Financial Analysis of Telecommunication Companies in Australia

HI5002 Finance for Business Assignment
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Prepare a brief description of the company, outlining the core activities...................................4
Task 2...............................................................................................................................................5
1.1 Calculate the key ratios for the past 4 years......................................................................5
1.2 Explain the phenomenon behind the variable Total Assets/Ordinary Equity and its
implication on the relationship between ROA and ROE.............................................................8
1.3 Explain why ROE is significantly greater than or less than the ROA...................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Introduction
The report aims to cover key turnover ratios of two telecommunication service provider
operating in Australia namely, Telstra Corporation Limited and Total Peripherals Group (TPG)
Telecom Limited. As such, this report provides a glimpse and brief of working and
organizational structure of corporates engaged in the telecommunication sector. Apart from this,
report covers the calculation of major financial parameters which is a prerequisite for the
determination of financial ratios. Both these corporations are multinational organizations since
they operate in multiple countries. An analysis, understanding, and interpretation of major ratios
have been explained. Various conclusions and recommendations have been drawn and cited at
appropriate places throughout the report.
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Task 1
Prepare a brief description of the company, outlining the core activities.
Telstra is an Australian based company which is engaged in telecommunications and technology
sector providing several types of communication services in the telecommunication market. It
has its operations in about 22 countries besides Australia. The company mainly focus its
operations on Asia-Pacific region. According to Delen, et. al., (2013), the success of its
operations can be figured out from the fact that it provides services to both governmental
organizations as well as the public. Telstra also provides cloud services and its associated
services namely cloud management and cloud consulting. It manages and operates both public
cloud, private cloud and hybrid cloud. Besides providing services, it also deals intangible goods.
It sells mobile phones, pre-paid mobiles, mobile broadband and related services. Likewise, it
provides mobile phone, tablets, a fixed line telephone, broadband, SIM only plans and similar
goods to small businesses.
Total Peripherals Group (TPG) is another Australian company which started its operations in
1986. According to Baki, et. al., (2014), it provides a wide range of communication services for
commercial purpose as well as domestic use since its main purchasers are big corporates, non-
profit organizations, residential users and various government departments. The main products of
TPG are internet services, mobile communication services, different types of bundled services,
and similar services. Besides these services, the concerned company also provides cloud services
business corporate and governmental organizations. The major proportion of the revenue comes
from the broadband services followed by the fixed voice services, mobile telecommunication
services, and other services.
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