• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Unit 2 D2 Evaluate the adequacy of accounting ratios as a means of monitoring the state of Tescos

Extracts from this document...

Introduction

D2 evaluate the adequacy of accounting ratios as a means of monitoring the state of the business in selected organisation, using example This report will evaluate the adequacy of accounting ratios as a means of monitoring the state of the business in selected organisation, using example. The selected organisation is going to Tesco plc, and it will be evaluating their profitability ratios and Liquidity ratios. A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. There are many standard ratios used to try to evaluate the overall financial condition of a corporation form a balance sheet. Financial ratios may be used by managers within a firm, by current and potential shareholders of a firm. Financial analysts use financial ratios to compare the strengths and weaknesses in various companies. Accounting ratios indicates the efficient use of business assets and whether the share price is realistic based on earnings, but some of the critical details that might cause the business to go bankrupt are, liquidity ratios, legal issues, employee issues or funding issues/gearing ratios. ...read more.

Middle

For example: This is because it shows the shareholder what Tesco plc’s profit is in a percentage, but not the specific amount of profit or sales they have made, however this will make it easier for shareholder to know if the business is right organisation to invest in as they would also look at shareholder ratios. The calculation below will show the gross profit margin of Tesco plc from the balance sheet. Actual figure indicates how much gross profit the business has gain, this shows how much profit the business has gained or the amount of sales the business has gained from selling products. This shows the actually figures shows much the organisation has actually gained or loss. However actual figures doesn’t give the indication of the performance of the business for example on Tesco plc’s balance sheet it shows that in 2013 they had a total sales of £64,826m and in 2012 they made a total gross profit of £5,397m. Actual figures show the aspects that the business has made over the years. This indicates how much they have gained and loss in the years, which is useful to check the business profit margin and finance. ...read more.

Conclusion

(19,249) The current liabilities (including liabilities of the disposal group classified as held for sales) on Tesco plc’s balance sheet show the amount of debt that they owe to other companies. For example Tesco plc owed £18,985m in 2013 and in 2012 Tesco plc owed £19,249m. This indicates Tesco plc owed companies more in 2012 than in 2013 because of the less borrowing they have done in 2012 by £264m The balance sheet of Tesco plc’s current assets (including liabilities of the disposal group and non-current assets classified as held for sale) in 2013 Tesco plc had £13,096m this because however in 2012 Tesco plc had less money than in 2012 for example they spent £12,863m, their current assets went up by £233m in a year. This indicates that Tesco plc.’s current assets and current liabilities shows how much they have spent on certain things and what they are paying out to certain things too. In conclusion, the adequacy of accounting in Tesco plc, monitoring their profitability ratios and Liquidity ratios is essential for Tesco plc to be monitored frequently. This is because not knowing whether the organisation has enough money or doesn’t have enough money to invest in the organisation; it is difficult to make decisions if their finances are not monitored. | Page ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. Marked by a teacher

    Aims of tesco

    5 star(s)

    They treat the customer with respect at all times and value what they have to say. Tesco Monaghan also offers a service where customers can purchase their items online and they will deliver them free to their door. Be responsible, fair and honest As well as obvious business objectives Tesco

  2. Marked by a teacher

    Business information and communication at Tescos.

    3 star(s)

    written Letter Writing to inform the customer of new deals and offers Customer Writing letters is more personalised and allows the customer to feel good about themselves having a personalised letter from a store probably for buying a sofa Memos Documents, industry, assignments Business officers It observes on the topic.

  1. (P4) Describe the Functional Activities and the Independencies of Tesco Plc and Coleraine Borough ...

    It involves organising the delivery of goods by a business and various materials and products around an organisation. Marketing Market research is required by Tesco in order to identify, anticipate, and satisfy the particular needs of customers. By then matching products to meet these needs, they can then achieve; *

  2. Unit 9: Marketing Strategy

    been able to give out more questionnaires for my primary research and look through further websites and other secondary sources to collect relevant information about my potential target market. With particular reference to my secondary research, I would have been able to delve much further into 405,000 results for Sutton-on-Sea when entered into Google had I had more time.

  1. BNC BUSINESS UNIT 19 P4

    To get to stage three you really need to listen carefully. So attentive listening can create a good team listener- someone who is willing to see that the sum of the team is greater than the individual parts. I have felt this before as I have seen that other people have good ideas which are better than my own.

  2. In This unit I am gong analyse the product knowledge required by employees of ...

    This is bad because if a person has bought a ticket online and then once inside the park they ask a member of staff and they get it wrong the customer might inform their friends and relatives of the wrong price.

  1. D2 Evaluate the effectiveness of business information and its communication as key contributors to ...

    Interests This is about grabbing the attention of the audience to which the information of the business is being communicated to. This can be achieved by the business through getting straight to the point of what they want to say so that they can keep their audience attention.

  2. Unit 1 P5 Describe the influence of two contrasting economic environment on business activities ...

    This gives an indication that Tesco?s shares are not sustainable in 2013. In the article it shows that the CEO is trying to maintain Tesco plc?s difficulty for example the Panmure Gordon analyst Philip Dorgan believes ?beginning to get a grip on the steering wheel and now has a clear

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work