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Financial Analysis

Financial Analysis

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Published by vilas jadhav

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Published by: vilas jadhav on May 01, 2011
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05/27/2013

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EXECUTIVE SUMMARY:
The role of the management accounting is very essential in today’s organizationalenvironment. There are some important techniques which are very useful for thecompany’s success. This report is to the Board of Directors of the TESCO Plc. As amanagement accountant consultant I have analyzed how management accountinghelpful to take business decision and can improve business profitability.
INTRODUCTION:Tesco plc
is a worldwide grocery and general merchandising retailer. The company ishaving it’s headquarter in Cheshunt, United Kingdom. The company is the fourth-largestretailer in the world measured by revenues after Wal-Mart, Carrefour and Metro. Andalso the second-largest measured by profits after Wal-Mart. The company is havingretail stores in 14 countries including Asia, Europe and North America and the companyis the grocery market leader in the UK, Malaysia, and Thailand. In UK the companyowns market share of around 30%.Basically the chain was founded by Jack Cohen in 1919. The company has started itsbrand after Cohen bought a shipment of tea from T.E. Stockwell. The name TESCOcame from using the initials (T.E.S) and adding the first two letters of his own surname(CO). The company opened its first Tesco store in 1929 in Burnt Oak, Edgware,Middlesex. Basically the company’s focus was at UK and specializing in food and drink.It has diversified both geographically and by product, into areas such as clothing,electronics, financial services, telecoms, home, health, car and dental insurance,retailing and renting DVDs, CDs, music downloads, Internet services and software. Thecompany is listed on the London Stock Exchange and is a member of the FTSE 100Index. The company has started its operations in India.The company is having three types of stores which are as follows;
 
Tesco Extra:
In this category of stores, they are larger, mainly out-of-town hypermarkets whichcontains stock nearly all of Tesco's product ranges.
Tesco Superstores:
In this category of stores, the superstores are standard large supermarkets, containsstock of groceries and a much lower range of non-food goods than Extra stores.
Tesco Metro:
These types of stores are sized between Tesco superstores and Tesco Express stores.They are mostly located in city centers, the inner city or on the high streets of towns.According to TNS Worldpanel, Tesco's share of the UK grocery market in the 12 weeksto 27 December 2009 was 30.5% which is increase of 0.1% on 12 weeks to 27December 2008 largely in line with the increase of the other four largest supermarkets.These increases resulted in to the decline in the market share of discount chains Lidl,Aldi and Netto in the same period, collectively of 0.1%.(Source: Kantar Worldpanel)The company’s major competitors are ASDA, Sainsbury’s, Morrisons, LIDL, ALDI etc.But in the UK the company holds a major market share. This shows good sign for thecompany’s progress.
 
What is management accounting?
Management accounting is a combination of accounting, finance and management withthe leading edge techniques which will help to drive successful businesses. There areChartered Management Accountants who help business organizations to take major business decisions.The role of Chartered management accountants:
Advise to the managers about the financial implications of projects
Explanation of the financial consequences of business decisions
Formulation of business strategy
Control on the spending and finance
Conduct internal business audits
Explanation of the impact of the competitive landscapeThe above are the role of the management accountants. These roles are part of thedefinition of the management accounting. It means all of the functions also part of themanagement accounting.
Techniques of Management Accounting:
There are some techniques of management accounting which have been used to takebusiness decisions. These techniques are as follows;
Activity-Based Costing (ABC)
Just-in-Time (JIT) and
Total Quality Management (TQM)Now I have discussed how these techniques can be used by the TESCO Plc so that ithelps company to take proper decision.

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