1.1 Analysis of business structure and financial structure and reporting requirements.
1.2 Analysis of published financial statements for decision-making purposes.
1.3 Calculation of financial ratios from published accounts that can be used to support business decision-making.
2.1 Difference between long and short-term business finance needs.
2.2 Sources of finance available to a business.
2.3 Assessment of the implications of different sources of finance for the organization.
2.4 Recommendations for sourcing finance for business projects.
3.1 Analysis of budgets and cash flow for decision-making purposes.
3.2 Assessment of capital expenditure or investment projects using investment appraisal techniques
3.3 Recommendations for managing business finance and expenditure.
References & Bibliography.
This assignment aims to achieve the skills and knowledge which are required to analyze financial information and make business decisions based on published financial information. The objectives of this assignment are to understand the business, financial structure of the business and reporting requirement of the organization; to know how to evaluate financial statements using financial ratios for making an investment decision; to know the sources of finance available to a business and understand their implication on the business; to know how to prepare a budget; and to know how to assess available investment opportunity using investment appraisal methods. For this assignment Tesco PLC, UK is chosen.
1.1 Analysis of business structure and financial structure and reporting requirements
Business Structure of Tesco
Tesco plc is a public limited company in the UK. A company is formed under some specific legal structures of any country. In the eye of the law, the company has a specific identity and gets some advantage and basic rights while they are operated in the limited liability. This type of company makes a financial advantage for the shareholders and these corporations also provide taxes to the country of operation. These companies are a vital segment of any specific economy. According to Berkley et al., (2008), companies provide employment to the people of any country of interest. Corporations can be profit or nonprofit-centric.
The financial structure of Tesco
The financial structure is the way of financing the assets of the company such as shareholders’ equity, short-term liabilities, and long-term liabilities. Tesco plc also includes these in its financial structure. Tesco’s financial structure includes total assets of £50129 financed by the equity of £16661 and debt capital of £33468 as of 23 February 2013 (Tesco Annual Report, 2013).
Reporting requirements for a company like Tesco
A company has to maintain some rules and regulations while they make financial statements. A company has to maintain the IFRSs and IAS in reporting financial information. FRS 102 which is The Financial Reporting Standard applicable in the UK and Republic of Ireland is issued by the Financial Reporting Council in respect of its application in the United Kingdom and promulgated by the Institute of Chartered Accountants in Ireland in respect of its application in the Republic of Ireland. Tesco has to maintain this FRS 102 in reporting financial information (Tesco, 2013).
The financial statement basically shows the total profit, net profit for any financial year and the net loss or profit is calculated by deducting the costs incurred by the organization. In the financial statement, the Income Statement comes first which states the revenue and costs of the organization and these things ultimately are shown in the capital of the business. According to Kermit and Larson (1997) the circulation of the finances, capital or investment is presented in the financial statement of the organization. Here, in the financial statement, the business organization also needs to show all current, fixed and all tangible and intangible assets. The statement helps to find the total capital or total liabilities of the organization (Kermit and Larson, 1997).
Comparison with other possible structures
A sole proprietorship is a business organization that is operated under one ownership and in this organization an individual is almost everything. This type of organization feels very few legal bindings and the proprietor has to take all the liability for the organization. The sole proprietorship business organization inherits a lot of business liability through its own ownership type (Khan and Jain, 2010).
A general partnership business organization consists of two or more owners in a community that is banded in a partnership accord and makes all sorts of business deals. The partners share the amount of knowledge, capital and labor and skill so that they can be equal in the business operation. The partners are equally liable for all the liabilities incurred by the organization. They also share an equal amount of the loss or profit of the business. They all have to share the profit of the organization among them and also maintain equal rights in their operation (Khan and Jain, 2010).
A nonprofit organization is operated under the provision of some legal restrictions that the organization has no chance to share its profit with the shareholders of the organization. The profit the organization makes is only for further business expansion. The nonprofit organizations are found to be operated in the local arena and these organizations make the most benevolent things for the people of any locality. Basically, the nonprofit organization does not make a profit but the profit they make is for the betterment of society. The most money gathered by the nonprofit organizations comes from the fund of the general people. The general people also make the best decision to serve the deprived people. To establish the nonprofit or charitable organization the initiators need to take the permission of the charities program of the Washington Secretary of State (Khan and Jain, 2010)…………………………..