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Financial Management Analysis of Vodafone Inc.

   

Added on  2019-09-16

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FINANCIAL MANAGEMENT ANALYSIS1
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ContentsIntroduction......................................................................................................................................3Financial Performance Analysis......................................................................................................4Liquidity analysis.........................................................................................................................5Profitability analysis....................................................................................................................7Efficiency analysis.......................................................................................................................9Capital structure.........................................................................................................................10Stock market performance.........................................................................................................11Limitation of analysis....................................................................................................................13Recommendations..........................................................................................................................15Conclusion.....................................................................................................................................16References......................................................................................................................................172
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IntroductionFinancial management analysis can be referred to as a process of analysing of financialperformance of an organisation. Main objective of such analysis is to determine the financialhealth and future prospective of an organisation. Financial management analysis is an importantbusiness tool as it helps management of an organisation in strategy development. It also helpsstakeholders such as shareholders, government, creditors, lenders etc. to evaluate theirinvestment in the organisation (Brighamand Ehrhardt, 2013). There are various techniques whichcan be used for financial management analysis such as vertical analysis, horizontal analysis, ratioanalysis, etc. Financial statements of an organisation play a very important role in this process asthis analysis is done on the basis of financial statement prepared by the organisation. All theabove mentioned techniques of financial management analysis are based on financial statements(Van Horneand Wachowicz, 2008). In this report we will try to understand different aspects offinancial management analysis with the help of financial analysis of Vodafone Plc. VodafonePlc. is an British multinational telecommunication company with subsidiaries in Asia, Africa andEurope. As of 2016, Vodafone is eight largest company listed on UK stock exchange with amarket capital of approximately £52.5billion. Vodafone owns network in around 26 countriesand has partnership networks in more than 50 countries. Hence it could be said that Vodafone ofamong one of the largest telecommunication companies in the world. In this report we willanalyse financial statement of the company of last 3 years to determine its financial health andfuture prospective.3
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Financial Performance AnalysisIn this part of the report we will try to analyse the financial performance the company over thelast five years. For proper and efficient evaluation this category has been divided into five subparts i.e. Liquidity, profitability, efficiency, capital structure and stock market performance. Allthe data for the calculation has been taken from the annual reports published by the company atthe end of the financial year (Healyand Palepu, 2012.). Relevant financial data- Financial data on which majority of ratio analysis is based on is as follows- Particular 2016 2015 2014 Revenue 40,973.00 42,227.00 38,346.00 Gross profit 10,538.00 11,345.00 10,404.00 PBT -449.00 1,095.00 -5,270.00 PAT -3,818.00 5,917.00 59,420.00 EPS -basic -15.08 21.53 42.10 -diluted -15.08 21.42 41.77 Non-current assets 1,05,569.00 1,02,726.00 97,118.00 Goodwill 22,789.00 22,573.00 23,315.00 Other intangible assets 23,979.00 20,953.00 23,373.00 Current assets 28,144.00 19,847.00 24,722.00 Inventory 565.00 482.00 41.00 Equity 67,317.00 67,733.00 71,781.00 Non-current liabilities 33,001.00 25,943.00 25,020.00 Current liabilities 33,395.00 28,897.00 25,039.00 Liquidity analysisLiquidity of a company is based on its ability to convert its assets into cash without affecting themarket price of such assets. It can also be said that liquidity of a company refers to its ability to4
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