Tesco Financial Analysis

In: Business and Management

Submitted By fasaleem
Words 693
Pages 3
4.3 Financial Analysis 4.3.1 Valuation Analysis The valuation analysis is more commonly looked at by investors as a quick way to measure a company’s share price against earnings levels. Nonetheless, often times the case is where the valuation ratios can lead to poor decision-making. The EPS (earnings per share) is the dollar value of earnings per each outstanding share of a company’s common stock. Tesco Corporation’s basic earnings per share increased from 0.71 in 2011 to 1.29 in 2012. However, it fell to 0.93 in 2013. The company’s effective tax rate fell every year from 35% in 2011, to 33% in 2012, and to 30% in 2013.
4.3.2 Growth Analysis This is the part of the analysis where the business aims at the growth pattern of the company. Their revenue conducted from their three main segments (top drive, tubular services, and casing drilling) was $525 million in 2013. This was a decrease from $553.1 million in 2012, but an increase from $513 million made in 2011. The company had $16.4 million in net cash in 2011, then increased to $21.8 million in 2012, and then increased substantially to $96.9 million in 2013. Working capital is a general and quick measure of liquidity of a firm. It represents the margin of safety available to the creditors (Stockresearching.com). To get the current ratio, you have to get the current assets of a company and divide by the current liabilities. This is the only ratio that has increased every year from 2.33 (2011), to 3.13 (2012), to 3.44 (2013). Since these numbers are well above 1, this signifies the strength of the company if it were to pay off its payments today.
4.3.3 Profitability Analysis This analysis provides an insight to a company’s ability to generate earnings relative to its expenses. The first of which is net income. The company increased from $27 million in 2011 to $36.3 million in 2013. This shows an increase of…...

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