Professional Documents
Culture Documents
Index
Task 1
Finance....................................................................................................................... 7
Recommendation of projects...................................................................................... 8
References..................................................................................................................9
Task 1
(A)
(B)
2014
2013
64,82
63,55
6
7
6.3
6.3
2,188
2,631
3.4
4.1
0.05
0.36
78.4
58.7
100
100
93.69
93.69
6.31
6.31
0.19
1.53
1.28
1.27
0.25
1.94
3.01
3.41
0.72
6.21
1.61
5.33
5.4
6.05
6.17
7.18
7.47
7.13
26.12
31.04
100
100
12.04
11.62
37.87
42.66
66.76
70.65
33.24
29.35
100
100
0.69
0.73
0.41
0.37
0.6
0.63
36.08
36.37
36.36
17.48
2.47
2.58
1.28
1.27
Tesco is a large firm and it has a huge hierarchical structure lots of people reporting more
than one person before the information passed to top management or leadership. One person
control the each level. Usually hierarchical companies are to be big companies like Tesco or
Asda. Information is passed down from one person to another person until its gets to the top
of the hierarchical structure. If there is any problem in the hierarchical structure it will move
up again from one person to another person until the problem is being sorted out. Close
control of worker is one of the important strength of a hierarchical structure. Workers do not
wait around until they are told because they know exactly what they have to do.
than the inflation rate. Your capital appreciate in a real value have a very little opportunity,
kind of returns possible with other kind of investment opportunities.
(E)
Angel Equity:
Find a well reputed industry executive or management who is interested to invest a good
amount of money in the organization. Angel equity is an internal source of finance so thats
why its very positive for the organization to get finance at interest free rate or at very low
interest rate. It could be your friends and family who are ready to help you in your difficult
time at free of cost and ready to wait for getting their finances back.
Smart Leases:
Generally very difficult for the small organizations to finance, leasing fixed assets conserves
cash for working capital to cover inventory, especially for the new business. If business is
newly set up or have not goodwill in the market then its very difficult for the organization to
hire assets on lease. Some equipments are very costly and you have to import from other
countries so if organization is financially not good then they are not able to hire assets on
lease. If they able to hire it they have to pay particular amount as an interest charges which
could be in millions. Some assets are very costly and it is difficult for the organization to
purchase it on cash so they prefer to buy it on lease which gives organization a sort of relief.
Bank Loans:
Banks are one of the major sources of finance for the organization. If organization have good
reputation in the market or their business is at boom banks should offer loans to
organizations. Banks are the external sources of finance so they will charge interest rate on
borrowing. Interest rate is depend on the amount of money which you borrowed from bank. If
you are setting up a new business or organization have not good reputation in the market then
bank can refuse to give loan or have Bank needs high security because they want protection
of money.
Working capital depend on how much of current debt the company is caring on its balance
sheet, it could be positive or negative. Company who have lots of working capital will
experience more growth in the near future and they can also expand their operations using
existing resources. Companies suffer if they do not have enough working capital, company
growth rate could be effected. To satisfy short term liabilities and operational expenses
working capital Shows Company have a sufficient liquid resources.
Tesco PLC has a working capital of -5.727. This is lower than the service sector, and
3107.81%higher than that of Grocery industry stores. Working capital ratio for entire stock is
255.09% which is slightly higher as compare with company.
There is a stability in net debt which is 6.8 billion. It is little lesser than our expectations at
the half year, trading result on cash flow and lower working capital due to impact of
Christmas, higher stock levels as compare with planned. Due to control in sending group
capital expenditure was slightly low from our expectations. Operating cash flow from retail
operations was slightly down by 3.8 billion, effected by the lower working capital inflow.
Task 2
July
106
August
114
Sep
118
Oct
124
Nov
104
Dec
96
-106
-30
-64
-30
-66
-30
-20
-70
-30
-59
-30
-54
-30
-34
-30
20
24
15
-22
24
15
-22
-25
-30
20
-23
-135
-30
20
-23
24
15
-157
90
60
60
80
80
57
57
81
81
96
96
-61
TASK 3
(A)
Accounting rate of return= (initial investment scrap valve)/ useful in years
3.16%
3.335 %
(B)
Base of recommendation which project organization have to
choose
Its better for the organization to choose the project 1 there are several reasons
to choose project 2. If we look at the NPV of both project it is negative in both
projects. But project 2 NPV is acceptable in that worst case because we have to
choose at least 1 project out of these 2 projects. If we look at the ARR project 2
ARR is higher. It is the basic concept of ARR we must choose the higher ARR
project 2 ARR is 3.335% which is higher as compare to project 1.Payback
duration of project 1 is 3 years and 5 months which is slightly lower than as
compare with project 1. IRR of project 2 is very low as compare to project 1,
whereas project 1 IRR is higher which is 14.28%.
References:
Tesco, New Jersey: VDM Publishers. Neil, W. (1997) 'Exporting British food model
retailing to the US: implications for the EU-US food systems convergence debate',
Agribusiness , volume 13, pp. 135-151
Vignali, C. (2001) 'Tesco adaptation to Irish food', British Food Journal, volume
103, no. 2, pp.145-184.
http://www.letslearnfinance.com/advantages-and-disadvantages-ofmarginal-costing.html