British Telecom(BT) | Case Study

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Table of Contents
Overview of companies..............................................................................................................1
Ratio analysis.............................................................................................................................2
Sustainability reporting..............................................................................................................8
References................................................................................................................................10

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Overview of companies
William Fothergill Cooke and John Lewis Ricardo founded BT Group, formerly
known as British Telecom in 1969. It has headquarters in London, United Kingdom. BT
Group operates in telecommunication industry and is a multinational holding company
operating in around 180 countries. It offers products in various lines such as mobile
telephony, digital television, broadband service, home security, and many more IT related
services. It is a public limited company and has to list in London Stock Exchange and New
York Stock Exchange. Even it is a constituent of the FTSE 100 Index. BT Global Service is a
subsidiary of the BT Group and deals with telecom services related to government and
corporate customers worldwide. One of the significant subsidiaries is BT Consumer that
provides telephony broadband and subscription television services (Btplc.com, 2020). It has a
tagline” Go beyond Limits”. The company provides service to consumers, small and
medium-sized enterprises, and public sector. The company offers various wholesale products
and services to communication providers in the UK. The cloud and networking services of
the company are awe-inspiring, and it serves the multinational organizations all over the
world. The company provides services to commercial premises such as hotels and disco; thus,
these premises can avail BT Sports or BT Wi-Fi. The business has various organizational
units that offer excellent products and services to the customers. The main aim of the
company is to create value for the shareholders by providing products and services that are
essential for daily life.
Vodafone Group plc. is a public limited company founded on 16 September 1991 by
Ernest Harrison and Gerry Whent. It operates in telecommunication industry and is a
predecessor of Racal Telecom (Vodafone.com, 2020). The headquarters of Vodafone Group
is located in London, England. It works in various line of services such as mobile phone,
digital television, fixed-line telephone, broadband, and many more that are served worldwide.

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The company provides mobile operation services in twenty-four countries and even has a
partnership with forty-two mobile network services. This company offers fixed broadband in
nineteen markets. Vodafone is entering into a partnership with leading inventors related to
technology and many other businesses to build the infrastructure that will lead to a digital
future. The central vision of the company is to use innovative technology and communication
network to develop and transform the lives of the people in society. The business is well
aware of the risk that is associated with the technology and communication system; however;
the company try to identify all issues and bring transparency into the entire system. The
company aims to gain sustainable competitive advantage, improve the return on investments
by attracting more customer engagement, and try to improve the utilization of the asset.
Vodafone operates across twenty-five countries and mainly covers two geographic regions
Europe and rest of the world. The Vodafone foundation offers support to those projects that
primarily focused on the development of public, related to technology in various areas such
as education, health, and many more.
Ratio analysis
Companies Vodafone BT Group
Years 2019 2018 2019 2018
Liquidity ratio
Current Assets 39,817 24,131 10,444 8,349
Current Liabilities 25,523 28,025 9,602 10,185
Current Ratio 1.560 0.861 1.088 0.820
Quick Assets 39,103 23,550 10,075 8,110
Quick Ratio 1.532 0.840 1.049 0.796
Working Capital turnover 14,294 -3,894 842 -1836
Every company calculates the liquidity ratio to identify the ability of the company to
pay off its short-term obligations. By evaluating different types of liquidity ratio, companies
can verify that whether the company is capable of paying off its current debt obligation and

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can have smooth functioning of its operational activities. The main reason for evaluating
liquidity ratios is to inform various investors and creditors of the company, that what the
current liquidity position of the business is (Rashid 2018). Multiple lenders and creditors are
interested in the liquidity ratios as before granting any credit to the company they want to
make sure that whether the company can repay their fund within the stipulated time. The
current ratio of Vodafone is 1.560 in 2019 and 0.861 in 2018. The current ratio refers to
measurement of liquidity position of an entity. It is evaluated, as current liabilities are due
within next year. For 2019, the current ratio of BT Group is 1.088, and for 2018, it is 0.820.
The above calculations reflect that in 2018, the current ratio is less for both the companies
and in general, it is assumed that a stable current ratio must be higher than one. However, in
2018, the ratio is less than one for both the companies. This shoes that in 2018, both
companies were not able to pay off their short-term obligations. In 2019, the current ratio was
more significant than one in both cases; hence there a stable liquidity position. Vodafone
current ratio is more than BT Group; this indicates that Vodafone has more stable liquidity
position than BT Group, which will be beneficial for the Vodafone company to attract more
investment. The quick ratio of Vodafone in 2019 is 1.532, and in 2018, it comes to 0.840.
The BT Group shows a quick ratio of 1.049 in 2019 and 2018, and it is 0.796. In this case
also, both the companies tended to have a low ratio is 2018; however, in 2019 both attained a
stable liquidity position. Acid test ratio tends to measure the ability of the company to use its
cash and pay off the current obligations as soon as they incur. The quick ratio of Vodafone is
more than BT Group that will prove to be beneficial for the company (Vodafone.com, 2020).
In 2019, the working capital turnover ratio of Vodafone Company was exceptionally high as
compared to BT Group. However, both companies have improved their working capital
turnover as a comparison to the previous year. If both the companies are compared on the
basis of current ratio then Vodafone is having a more stable ratio as compared to BT Group

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in 2019 as well as in 2018. The same goes with quick ratio, Vodafone is reflecting better
position as compared to BT Group in both the years. However, both Vodafone and BT Group
has improved there current and quick ratio from 2018 to 2019. Both companies are improving
their liquidity position over the period of two years.