Financial Analysis of Telstra Corporation Limited

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Financial Analysis of Telstra Corporation Limited

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Executive Summary
The underlying report is being prepared for carrying out the financial analysis of a
selected company over the past two financial years of 2017 to 2018. This has been carried out in
the report with the use of ratio analysis technique by extracting data from the annual report of the
selected company. The company selected for evaluation purpose is Telstra Corporation Limited.
It has been depicted form the use of ratio analysis that the performance of the company has been
weakened in the year 2018 as compared with that of the year 2018. This has been done through
calculation of profitability, liquidity, leverage, efficiency and market performance ratio’s within
the report.

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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Ratio analysis...................................................................................................................................4
Profitability Analysis.......................................................................................................................6
Return on Equity (ROE)..............................................................................................................6
Net profit Ratio............................................................................................................................6
Liquidity analysis (Short term solvency position)...........................................................................7
Current ratio.................................................................................................................................7
Quick ratio....................................................................................................................................7
Leverage analysis (Long term solvency position)...........................................................................7
Debt to Equity Ratio....................................................................................................................8
Interest Coverage Ratio................................................................................................................8
Asset Efficiency analysis.................................................................................................................8
Account Receivable turnover ratio in days..................................................................................9
Asset turnover ratio......................................................................................................................9
Market analysis................................................................................................................................9
Earnings per share......................................................................................................................10
Dividend yield ratio...................................................................................................................10
Recommendation...........................................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
The present report is developed for providing an insight into the process of financial
analysis used for evaluating the financial performance of a company. In this context, the report
presents the comparison of financial results of a selected company over the two financial years
from 2017 to 2018. This is carried out through extraction of financial information from the
annual reports for calculation of the relevant ratios. This is done for identifying the
improvements within the financial position and profitability of the company over the selected
financial period.
The company selected for the financial analysis purpose is Telstra Corporation Limited.
The company is recognized to be a leading telecommunication company within Australia that is
involved in operating telecommunication networks and other related products and services. The
company is involved in providing about 17.7 million retail mobile services and about 4.9 million
retail fixed voice services to its customers (Telstra, 2018). It is having international presence in
about 20 countries and is recognized as one of the largest and fastest national mobile network
(Telstra, 2018).
Ratio analysis
The ratio analysis can be described as a quantitative method that is used for analysis of
the financial performance of a company through evaluation of efficiency, liquidity, profitability
and solvency. The technique proves to be very useful for comparing the financial information of
one company with other with extraction of financial data. The results obtained can be used for
developing an understanding of the financial position of a firm by identification of the major
trends over time.
Financial Information of Telstra Corporation
Financial Data 2016 2017 2018
Amount in AUD Million
Net Profit after tax
$
3,874.00 $ 3,529.00
Shareholder's Equity $ $ $ 15,027.00