Importance of Structured Formality

Running Head: FINANCIAL & ECONOMIC INTERPRETATION AND
COMMUNICATION
FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Name of the Student
Name of the University
Author Note

1FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Table of Contents
Executive Summary...................................................................................................................2
Analysis......................................................................................................................................3
Interpretation..............................................................................................................................3
Financial Indicators................................................................................................................3
Non-Financial Indicators........................................................................................................4
Conclusion..................................................................................................................................5
Recommendations......................................................................................................................6
Reference....................................................................................................................................7

2FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Executive Summary
The financial reporting and analysis is integral part of the overall financial analysis
that is carried out by the various business organization. It depicts financial health of company
and it helps firms to augment their financial management and resources of the generated
funds in efficient manner. The financial analysis compels business organizations to remain
judicious in the allocation of fund to the different sub activities and activities and uses of the
generated funds in the careful way. It guides the firms about future courses of action and
gives the direction for moving on (Williams and Dobelman 2017). Hence, this report aims to
discuss and analyze financial and the non-financial indicators of Telstra Group.

3FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Analysis
Current Ratio 2019 2018
Current Asset 7303 7290
Current Liabilities 9553 8785
Result 0.76 0.83
Debt to Equity Ratio 2019 2018
Total Liabilities 28059 28104
Shareholder's Equity 14530 14619
Result 1.93 1.92
Return on Assets 2019 2018
Net Income 2149 3557
Total Assets 42589 42723
Result 5% 8%
Net Profit Margin 2019 2018
Net Profit 2149 3557
Sales 25259 25848
Result 9% 14%
Dividend Yield Ratio 2019 2018
Dividend 2259 3150
Market Share Price 3.83 2.62
Result 589.82 1,202.29
Telstra Limited
Liquidity Ratio
Stability Ratio
Profitability Ratio
Market Performance
Table 1: Financial Analysis (Crowther 2018)
Interpretation
Financial Indicators
Ratio analysis of company is great indicator of financial position of company. The
current ratio of Telstra Group decreased from 0.83-0.76, during 2018-2019. It is liquidity
ratio, which helps in measuring ability of the firm for paying obligations of the short-term.
The liquidity position of Telstra Group shows that firm’s ability for paying its short-term

4FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
obligations has been decreased over the years. Further, debt to equity ratio of Telstra Group
increased from 1.92-1.93, during 2018-2019 (Schroeder, Clark and Cathey 2019). This ratio
is the relationship measure in between the capital contributed by the creditors and
contribution of capital by the shareholders. Further, the debt to equity ratio of company
indicates that uses of liabilities in comparison to the equity of firm is increased over years.
Moreover, the ROA of Telstra Group decreased from 8%-5%, during 2018-2019. The return
on assets of firm shows profitability of company. It indicates that the ability of Telstra Group
for generating income from the utilization of its assets has been decreased over years. The net
profit margin ratio of Telstra Group decreased from 14%-9%, during 2018-2019. The net
profit margin ratio of Telstra Group shows that generation of profit from the sales of
company has been decreased over the years. Lastly, the dividend yield ratio of Telstra Group
decreased from 1202.89- 589.82, during 2018-2019. The dividend yield ratio of company
shows that in comparison to the market share price of Telstra, the distribution of dividends
has been decreased (Crowther 2018).
Non-Financial Indicators
Telstra is the leading information services and the Telecommunication organization
with the best recognized brands in country. The company provides solutions of
telecommunications including cloud services, colocation, satellite services, cloud and
network. The market capitalization of company is around $600m (Theriou 2015). It helps in
providing basic access services to most of the businesses and homes, long-distance and local
telephone call services and internet and the mobile services. Telstra continues for expanding
into the emerging areas of technology, for instance e-Health. Recently, Telstra has completed
its fifteen partnerships as well as acquisitions in the electronic prescriptions, securing health
record keeping, telematics and remote diagnostics (Telstra.com.au. 2020).

5FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Telstra Group complies with the third edition of the Corporate Governance Principles
and Recommendations of ASX Corporate Governance. The framework of governance plays
integral role to help and support for delivering strategy. The company provides structure by
which the business objectives are set. The performance of company is monitored and the
risks faced by firm are managed. This is consists of clear framework for the decision-making
and the accountability across business of company (Dumay, Frost and Beck 2015). It helps in
providing guidance on the standards of behavior that is expected from each other. The
commitment of company is towards excellence in the accountability, transparency and
corporate governance. It is important for the long-term sustainability and performance of firm
and for enhancing and protecting shareholders and other stakeholders’ interest. Telstra goal is
to embed environmental and social consideration into the business in the ways, which helps
in creating value for the firm and the stakeholders. The sustainability report of company
provides transparent overview of the performance and progress in relation to the material
topics. It also helps to details the work that company is undertaking in the support of SDGs
(Fordyce III and Patterson 2019).
The board of Telstra has spent great deal of the time in designing best suited structure
of remuneration for reflecting interest of company, its management and its shareholders. The
company strongly believes that its EVP remains most appropriate mechanism for rewarding
performance. The company’s board believes that strategic, transformation and customer
measures directly demonstrate delivery of the critical components of T22 strategy and they
are fundamental key drivers for the creation of long-term value (Lament 2016).
Conclusion
Therefore, this assignment concludes that financial position of Telstra Group, which
includes liquidity, stability, profitability and market performance has been decreased over the
years. The financial performance of company indicates that they are not able to generate good

6FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
return of profit out of its sales. Further, high level of debt uses over equity will may put great
threat to the company. Moreover, market performance of company indicates that they are not
able to provide good dividend in comparison to the market share price of company. In
addition, the non-financial indicators of the Telstra Group indicates that the management of
company is having greater potential for managing the company in sustainable and ethical way
by the help of strategic actions for operations of business and for the stakeholders.
Recommendations
The recommendation given to the investors of Telstra Group is not to invest in
company as if now. It is due to the fact that company’s earning has been decreased, as they
are not able for controlling its costs of operation. Further, uses of debt of company has also
increased, which is not good from investor’s point of view. Moreover, firm’s ability for
distributing the dividend has been decreased. Hence, it is also not good from investor’s point
of the view.

7FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Reference
Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of
Corporate Financial and Environmental Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting. Routledge.
Dumay, J., Frost, G. and Beck, C., 2015. Material legitimacy: blending organisational and
stakeholder concerns through non-financial information disclosures. Journal of Accounting &
Organizational Change, 11(1), pp.2-23.
Fordyce III, E.W. and Patterson, B.E., Visa USA Inc, 2019. Payment account processing
which conveys financial transaction data and non financial transaction data. U.S. Patent
10,395,264.
Lament, M., 2016. Quality of non-financial information reported by financial institutions.
The example of Poland. The 10th International Days of Statistics and Economics, Prague,
pp.1031-1040.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2019. Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Telstra.com.au. 2020. [online] Available at:
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf%20F/2019-Annual-
Report.PDF [Accessed 4 Jan. 2020].
Theriou, N.G., 2015. Strategic Management Process and the Importance of Structured
Formality, Financial and Non-Financial Information. European Research Studies, 18(2), p.3.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific
Book Chapters, pp.109-169.