Background of the Study
The ancient year of 1930s bought the practice of detecting financial symptoms of unsuccessful business. The prediction of various distresses in the corporate sector is one of the toughest jobs that need to be performed with intense care by the management of the organization. This study, which is based on the importance of financial ratios of Tesco aims to introduce and develop an appropriate instrument for signalling failures in business before the unfavourable event attacks the firm. Tesco PLC is a British based multinational company, which operates in the division of general merchandise and multinational grocery. The retail firm has it’s headquarter in Cheshunt, Hertfordshire, England, United Kingdom. The study is designed in such a manner, which will investigate the current financial status of the firm and at the same time will extract the various loopholes in the finance section of the organization. Moreover, the evaluation of the various Key Performance Indicators (KPIs) of the firm will be analyzed within the course of the study. This will enable the researcher to understand the exact problem statement of the firm. The evaluation of the risk factor by studying the financial ratios of organizations has become one of the most common and popular practice in the recent era.
Aims and Objectives of the Research
The major aim of the research is to evaluate the current financial position of Tesco. Moreover, the research also has various other aims, which are related to the financial sector of the company. Meanwhile, the researcher will also go through the various negative elements that has affected the overall revenue generation of the firm in the recent past. The objectives of the research have been stated below:
- To assess the current financial position of Tesco
- To evaluate the loopholes in the finance division of Tesco
- To dig out the reason behind the lowering of the revenue generation of Tesco
- To recommend various strategies to develop the current financial condition of Tesco
The statements that are created by researchers at the time of speculating the possible outcome of the research is known as the research hypothesis. The hypothesis of the research has been stated below:
H 1: Scrutinizing the financial ratios evaluate the current performance of Tesco.
H 1A: Setting of financial objectives will affect the revenue generation of Tesco in a positive manner.
H 2: Evaluating the financial statements of Tesco will extract the loopholes of Tesco.
H 2A: The current financial ratios can be used to determine the upcoming problems of Tesco.
H 2B: The ratio - based models will enable Tesco to improve the financial ratios of the firm.
H 2C: The recommendations will enable Tesco to get rid of the highlighted problems.
H 3: Recommendations will improve the overall business process of Tesco.
The financial section of any firm has a major importance for the whole organization, as all firms within every industry has the sole motto of earning profits from its respective business. The current market in the retail industry has become immensely competitive, which has made various firms face major problems regarding their business transactions. The reason behind this immense increase in competition within the retail sector is due to the high flourish of the industry in the recent era. The competition has increased even more due to the massive number of new entrants arriving in the market. Therefore, it is of utmost importance that firms implement the right strategies to balance their financial section. Moreover, the study of the KPIs will highlight the current financial status of the organization. On the other hand, financial statements of a firm have the ability to determine the current profit making condition of the organization. These statements also have a huge amount of significance in determining the future steps that should be taken by the organization in order to smoothen up the division of profit making.
Quantitative research methodology enables to perform the researcher to develop relationship between numerical data and the theories or theoretical models based which are related to the financial segment. The researcher has stated clear objectives and hence positivism research philosophy will be implemented within the research. The research will be based on primary data, which will be collected by distributing questionnaires to 55 employees of Tesco, which will be treated as the quantitative data. On the hand, the qualitative data will be collected by interviewing 4 finance managers of Tesco. However, the data collected for the research will not be used for any type of commercial use and the information of the research participants will be kept confidential.
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