How Would The Stakeholders Of A Company Essay Sample

Introduction To How Would The Stakeholders Of A Company, Listed On The London Stock Exchange Essay

The application and use of annual reports are deemed to be essential observational skills that are employed by various stakeholders associated with a company for conducting primary assessment of how annual performances have transpired. In order to explore the gravity of annual report usage in this essay, the company chosen for detailed analysis is Tesco Plc. Tesco Plc is identified as a prominent organisation situated under the retail and wholesale industry of the UK as well as the London Stock Exchange. The primary subject of importance in this will be offered towards creditor risk assessment and how it is analysed as per annual reports published by Tesco and how it is applicable for relevant stakeholders.

The secondary importance of this essay will cover regulators and government insight while additional importance will also be offered towards usage of annual reports for the purpose of management and internal stakeholders with the general public. Additionally, consideration to the investor-oriented decision-making framework along with the analyst and financial advisor insights will be further explored in the essay. The importance of these areas of the essay are essential for detailed evaluation of Tesco's performance and how it can impact its overall competitive dynamics.

Creditor Risk Assessment

The creditor risk assessment is an important field of priority offered by various associated stakeholders of Tesco especially to track credit rating as well as loan payment facilitation made available. The usage of annual reports applicable for creditor risk assessment is predominantly identified as an important area of consideration applicable for both internal and external stakeholders of Tesco. Therefore, the creditor risk assessment is likely to attract attention of upper-tier management and shareholders of Tesco to analyse overall financial burden that are needed to be obligated. As illustrated and demonstrated by Birindelli et al. (2022), the creditor risk assessment of a company is identified as a quantitative attribute which is located through available obligations needed to be made in favour of short- term and long-term liabilities. The composition of short-term and long-term liabilities of Tesco are integral components of the liabilities section of the balance sheet which illustrate the following figures and evaluation.

Figure 1: Creditor Risk Assessment of Tesco

(Source: tescoplc.com, 2023)

As per the above assessment of creditor risks, it can be illustrated that total values of current liabilities for 2022 and 2021 include numerical expressions of GBP 16,125 and GBP 15,721 million. Similarly, the total valuation of non-current liabilities for 2022 and 2021 are GBP 17,668 and GBP 17,456 million respectively. Preliminary evaluation of creditor risk assessment of Tesco indicates marginally increasing values for both current and non -current liabilities. This signifies higher credit facilities that are being availed by Tesco to stabilise its current operational scales as well as magnify future investment compositions. As per critical opinions and views of Adegbie and Akenronye (2022), incremental values for current and non-current liabilities can impact financial planning attributes for a company which can lead to insufficient availability of funds and cause weakening of competitive advantage. On the other hand, the higher credit facilities of Tesco also dictate that the company's financial leverage is increasing and possesses favourable future opportunities for investors to magnify returns from investments.

Regulators and Government Insight

In addition to creditor risk assessment, evaluation of regulators and government insight applicable for usage of annual reports of Tesco are also identified as important elements mostly applicable for external stakeholders. The regulators and government insight are largely expressed from an annual report through determination of asset positioning of a company for analysing potential of net worth that Tesco possesses. According to Saputra (2022), determination of asset positioning of a company can be traced based on extracting values of current and non-current assets acquired during a specific financial year. 5The following is a detailed demarcation about the asset positioning of Tesco and what it conveys for regulators and government bodies.

Figure 2: Asset Positioning of Tesco

(Source: tescoplc.com, 2023)

As per the above figure of asset positioning of Tesco, it can be determined that non-current assets contain a numerical value of GBP 37,162 and GBP 34, 705 million as of 2022 and 2021 respectively. The value of current assets during 2022 and 2021 include numerical expressions of GBP 11,821 and GBP 10,202 million respectively. This indicates that proportional increase in both current and non-current assets has been observed marginally in 2022 when compared to the values of 2021. As per opinions and explanations of Abdulazizov et al. (2022), incremental facets of asset valuation are a positive financial indicator which expresses the ability of an organisation to develop healthy financial credentials in the associated industry. The overall asset positioning of Tesco is identified to be favourable in 2022 and from a government and regulator perspective positive opportunities prevail for the company to earn higher future profits and contribute towards economic development of the UK.

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Management and Internal Stakeholders with general public

In addition to assessment of regulators and government insight, the application and usage of annual reports is also essential on behalf of internal stakeholders of Tesco comprising management and other associated individuals. The evaluation of performance credentials used by management and internal stakeholders along with the general public are perhaps conveyed through positioning of income statements during a fiscal calendar. According to Raza et al. (2022), the income statement is also an integral proforma situated under the financial statement composition which highlights overall manufacturing and operational strongholds established during a financial year. The following is a detailed assessment of numerical expressions derived from Tesco's annual income statement and what opportunities and threats it contains that are needed to be addressed by the internal stakeholders.

Figure 3: Income Statement

(Source: tescoplc.com, 2023)

According to the above income statement of Tesco gross profit generated from manufacturing activities is calculated as GBP 4,633 million and GBP 3,776 million in 2022 and 2021. Simultaneously the operating profit from operations includes numerical expressions of GBP 1,523 and GBP 532 million respectively. The net profit from continued business operations in 2022 and 2021 further includes numerical values of GBP 1,483 and GBP 5,958 million respectively. From the initial assessment of gross and operating profits, it can be determined that performance of Tesco has increased significantly in 2022, however a decreasing net profit pattern is established for 2022 when compared to the net profit of 2021.

As per critical explanations and views of Sumantri et al. (2022), decrease in net profit is likely to impact long-term operational sustainability for a company. Therefore, the income statement addresses negative attributes of net profit generation trend which might jeopardise operational and financial planning of Tesco's management, employees and subordinates. This can lead to a lower customer network in future which can cause dilution of business competitive positioning.

Investor-oriented decision-making framework

The investor-oriented decision-making framework is further considered as an important field of annual report usage applicable for the company Tesco Plc. In order to trace application of annual reports and financial statements, investors usually comprehend numerical values and features obtained from both income statements as well as the balance sheet. The investor-oriented decision-making framework is largely identified as part of external stakeholder emphasis which provides a company the potential scope of how future investments are likely to be induced from shareholders and investors.

On the basis of evaluating important attributes of the income statement and the balance sheet, it can be observed that net profit for 2022 is following a gradual declining pattern while value of assets and liabilities have increased proportionally. The proportional increase in assets and liabilities value should encourage nominal investments by an investor due to higher scope of investment portfolio returns (Gleißner et al. 2022). However, on the contrary, the diminishing net profit pattern might cause investors to rethink their investment strategies and can also cause bail outs due to regressive operational parameters. Therefore, the overall investor-oriented decision-making framework is deemed marginally favourable for Tesco where progressive strategies should be employed in the long-run to achieve better financial outcomes.

Analysts and Financial advisor insight

The analyst and financial advisor insight can be addressed based on determining overall performances achieved from cash flow statements of Tesco Plc. The following is a detailed demarcation about numerical values attracted in 2022 and 2021.

Figure 4: Cash Flow Statement

(Source: tescoplc.com, 2023)

The above cash flow statement addresses net cash generated from operating activities as GBP 3,757 and 602 respectively. Cash flow from investing activities includes numerical expressions of GBP -1,735 and 6,171 while cash flow from financing activities includes numerical expressions of GBP -2,234 and - 7,841 million. The overall cash flow generated includes numerical values of GBP -212 and GBP -1068 billion which indicates adverse liquidity prospects generated by Tesco in 2022. As critically stated by Drissi et al. (2023), adverse cash flow is likely to impact management of receivables and payables for a company thereby causing disruption in liquidity and efficiency parameters. The associated analyst and financial advisor insight applicable for Tesco thereby conveys negative performance attributes from the annual report where future liquidity progression might be challenging.

Conclusion

This essay has contemplated uses of annual reports by various stakeholders of Tesco where important financial statements include income statement, balance sheet and the cash flow statement. The usage of income statements is likely to be important for internal stakeholders while government and regulators along with an assessment of credit raise is mostly contemplated through the balance sheet. The use of annual reports of Tesco for investor decision making is predominantly contemplated through both income statement as well as balance sheet which allows establishment of a better vision regarding what expected returns and risks are likely from future investments.

Part 2: Poster

Introduction

• Usage of annual reports includes classification of performance statements measured across qualitative and quantitative attributes.
• The important factors of quantitative performance attributes applicable for various stakeholders can be conveyed through the income statement, the statement of financial position or balance sheet and the statement of cash flows.

Creditor Risk Assessment

• The creditor risk assessment of Tesco indicates increasing numerical attributes obtained for current and non-current liabilities which might cause higher probability of capital and financial risks in future.
• The creditor risk assessment also indicates favourable opportunities available to Tesco for comprehending capital structure growth signified through incremental prospects of financial leverage.

Regulators and Government Insight

• The usage of the balance sheet is identified as an important part of annual report implementation where movement in the assets side is highly prioritised by regulators and government bodies (Kosta et al. 2022).
• The evaluation of assets on the balance sheet of Tesco indicates favourable growth opportunities and conversion of net worth which bodes positive opportunities for the company to promote economic growth in the UK.

Management and Internal Stakeholders with the general public

• The management and stakeholders with the general public is considered as an internal stakeholder priority applicable for Tesco which is predominantly evaluated through numerical expressions obtained from the income statement.
• Composition of profitability available is marginally considered to be regressive and can impact long-term association of customers due to stagnated offering of products and services (Kapukha and Makau, 2023).

Investor-Oriented decision-making framework

• Investor oriented decision-making framework is likely to be analysed through both income statements as well as balance sheet performances of Tesco.
• Overall decisions that can be contemplated from an investor are marginally favourable since proportion of risks and returns available are minimal.

Analysts and Financial Advisor Insight

• The analyst and financial advisor insight is contemplated through the cash flow statement where individual performances of operating, investing and financing activities are judged (Qudratovich, 2022).
• Overall cash flow performance of Tesco is identified to be adverse and can cause distorted collaboration of analysts and financial advisors in the long run which can also affect the liquidity and efficiency positioning.

Conclusion

• Usage of financial statements including income statement, balance sheet and cash flow statement are identified as integral components of annual reports published by Tesco.
• The overall financial performance indicator demonstrates fair opportunities of future expected growth, however traces of financial risks and obligations are also on the higher side for Tesco.

References

• Abdulazizov, K.U., Sherzod, I. and Abdulkhodinevna, S.M., 2022. IMPROVING THE METHODOLOGICAL BASIS OF ACCOUNTING FOR FINANCIAL ASSETS. INTERNATIONAL JOURNAL OF SOCIAL SCIENCE & INTERDISCIPLINARY RESEARCH ISSN: 2277-3630 Impact factor: 7.429, 11, pp.34-39.
• Adegbie, F.F. and Akenronye, C.T., 2022. Financial strategy and corporate performance growth of quoted cement manufacturing companies in Nigeria. International Journal of Business Innovation and Research, 29(3), pp.367-405.
• Birindelli, G., Bonanno, G., Dell'Atti, S. and Iannuzzi, A.P., 2022. Climate change commitment, credit risk and the country's environmental performance: Empirical evidence from a sample of international banks. Business Strategy and the Environment, 31(4), pp.1641-1655.
• Drissi, H., Lamzaouek, H., Amellal, I. and Mialed, K., 2023. Cash flow bullwhip control mechanisms in a major crisis situation: a case study from the COVID-19 crisis. EuroMed Journal of Business, 18(4), pp.660-681.
• Gleißner, W., Günther, T. and Walkshäusl, C., 2022. Financial sustainability: measurement and empirical evidence. Journal of Business Economics, 92(3), pp.467-516.
• Kapukha, J. and Makau, M.S., 2023. Strategic positioning and is it a useful construct in improving performance of microfinance institutions in Kenya. International Journal of Research in Business and Social Science (2147-4478), 12(7), pp.136-152.
• Kosta, E., Bakiasi, A. and Jupe, A., 2022. Challenges of agricultural entities in financial reporting: Case of Albania. International Journal of Advanced Engineering Research and Science, 9(8), pp.481-492.
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• Raza, H., Khan, M.A., Mazliham, M.S., Alam, M.M., Aman, N. and Abbas, K., 2022. Applying artificial intelligence techniques for predicting the environment, social, and governance (ESG) pillar score based on balance sheet and income statement data: A case of non-financial companies of USA, UK, and Germany. Frontiers in Environmental Science, 10, p.975487.
• Saputra, F., 2022. Analysis Effect Return on Assets (ROA), Return on Equity (ROE) and Price Earning Ratio (PER) on Stock Prices of Coal Companies in the Indonesia Stock Exchange (IDX) Period 2018-2021. Dinasti International Journal of Economics, Finance & Accounting, 3(1), pp.82-94.
• Sumantri, F.A., Kusnawan, A. and Anggraeni, R.D., 2022. The Effect Of Capital Intensity, Sales Growth, Leverage On Tax Avoidance And Profitability As Moderators. Primanomics: Jurnal Ekonomi & Bisnis, 20(1), pp.36-53.