Financial Analysis of TPG Telecom Limited

FINANCIAL MANAGEMENT
(TPG)

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
REPORT..........................................................................................................................................1
TPG Telecom Limited.................................................................................................................1
Financial Analysis of TPG Telecom Limited..............................................................................1
Profitability Ratios.......................................................................................................................2
Liquidity Ratio.............................................................................................................................5
Efficiency Ratios.........................................................................................................................6
Capital Structure..........................................................................................................................7
Impact of political impact over the business...............................................................................8
Ethical consideration when organisation becomes insolvent......................................................9
External factors to be considered by the organisation.................................................................9
CONCLUSION & RECOMMENDTION.......................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial management refers to planning, organising, directing and controlling financial
activities like the procurement and utilisation of the financial resources of the company. This
refers to application of principles of the general management for financial management in the
company. It helps the business in taking various business decisions such as investment,
procurement of funds and the management of existing financial resources of the company.
Report is based on the case study of TPG Telecom which is an Australian
telecommunication and IT company. It will provide the application of various theories and
principles of the financial management. This will provide the use of financial statements in
analysing the financial health and position of the company. Report will also cover the impact of
political and competitive environment on the company. Ethical consideration when organisation
becomes insolvent is also covered in the study. There are number of external factors that are
required to be taken into consideration by the organisation. Research will enhance the
understanding of the various concepts of the financial management
REPORT
TPG Telecom Limited
It is an Australian IT and telecommunication company specialising in the consumer as well
as business internet services and mobile telephone services. As August 2015, it became the 2n
largest service provider for internet in Australia and is also biggest virtual network mobile
operator. Company is formed by merger of Total Peripherals Group and SP Telemedia in year
2008. TPG is providing five ranges of the product and services which are networking, internet
access, cell phone services, OEM services and accounting software. Company has faced a
lawsuit in year 2010 by Australian Competition and Consumer Commission
Financial Analysis of TPG Telecom Limited
The performance of the company during the year has been significant. Company is
achieving and excellence in the sector from years. It has become the 2nd largest internet service
provider of Australia. Company had earned total revenues of 2434 million in 2019, operating
income of 327 million and net income of 277.1 million. The net assets of company as the year
ending 2019 were 2962.7. Company has seen a decline in the profitability and returns from the
last year due to non monetary items which are impairment of spectrum & mobile assets and
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amortisation of the intangibles. However company has efficiently managed to maintain the
revenue levels.
Ratio Analysis
The financial position of the company is analysed by the company using ratio analysis tool.
It is focused over assessing the internal functioning of the organisation. Ratio analysis helps the
company in analysing the efficiency of the company in managing its resources and generating
adequate returns using effective corporate strategies. It helps the investors in analysing the option
of investments. They can identify whether the organisation will be profitable in the long run or
not. This helps the business in making the right choices between the organisations operating in
the market for investing their funds
Profitability Ratios
Profitability ration measures the profitability of the company in terms of return generated
by it using the various profitability ratios. it assess the efficiency of the company in using its
available resources for generating profits and increasing the value for shareholders
Profitability ratio
TPG
2019 2018 Change
Employed Capi-
tal
(Total Assets -
Current Liabili-
ties) 4416 4509 -2%
Net profit 175 398 -127%
Return on cap-
ital employed
Net operating
profit/Employed
Capital 3.96% 8.81% -122%
Net Income 175 398 -127%
Shareholder's
Equity 2887 2787 3%
Return on Eq-
uity
Net Income /
Shareholder's
Equity 6.06% 14.26% -135%
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