Accounts and Finance

Running head: ACCOUNTS AND FINANCE
Accounts and Finance
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ACCOUNTS AND FINANCE
Table of Contents
Overview of the Company...............................................................................................................3
Ratio Analysis..................................................................................................................................3
Application of Ratio Analysis.....................................................................................................3
Merits of Ratio Analysis..............................................................................................................4
Demerits of Ratio Analysis..........................................................................................................4
Profitability Ratios...........................................................................................................................5
Operating Profit Ratios................................................................................................................5
Net Profit Ratio............................................................................................................................6
Return on Capital Employed.......................................................................................................6
Liquidity Ratios...............................................................................................................................7
Current Ratio...............................................................................................................................7
Acid Test Ratio............................................................................................................................8
Activity Ratios.................................................................................................................................9
Trade Receivables Collection Period...........................................................................................9
Trade Payables Payment Period................................................................................................10
Inventories Turnover Period......................................................................................................10
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12
Appendix........................................................................................................................................14

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ACCOUNTS AND FINANCE

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ACCOUNTS AND FINANCE
Overview of the Company
BT Group plc is multinational company which is engaged in telecommunication and the
company has its headquarters in London. The company is engaged in providing
telecommunication services in many countries and this shows that the scale of operation of the
company is high. BT group controls of a large number of subsidiaries. The company controls
telephone, broad bank and subscription television services on Great Britain.
The company is listed in London stock exchanges and the company has developed
reputation in the market. The company serves maximum customers in the market of London. The
origin of the business dates back toto the founding of Electric Telegraph which was established
in 1946. In today’s era the company serves around 30 million customers and is regarded as the
leading supplier of customer broad bank and communication services in UK (Btplc.com. 2018).
The assessment aims to analyze the financial performance of the business with the help of key
ratios which are computed for the business.
Ratio Analysis
Application of Ratio Analysis
The financial ratios of a business are considered to be important financial indicators of
the business and can be used effectively to determine the performance of the business. The ratios
which are computed and analyzed using the technique of ratio analysis are liquidity ratios,
profitability ratios and efficiency ratios (Delen, Kuzey and Uyar 2013). The ratios which are
computed are considered to be important factors which determine the performance of the
business and also are considered to financial indicators for the success of the business. In
addition to this, the financial ratios cover different aspects of performance of a business such as