ACCOUNTING ANALYSIS

Accounting Analysis

Abstract

The major focus of the paper is to analyze the financial stability of the company with the perspective of a share holder. Thus, for this purpose, the chosen company is a well renowned firm in UK named TESCO Plc. It is a public limited company and it is said to be one of the largest grocery retailer in the world. To have better insight of the current financial position of the company, ratio analysis has been conduct in detail with graphical representation. Further, share holder value analysis has also been carried out to gain a true picture. In addition to this, some analysts' opinion regarding the company's strategies and future prospects have been discussed. After examining the company, it is recommend that the share of Tesco should be put on hold, since there is great prospect that it will grow further, which will result in much higher price.

Accounting Analysis

Introduction

The major focus of the paper is to analyze the financial stability of the company with the perspective of a share holder. Thus, for this purpose, the chosen company is a well renowned firm in UK named TESCO Plc. It is a public limited company and it is said to be one of the largest grocery retailer in the world. To have better insight of the current financial position of the company, ratio analysis has been conduct in detail with graphical representation. Further, share holder value analysis has also been carried out to gain a true picture. In addition to this, some analysts' opinion regarding the company's strategies and future prospects have been discussed.

Overview of the Company

TESCO is termed as world's third largest retail grocery store after Wal-Mart of United States and Carrefour of France. In UK alone it has managed to open 5,380 stores and many more in three other continents under the new names. Those continents are Asia, Europe and North America. Tesco has been able to diversify its portfolio in order to gain advantage of various other business industries, such as Tesco Extra that focuses on the super market and super store, then there is Tesco Metro, which focuses on the small urban stores, further there is Tesco Express, which is based on gasoline retailing, in addition to this, there is Tesco Personal Finance, which is based on providing financial services. Tesco has also created a business of online delivery service by the name of tesco.com. Therefore, the key ingredient of Tesco's success is to build new stores and enter in to new businesses to increase its growth opportunities. This has provided Tesco with a potential to grow its business in foreign countries and increase its target market. Consequently, Tesco came out of UK and general grocery business in to global market catering world population with its diversified business portfolio.

Discussion

Financial Ratio Analysis

Liquidity Ratios

Current Ratio

This ratio is the measurement of company's capability to meet its short term financial obligations. It is calculated by dividing the current assets by current ...