Financial Analysis of the Annual

CONTENTS
A.VERTICAL ANALYSIS OF INCOME STATEMENT:...........................................................2
B. RATIO ANALYSIS:.................................................................................................................2
1. QUICK RATIO......................................................................................................................2
2. CURRENT RATIO................................................................................................................2
3. DEBT-EQUITY RATIO.........................................................................................................2
4. DEBT-CAPITAL RATIO.......................................................................................................2
5. INTEREST COVERAGE RATIO.........................................................................................2
6. INVENTORY TURNOVER RATIO......................................................................................2
7. ACCOUNTS RECEIVABLE TURNOVER RATIO..............................................................2
8. ACCOUNTS PAYABLE TURNOVER RATIO.....................................................................3
9. TOTAL ASSETS TURNOVER RATIO.................................................................................3
10. NET ASSETS TURNOVER RATIO....................................................................................3
11. RETURN ON CAPITAL EMPLOYED RATIO..................................................................3
12. GROSS PROFIT RATIO.....................................................................................................3
13. NET PROFIT RATIO..........................................................................................................3
RATIO ANALYSIS CONCLUSION:...........................................................................................3
C. DUPONT ANALYSIS..............................................................................................................4
D. CASH FLOW STATEMENT OVERVIEW AND ANALYSIS:...............................................4
REFERENCES:..................................................................................................................................5
ANNEXURE 1..................................................................................................................................5

1. NAME OF THE COMPANY AND YEARS TAKEN FOR THIS
ANALYSIS
The company chosen for the analysis is “TELSTRA CORPORATION LTD.”. Analysis is
made on its financial data for the years 2016, 2017 and 2018
2. ANNUAL FINANCIAL REPORTS
The annual Financial Report of Telstra Corporation for 2016, 2017 and 2018 have been
attached in the excel file
3. BASIS OF CALCULATION
All calculations are done using real numbers. The figures have been taken from official
website of the company Telstra Corporation Ltd. No figures from any other sources have
been used.
4. COLLECTION OF STOCK DATA
The collection of stock data has been attached in the excel sheet. The data has been collected
from Yahoo Finance website.
5. RATIO ANALYSIS:
A ratio analysis helps to the performance of the company such as profitability, liquidity and
solvency etc. (Bragg & Bragg, 2019).
1. QUICK RATIO
Here, the quick ratio is decreasing from 2016 to 2018. This tells us that the company
does not have enough liquid asset to take care of its day to day activity.
2. CURRENT RATIO
Any company that is in line with the ideal current ratio i.e. 2:1 or slightly higher is
considered to be ideal ("Ratio Analysis: Using Financial Ratios", 2019). Telstra
Corporation’s current ratio is falling from 2016 to 2018 indicating a high risk of
default and fall in its capacity to clear off its liquid debts.
3. DEBT-EQUITY RATIO
The ratio increases from 2016 to 2018 and is higher than the ideal ratio of 1:1. This
means that the company is liquidated which is not good for lenders because the risk
rises.