By comparing NAV per share ( See Appendix 3 ) with the closing share price ( 236. 25 pence ) on 31 October, 2003, there were significantly different. There are some reasons.

Firstly, NAV is a balance sheet value that is predominantly based on historical costs and it is changing daily. Therefore, it would be difficult to match NAV per share with the current market share price. Secondly, changing market share price depends on the shareholders’/investors’ assessment on company’s performance.NAV per share could not determine the share price. Tesco’s total shareholders’ funds has been increasing continuously from 4382m (1999 ) to 6516m ( 2003 ), along with increasing fixed assets and current assets value by making new investments.Therefore, existing shareholders were getting more confidence on Tesco’s performance and so there could be more demand of existing and new shareholders to buy Tesco’s shares in the stock market. Besides, Tesco’s underlying earnings per share and dividend per share has been increasing continuously from 1999 to 2003.

Therefore, shareholders could think by buying shares from Tesco, they could get big return in the future. Consequently, shareholders bought more shares with high expectations and the market shares price raised up.Generally, market price of shares are more driven by non-accounting values such as state of the economy ( generally ), government pronouncements, tax incentives for the investors/shareholders, quality of management teams, the global market forces, the chances of takeover/merger/amalgamation..

. but these factors may not impact to NAV per share.  According to Tesco’s Total Shareholder Return ( TSR ) performance graph, generally we can say that Tesco performance was good. Because Tesco’s performance was significantly higher than Financial Times Stock Exchange ( FTSE ) 100 index of companies, from February 2000 to February 2003.Only from February 1998 to February 2000 was lower than FTSE. Therefore, performance graph is useful because it expresses generally the performance of Tesco to existing shareholders, outsiders to know whether company is performing well or not and to induce new shareholders. But as FTSE consists of non-retail companies, it may be difficult to say whether Tesco performance was better than its competitors retailers or non-retailers.

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We can not say that TSR is a good indicator of company and management performance. Because TSR is described in terms of share price movements plus dividends reinvested.As we discussed in part that share price is shaped by many factors.

Therefore, even company’s management and performance is good but TSR can be lesser and lesser because of those shaped factors, especially government’s new regulations, global market changes and competitors’ price changes. At that time, it may be difficult to say TSR is a good indicator to reflect company and management performance. Conclusion We have already discussed about Tesco’s performance from financial point of view by using financial ratios. To achieve success financially in the future, Tesco should more focus on ROCE issues.