TESCO is the largest grocery retailer in the UK. For the financial year ended February 2007 it reported world-wide group gross revenue in excess of 42 billion. TESCO operates in a number of countries across Europe and Asia and also in the United States.
The TESCO ordinary share of 5p is currently traded on the London Stock Exchange at 424.75p (January 18, 2008 close) with a 52 week high of 494.25p and low of 392.00p.
This report analyses the behaviour of the stock in the past five years, links it to the financial performance of the company and predicts the future trend that may emerge. This report also analyses the value of the TESCO share as an instrument for investment in absolute terms.
Different tools are available for making financial analysis of stocks and range from the very simple and elegant to the very complex and difficult to understand ones. Here we use some of the most recognised analysis methods such as Earnings per Share (EPS); Price to Earnings Ratio (PE); Cash Flow Discounting; Market Value; and Book Value.
The financial performance of the company is better understood through the calculation of some important ratios that assist us in further detailed appraisal. (These ratios are calculated from the summary financial performance sheets placed at Enclosures 1 and 2.)
This ratio helps us understand the relative importance of long-term debt in the capital structure and can therefore provide useful additional information for assessing the acceptability of the overall leverage position of the business.
The long-term leverage of the company is good and shows a positive and reducing trend over the period considered. ...