. Datamonitor URL:
Black, G
Figure 1: Sales by food retailers, 2001-06
|£m (excl
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