TSOKKO HOTEL LTD.

Financial Analysis of The Tsokko Hotel ltd.

Financial Analysis of The Tsokko Hotel ltd.

Introduction

A Tsokkos Hotels Public Ltd is a Cyprus-based company that is mainly engaged in the hotel and tourism industry. Its principal activities comprise the construction, acquisition and operation of hotel units in Cyprus, Greece, the Mediterranean region and other European tourist developing areas. The Company operates more than 30 hotels, a tourist village and a number of apartments that are mainly located in Protaras, Ayia Napa and Paphos in Cyprus, and Sharm El Sheikh in Egypt. Its subsidiaries include, among others, A Tsokkos Properties and Leisure Limited, C.A. Holdings Limited, Dome Investments Public Company Limited, Odessa Hotels Limited and Graicias Holdings Limited. The Company is also active in the property development sector as well as operates in the restaurant and leisure industry (Shillinglaw, 1972, P.21).

Market value of the Equity

Market value of the equity or market capitalization tells the market worth of the company according to the current market price of the company. It also used by the investors in measuring the size of the company and make investment accordingly. The market value of the equity is totally different form the fair value of the company (Silverstone & Sheetz, 2012). The formula for market value of the equity is the following.

Market value of the equity = (market price of the company's share) x (number of outstanding shares)

Market Value of the equity = 251,200,000 x 0.13498

= € 33,906,976

The Number of outstanding shares of the company as of 29th June, 2012 is 251,200,000 and the market price per share as of 29th June, 2012 is CYP 0.079 per share and € 0.13498 per share.

Real Value of theCcompany

Real value of the company tells you the actual worth of the company which shows the reality of the company. The real value is different from the market value of the company. It shows the true picture of the company to the investors who are willing to invest in the company (Scott, 2009, P.49). The real value of the company can be calculated through many methods such as income based method, asset based method and market method.

Income based method is commonly used by the companies. This approach is calculated through discounting the expected future cash flows of the company to the present day and summing up them with the present cash flow of the company (Schmidgall, 2011, p.47).

Asset based method is widely used by the investors in calculating the real value of the company. Asset based method is also considered as the net book value of the company. It is calculated through calculating the worth of the total assets of the company subtracting total liabilities of the company. The value which will be left over after subtracting the total liabilities of the company will represents the share holder's equity which will give the clear value of the company that share holders possess. This method is used by the companies when they are liquidating their business (Mcwatters, ...