Comparative Financial Report on Vodafone Plc Assignment

Added on - 03 Dec 2019

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FINANCIAL MANAGEMENT
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Analysis of information...................................................................................................................1Recommendations............................................................................................................................4CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................5INDEX OF TABLESTable 1: Gearing ratio......................................................................................................................1Table 2: Debt to asset ratio of Vodafone.........................................................................................1Table 3: Dividend payment by Volkswagen in Euro.......................................................................3Table 4: Calculation of EPS............................................................................................................4Table 5: Dividend payout ratio of Vodafone...................................................................................4Table 6: Dividend yield ratio of Volkswagen..................................................................................4
INTRODUCTIONVodafone is well reputed organization and it is known all over the world due quality ofservice and good network that it provides to its customers. Before making investment in anycompany it is necessary to understand its fundamentals and past track record. In this regard,gearing ratio and dividend policy is considered. Relevant interpretations are done and an attemptis made to understand practical importance of these two factors.Analysis of informationTable1: Gearing ratio20112012201320142015Debt equity ratio0.320.360.40.30.34Percentage change12.50%-11.11%-25.00%13.33%On analysis of data it can be seen that in FY 2012 ratio of the firm increase and after thatin FY 2013 and 14 it declines steadily. Bur in FY 2015 it again increases. This reflects that shareof debt in the company capital structure is continuously declined in FY 2013 followed by FY2014. Thus, gearing ratio of the company reflects that company becomes stronger and due to thisreason it reduces its dependency on debt for financing its operations. In case of Volkswagen,number of shares issued is increased in each and every mentioned financial year. Economicconditions are not good and company is also not performing well. Vodafone economic conditionis also not good and this happens due to lack of control on indirect expenses. Poor economicconditions worldwide are also main reason behind huge decline in net profit in FY 2013 and2014 relative to 2012. (Gill, Biger and Mathur, 2011). Due to anticipation of degradation ineconomic health of global economy, weakness in currencies, possible deduction in slow down inworld economic growth rate its profitability eroded. Hence it has less money to finance itsoperations form internal sources. Thus, this is the main reason due to which it increase share ofdebt in its capital structure.But in FY 2015 again share of debt increases in capital structure andenhancement in the company business operations is the basic reason behind this.By looking at debt to asset ratio it can be seen that proportion of debt to asset is constantin most of the years. This means that the company is taking a loan of that amount that it can payby using its asset. This shows that Vodafone is following a cautious approach due to change inturmoil in economic environment. Hence, it can be said that Vodafone is taking appropriate stepsto maintain strong fundamentals.From facts it is clear that Vodafone is paying regular dividend1
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