Financial and Economic Interpretation and Communication | Report

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Financial and Economic Interpretation
and Communication

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Table of Contents
Part A.........................................................................................................................................3
Ratio analysis.........................................................................................................................3
Part B..........................................................................................................................................6
References..................................................................................................................................8

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Part A
Telstra is an Australian company that is involved in telecommunication business. There are
various aspects in the businesses which are required to be considered and for that, the ratio
analysis is performed.
Ratio analysis
The performance of the company is required to be analyzed and with that position shall also
be evaluated. This is made possible with the help of ratio analysis which is involved. In this,
all the information is used from the financial statements and then on that basis, the
profitability, liquidity, efficiency and leverage position of the business are evaluated
(Babalola and Abiola, 2013). Various ratios are calculated and they are shown below for
gaining of proper understanding.
Profitability ratios
Particulars Formula 2018 2019
Net profit margin Net profit/sales*100 13.76% 8.51%
Return on total assets Net profit/Total assets
*100
8.33% 5.05%
2018 2019
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Profitability ratios
Net profit margin
Return on total assets
The profitability of the company is declining and this is because of the reduction of the net
profit that is made. The expenses which are involved have raised and due to that, the decline
is faced which is not in the favor of the company.