Finance Essay Example | Topics and Well Written Essays - 3750 words

Finance - Essay ExampleThis report analyses the behaviour of the agate line in the past five years, links it to the financial slaying of the company and predicts the future ignore that whitethorn emerge. This report also analyses the value of the TESCO share as an instrument for investment in absolute terms. divers(prenominal) tools are available for making financial analysis of stocks and range from the precise simple and elegant to the very complex and difficult to understand ones. Here we use some of the most recognised analysis methods such(prenominal) as Earnings per Share (EPS) Price to Earnings Ratio (PE) Cash Flow Discounting Market prise and Book Value.The financial performance of the company is better understood through the calculation of some all-important(a) 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 importanc e of long-term debt in the capital structure and can therefore provide useful additional information for assessing the acceptability of the boilers suit 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. Indicating that the long term debt is coming down and this will impact future quest burden as well as allow the company to raise further funds in the debt market, should they be required.c. Interest cover = operating take in / avocation chargesThis shows the number of times available profit covers interest charges and measures the extent to which operating profit can fall without being insufficient to cover the interest charges and thereby create a pre-tax loss.200320042005200620072007-08Operating Profit136116001943223526531289Interest Expenses22725823524121620Interest Cover (Times)6.006.208.279.2712.28N.R.2The execution of the lowering debt resulting in lowering of the interest bur den is clearly evident in these numbers. The company appears to crap no problem in servicing its debt, the numbers compare very favourably with the industry honest of 3.29.1.2 Operating performance The ratios that are relevant area. Return on Capital Employed (also cognise as the primary ratio)= Operating Profit / Capital Employed