Financial Performance and Sustainability Report of Telstra

This document discusses the financial performance of Telstra based on parameters such as liquidity, profitability, solvency, efficiency, and market value. It also includes a sustainability report of Telstra, which discusses the company's initiatives towards achieving the UNSDG goals. Additionally, it includes journal entries related to capital investment, prepaid rent, equipment purchase, supplies purchase, sales, and drawings withdrawn.

Running Head: CORPORTE FINANCE 1
CORPORTE FINANCE

Running Head: CORPORTE FINANCE
Table of Contents
Financial performance.....................................................................................................................3
Liquidity.......................................................................................................................................3
Profitability..................................................................................................................................4
Solvency.......................................................................................................................................4
Efficiency.....................................................................................................................................4
Market value................................................................................................................................4
Telstra sustainability report.............................................................................................................5

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Question 1: Financial performance
Financial performance is the tools that are used by the company in order to figure
whether the company is performing well or not. The performance in measured on the basis of
different parameters such as profitability, liquidity, solvency as well as efficiency and the market
conditions. In the current scenario the financial performance of Telstra is discussed in detail in
order to have an in-depth understanding of how well the company is performing either in terms
of the industry of against the competitors (Chiaramonte and Casu, 2017).
Liquidity
The liquidity is one of the easiest parameter to decide the ability of the company in terms
of the efficient utilization of the assets of current nature to handle the current liabilities. Under
the liquidity position the two major ratios are calculated such as current ratio and quick ratio.
The current ratio of Telstra can be observed to be at 0.83 in the year 2017 and the same declined
to 0.76. This proves to be the negative situation at on account of the company as the ratio is
deteriorating. The quick ratio on the other hand is the ratio which is also known as the acid test
ratio and defines the capacity of the company in order to have an understanding of how fast the
company can realize the cash. The quick ratio of the company is 0.77 and it reached to 0.72 in
the year 2018. Further, overall the liquidity position of the company is not at all smooth and the
immediate plans shall be made by the management to overcome such loss (Cole, 2019).
Key strategies: The key strategy to improve the situation is to focus on the long term
liabilities and to get rid of the outdated assets so that the company can focus only on those assets
that can produce the results in the positive manner.

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Profitability
Profitability of the company can be measured on the basis of the different elements such
as net profit ratio, return on equity as well as operating margin. The profitability ratio is basically
calculated by the investors, shareholders, the customers and the suppliers in order to understand
the company and the returns it can provide to them. In the case of Telstra, the net profit ratio also
saw a fall from 13.76% to 8.51% (Goldmann, 2017).
The net profit ratio is basically the pillar of the organization and if the net profit
decreases it means the company is not working efficiently towards its operations. The other
possible reasons are due to the increase in the expenses and the overall costs of the business. The
return on equity is the second parameter that is used to measure the performance of the business,
as the shareholders are majorly interested in how much return is associated with the business and
how much share they can avail in return (McLean, 2020).
The return on equity of Telstra is again steeping down towards the 14.79% from
24.33%. This is due to the fact that the net income is facing a downward trend. As such there are
no changed in the shareholders’ funds of the company. The gross margins also saw a falling
graph from 39.45% to 31.61%. Overall it can be concluded that the profitability position have
started to decline and the if the scenario remains the same the profitability can also reach in the
danger zone, like liquid ratios (Murphy and McGrath, 2016).
Key strategies: In order to improve the profitability of the business the alternative should
be found out to reduce the operating costs, the invoice shall be generated on the regular basis and
lastly the financial leverage shall be reduced on part of the management.

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Solvency
The solvency ratio is the ratio that is required to be evaluated in order to find out the
ways the company is acquiring the funds of the business. Generally there are several ways in
which the company can acquire the funds however; the balanced capital structure can build a
strong image of the company. As per the table it can be observed that the debt to equity ratio of
the company was 0.11 and it increased to 0.15 in the year 2019. The times interest coverage ratio
is the ratio which determines the ability of the company to settle down the financial costs at the
best possible manner. The debt to total assets is again the ratio which defines how much assets
are classified via the way of debt and what is its potentiality. The debt to total assets have
increased from 0.04 to 0.05 whereas the times interest coverage ratio have decreased from 7.11
to 4.26 times. This indicates the position of the company in terms of the solvency is also
decreasing and it’s the reason to worry about (Otekunrin, et al 2018).
Capital Structure 2018 2019 2018 2019
Debt to Equity Debt 1635 2222 0.11 0.15
Equity 14619 14530
Times interest coverage
ratio EBIT 5727 3702
7.11
4.26
Interest Expense 806 868
Debt to Total Assets Debt 1635 2222 0.04 0.05
Total Assets 42723 42589
Efficiency
The efficiency of the company is a financial measure that can be used by the company to
evaluate the efficiency of the business. The efficiency is generally judged on the basis of the
day’s inventory outstanding, days inventory receivables and days inventory payables. Basically

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the idea behind calculating these ratios is to make aware about the cash conversion cycle of the
company and to figure out in how many days the cash is realized from the receivables and
inventory to pay back the accounts payables. The inventory turnover ratio has reduced from
21.54 days to 17.89 days, whereas the same is the case with the receivables. This is a positive
side of for the company as the cash is realized on the faster basis and this will ultimately help the
company in getting the cash at the faster pace. The total asset turnover ratio is the ratio which is
decreasing from 0.61 to 0.59 which interprets that, assets are not utilized efficiently and hence
the ratio is decreasing (Qian, Kaur and Schaltegger, 2018).
Efficiency Ratios 2017 2018 2017 2018
Days Inventory Outstanding Inventory * 365 179580 163520 21.54
17.8
9
Cost of goods sold 8338 9138
Days Receivable
Outstanding
Accounts receivable *
365
203962
0
196808
0 78.91
77.9
2
Credit sales 25848 25259
Total Asset turnover Net Sales 25848 25259
0.61 0.59
Average total Assets 42364.5 42656
Market value
The market value ratios are the ratios which determine the overall value of the market
and overall competition the company is facing. The earnings per share of the company, was 0.30
whereas the same was 0.18 this implies that the company is giving the less share to its
shareholders than the previous year. hence the market value of the Telstra is also at the f=greater
stage of the risk (Rahman, 2017).
Market Value ratios 2017 2018 2017 2018
EPS Net income 3591 2154 0.30 0.18
Weighted average outstanding
shares 11884 11900

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Price to Earnings
Ratio Market Price 3.75 3.98 12.41
21.9
9
EPS 0.30 0.18

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From the overall analysis it can be concluded that the position of Telstra is declining in
all of the sectors and the same is of the biggest concern to the company. Hence the initiatives are
taken by the management in order to bring the value of the company so that the overall valuation
of the company can be determined.
Question 2: Telstra sustainability report
Sustainability is one of the core issues for each and every corporate, and it acts as a
scanner that basically helps in understanding the overall environment of the business. The term
sustainability is basically the ability of the company to exist in the environment. Sustainability is
the set of the principles and it is the newest degree each company must have. In short,
sustainability protects our natural environment, human and ecological health, while keeping he
drive force live and also by not sacrificing the regular lifestyle of the company.
The importance of the future resources is necessary. Sustainable development is often
partnered with good corporate citizenship. This means that organizations in the health system can
use their corporate powers and resources in ways that benefit rather than damage the economic,
social and physical environment in which the individuals live. There are several goals which are
associated with UNSDG, almost around 17 goals which are related to the different parameters of
the society such as no poverty, Zero hunger, good health and wellbeing, quality education,
gender equality, clean water and sanitation etc. in this section the detailed analysis of the goals
that are being implemented by the Telstra and how much they are curated with the UNSDG
goals. The priority goals of Telstra are Gender equality, where the company implements a wide
range of the policies to achieve the goals of the organization (Samudhram, Siew, Sinnakkannu
& Yeow, 2016).

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Gender Equality:
The Company takes in to consideration the diverse measures beyond the religion, age,
and ethnicity in order to create the fair opportunities for the individuals. The representation of
Women in Telstra can be found below in the form of the image. The SDG’s proprieties are also
met by the company to contribute as the relating distributor of the telecommunication factor. The
gender diversification allows the company to be respected at the global level for treating man
and woman at equal level.
Climate action:
According to Telstra businesses and other technology companies in particular, have a
crucial interest to play in helping the customers, and the overall society, to move towards a low
carbon future and become more resilient to a changing climate. The aim of the Telstra is to help
in the constant reduction of our emissions intensity. The overall impact on the environment can
be reduced when the operation efficiency of the company is taken care of. The company
achieved 40% reduction in the emission of the Carbon and in return 15.5 tons of customers
phones as well as accessorizes is used for the purpose of the recycling. Further, the voluntary

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sustainability initiatives are also taken by the company by attempting the Carbon Project
Disclosure. The new technologies are also unveiled to make sure the sustainability goals are met.
According to the Climate Disclosure Project, Telstra receives Grade A, not only this network
also assures $US100 trillion worth of assets.
Industry innovation and infrastructure:
According to the sustainability report, the investments in the network structure are
typically extended the area till rural and regional Australia basically to improve the network
resilience. The company is making sure the company is meeting the demand through the
disclosure of the data and the available content. The rolling out of the commercial 5g services
also helped in minimizing the overall impact on the society as well as environment. The count of
the 1 million customers is connected with the help of the communities to be able to build the
digital marketing capabilities. The innovation creates the transformative effect on the overall
performance of the company.
Decent Work and Economic growth:
The meaningful and the productive work shall be delivered is the only motto towards the
future sustainability of the company. The company majorly focuses on the value and the
diversified workforce that clearly determines the ability to increase the overall productivity of
the business. The economic growth of the company is also dependent upon the problem solvers
and protection of the labor rights. The constant approach towards the sustainability itself creates
the awareness amongst the employees and they strive towards meeting the sustainability goals of
the company.

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Question 3
QUESTION 7-24
Journal Entries
Date Particulars Debit Credit
7/1/2018 Bank A/c
Dr
. $ 7,500.00
To Capital A/c $ 7,500.00
(For capital invested in the business)
7/2/2018 Prepaid rent
Dr
. $ 2,475.00
To cash a/c $ 2,475.00
for prepaid rent paid in advance
7/3/2018 Equipment’s
Dr
. $ 13,750.00
To cash A/c $ 3,750.00
To notes payable $ 10,000.00
for equipment purchased
7/8/2018 Supplies on hand
Dr
. $ 1,237.50
To accounts payable $ 1,237.50
for supplies purchased on credit
7/15/201
8 Cash a/c
Dr
. $ 2,200.00
To sales $ 2,200.00
for cash received from accounts receivable
7/28/201
8 Drawings A/c
Dr
. $ 1,500.00
To cash a/c $ 1,500.00
for drawings withdrawn
7/29/201
8 Expenses
Dr
.
$
275.00
To outstanding expenses
$
275.00
for expenses to be paid in august
7/30/201 Cash a/c Dr $ 1,925.00

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8 .
To sales $ 1,925.00
for cash received from accounts receivable
7/30/201
8 Depreciation
Dr
.
$
105.00
To equipment
$
105.00
for depreciation charged on equipment
7/30/201
8 Rent expense
Dr
.
$
412.50
To cash a/c
$
412.50
for rent expenses
7/30/201
8 interest on notes
Dr
.
$
100.00
to interest payable
$
100.00
for interest payable
7/30/201
8 Salary A/c
Dr
.
$
150.00
Payg
$
125.00
To cash a/c
$
275.00
7/30/201
8 Supplies expense
Dr
.
$
145.00
To outstanding supplies
$
145.00
for supplies in hand
total $ 31,900.00 $ 31,900.00
Income statement
(For the month ending 31st July 2018)
Particulars Amount Particulars Amount
By Revenue 4125
Depreciation Expense - equipment 105
Expenses 275
Interest Expense 100

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Rent 412.5
salary 275
Supplies Expense 145
Net Profit 2812.5
4125 4125
Balance sheet
As at 31st July 2018
Particulars Amount Particulars Amount
Liabilities and Shareholder's funds Assets
Capital 7500 Current Assets
Add: net profit 2812.5 Bank A/c 3212.5
less: Drawings -1500 Supplies 1237.5
Long term liabilities Non-current assets
Notes payable 10000 Store Equipment 13750
Interest payable 100 Depreciation -105
Short term liabilities and provisions Other Assets
outstanding supplies 145 Prepaid Rent 2475
Accounts payable 1237.5
Outstanding expenses 275
20570 20570

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