Financial Statement Analysis

This paper provides a financial statement analysis of UAE companies Du and Etisalat. It includes a review of literature, methodology, data analysis, and findings. The analysis reveals the strengths and weaknesses of both companies and provides recommendations for healthy growth.

RUNNING HEAD: Financial Statement Analysis
Financial Statement Analysis
[Type the document subtitle]

Financial Statement Analysis 1
Abstract
The objective of the paper is to enlighten the reader about the information of the companies of
UAE, Du and Etisalat. Both the organizations are a part of telecommunication sector of UAE.
The below mentioned paper throw light on the financial activities of the companies along with an
analysis of the better performing organization in the one fiscal year. The report conducts a
systematic analysis of review of literatures about the financial statements of an organization.
Financial statements are important for the business analysis as they guide the investors to invest
in the right organization. Further, it has been found that the investor should invest in Etisalat
Company for the better profitability and returns. Suggestions to the company Du are provided for
healthy growth. More details about the paper are discussed below:

Financial Statement Analysis 2
Contents
Abstract............................................................................................................................................1
Introduction......................................................................................................................................3
Literature Review............................................................................................................................3
Methodology....................................................................................................................................6
Data Analysis...................................................................................................................................6
Du and Etisalat.............................................................................................................................6
Findings and Discussion................................................................................................................10
Conclusion and Recommendation.................................................................................................12
References......................................................................................................................................14
Appendices....................................................................................................................................17

Financial Statement Analysis 3
Introduction
The purpose of this paper is to initiate the time series analysis of two companies to UAE. DU
and Etisalat are the two companies chosen for the financial analysis. The report provides the
financial analysis of both the companies for one fiscal years. The objective of the paper is to
analyse the information about both the companies and provide a comparative analysis to reader
so that they can evaluate the more prosperous organization present in the market of UAE.
Emirates Integrated Telecommunication Company, commercially rebranded as DU is a telecom
organization present in the UAE. The company was rebranded in the year 2007 and is one of the
two telecom operators present in the United Arab Emirates market. The company provides fixed
line, mobile telephony, digital television and internet service to the people of UAE. The financial
results of the company DU state that the business is working profitable in the target market (Du
2019).
Further, talking about the company Etisalat that is an Emirates Telecommunication Group
Company was formed in the year 1976. The company is the second organization provides
telecommunication services to the customers in 15 countries across Asia. Middle East and Africa
as well. The company effectively provides internet services to the customers present in Middle
East region (Etisalat 2019).
Literature Review
The fact should be understood that all the active partners of an organization are interested in the
financial affairs of the company. The prospective people connected with the functioning of the
company believe that increasing financial data of the company shows prosperity for the company
that will certainly provide profitability to them as well. Further, it should be noted that balance
sheet is a statement that truly reflects the position of assets and liabilities of the company as a
particular period of time. Balance sheet is known as financial statement of the company.
According to Fridson, and Alvarez 2011, the assets side of the balance sheet constitute of fixed
assets, current assets, investments, loans and advances. Further, the share capital of the company
along with current and noncurrent liabilities and provisions form the liability side of a balance

Financial Statement Analysis 4
sheet. Thus, it can be said that several assets and liabilities that the company has acquired till a
set date are expressed in the form of a statement called balance sheet.
Balance sheet is a statement prepared with the aim to measure the exact financial position of the
business till a certain date. Balance sheet of a company further helps the management to prepare
fund flow statement that throws light of the funds present with the company and the areas where
they have been applied. Balance sheet can be analysed using various methods namely, financial
statement analysis, trend analysis, comparative and common size, ratio analysis, cash flow and
fund flow analysis. The analysis of balance sheet also helps the business to analyse the financial
ratios and evaluate capital employed as well.
Assets= Liabilities+ Equity
According to Chandra 2011, income statement is a summary of the profitability of the company
over a period of time. The income statement of an organization reveals the revenue generated by
the business during an operating period along with the expenses incurred by the organization
during that period. Income statement is also called profit and loss statement that focuses on the
revenue and expenses of company for a particular period of time. While balance sheet provides a
snapshot of the financials of the company, income statement evaluates the income of the
company throughout a particular period of time. Formula of income statement is mentioned
below:
Net Income = (Revenue + Gains) – (Expenses + Losses)
Vertical analysis that is commonly known as a common size analysis focuses on the important
relationships between the financial statements. When a company is growing or falling in its
overall market growth, it is difficult to analyse that which sector of the statement is changing.
Common size financial statement provides details about the percentage change in each aspect of
the financial statement of the company. Accroding to Chen, et. al., 2011 common size balance
sheet is formed by dividing each asset with the total amount of assets and each liability as total
amount of liabilities and stockholder’s equity. Further, common size income statement reports
each income aspect as a per cent of the sales. Common size analysis of financial statement
converts each line of the financial statement data to an easy and comparable per cent. This
process is initiated by stating the income statement aspects as a per cent of sales and balance

Financial Statement Analysis 5
sheet items as a per cent of total assets or total liabilities and stockholder’s equity. In the
perspective of Venkataraman, Khatoon 2012, the common size analysis is used to evaluate the
competitors and trends present in the company. This type of analysis is easy to understand and
provides a comparative time series analysis to the management as well. This financial statement
helps in analysing trends along with the structural position of the company. Further, limitation of
this type of analysis is that there is no standard ratio or percentage regarding the change in
various aspects due to which decision taken on this basis of the statement might negatively affect
the growth of the business. Also, this type of analysis does not focus on the changes in price
level that is inflationary effect (Brigham, et. al., 2016).
Financial ratio constitutes one of the most important parts of the financial analysis as it helps the
user to understand relationship among various item reported in the financial statements. This
type of analysis compares different aspects of the financial statement of the same year. This
analysis helps the user to know how the company has performed using the available resources in
the current year. There are four major ratios calculated in the financial analysis that are
profitability, liquidity, solvency and asset efficiency ratio. The solvency ratio is asset to equity
ratio that measures the firm’s degree of financial leverage due to which this type of ratio is also
called leverage ratio. The result of this ratio is equal to 1 plus the debt/ equity ratio. Just like the
liquidity ratio, this ratio also evaluates the ability of the company to meet its debts. The liquidity
ratio focuses on short term debts while the solvency ratio focus on long term liabilities of the
business. Lastly, asset efficiency ratio helps in understanding the efficiency of the company
when they use assets to increase sales (Rodríguez-González, et. al., 2012).
Dupont analysis is an extended examination of the return on equity of the company that analyse
the asset turnover, net profit margin and financial leverage of the company. This analysis
explains how the company can increase its returns for their shareholders by breaking by the
return on equity. The company increases its return on equity either by generating high net profit
margin, effectively using assets to generate more sales or by having high financial leverage. In
the perspective of Weil, Schipper, and Francis 2013, this type of analysis helps the investor to
have a broader picture about the returns of the company that they are earning on its equity. This
helps in explaining the strengths and weakness of the business. This analysis also helps the
business in analysing the reason of low return on equity. The major component of the DuPont

Financial Statement Analysis 6
analysis is ROE, this analysis breaks down the equity factor into profit margin, financial leverage
and total asset turnover and examine the reason due to which the company is lacking behind
(Kim, Li, and Zhang 2011).
Methodology
In order to attain the objectives of the study and to evaluate the different components of balance
sheet, income statement, financial ratios and DuPont analysis, an appropriate methodology has
been adopted. The current study is an empirical study used to create the paper. Both qualitative
as well as quantitative research has been conducted for the paper.
The companies selected for the analysis are Emirates Integrated Telecommunications Company
(Du), Emirates Telecommunication Group Company PJSC of UAE. Both the organization are
market leader present of UAE present in Telecommunication Sector. Various literatures have
been reviewed to prepare the report. The scope of the study covers a period from 2010 to 2019.
Statistical Tool: secondary sources of information have been used in the paper to gather relevant
information. Furthermore, for analysing the behaviour of the compiled data, various statistical
and financial tools were used. Balance Sheet and Income Statement were prepared to evaluate
the overall financial position of the company. The techniques of balance sheet and income
statement analysis that were used in the study are ratio analysis, Dupont analysis and common
size analysis. For evaluating the behaviour of the ratio analysis and compiled data, various
statistical tools such as annual growth rate, arithmetic means etc. were used in the paper. Annual
reports of both the companies have been used to prepare financial statement analysis. Calculation
of financial analysis has been conducted for one fiscal years. Findings are drawn using the
theoretical review of literatures along with the evaluation of financial statements of the
companies (Williams, and Dobelman 2017).
Data Analysis
Du and Etisalat
Balance Sheet- Refer Appendices

Financial Statement Analysis 7
Common Size Balance Sheet- Refer Appendices
Income Statement- Refer Appendices
Common Size Income Statement- Refer Appendices
Ratio Analysis
Basis Du Etisalat
Profitability Ratio
(2018)
Net Margin 13.07% 16.44%
Return on Equity 20.59% 19.17%
Liquidity Ratio
(2018)
Current Ratio 1.07 1.01
Quick Ratio 1.05 0.99
Solvency Ratio
(2018)
Debt to Equity 0.94 1.79
Debt to Asset 0.48 0.64
Asset Efficiency Ratio
(2018)
Receivable
Turnover Ratio
9.14 3.30
Creditors Turnover
Ratio
3.80 2.43
Profitability Ratio
Du Etisalat
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Net Margin
Return on Equity

Financial Statement Analysis 8
The Du Company has excellent return on equity that explains that the business is providing good
returns to the customers in the market. Whereas, the net margin ratio of the company is adequate
but there is scope of growth. The company Etisalat shows good profitability ratio that explain
that the business is providing adequate profits out of their revenue to the stakeholders. The ratio
of Etisalat is better than Du
Liquidity Ratio
Du Etisalat
0.94
0.96
0.98
1
1.02
1.04
1.06
1.08
Current Ratio
Quick Ratio
The company Du has fair current ratio that explains that the organization has adequate working
capital in hand to meet the unseen expenses. The company Etisalat has fair current ratio that
explains optimum working capital is generated by the organization.
Solvency Ratio

Financial Statement Analysis 9
Du Etisalat
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Debt to Equity
Debt to Asset
The company Du has low solvency ratio whereas ratio of Etisalat is optimum.
Asset Efficiency Ratio
Du Etisalat
0
1
2
3
4
5
6
7
8
9
10
Receivable Turnover
Ratio
Creditors Turnover
Ratio
The asset efficiency ratio is low for the organization Etisalat that explains that the company face
difficulty in reciprocating the receivables and payables as compared to Du
DuPont Analysis- Refer Appendices

Financial Statement Analysis 10
Findings and Discussion
From the above mentioned analysis it has been found that both the companies are efficiently
working in the UAE markets. On the basis of financial analysis of the both the companies, the
SWOT analysis is mentioned below:
Emirates Integrated Telecommunications Company (Du)
Strength Weakness
The solvency ratio of the company states that it
has less risk of making its business solvent.
The company has showed benefit in terms of
its debt to equity ratio. The credit sales of the
company have been increased that has
successfully resulted in procuring revenue for
the company. The company has maintained its
image in the market by quickly squaring off the
short term credits. The company is consistent
in providing profits to its stakeholders in the
market (Hitchner 2010).
Growth is appreciable for EITC but the
company is proceeding with a slow growth
rate. The net margin rate of the company has
reduced from past two years. The company has
reduced its short term investments. The total
assets of the organization have been decreased
that might affect the interest of investor in the
business. Short term investments reflect the
liquidity of the company and long term assets
explain the long term performance of the
company (Fraser, Ormiston, and Fraser 2010).
Opportunities Threats
The goodwill of the company has been
consistent from past two years. So, it should be
noted that increment in retained earning can
attract the prospective investors to invest in the
shares of the company. The company gained
varied opportunity to increase the goodwill of
the business. Increment in revenue will also
open various opportunities for the company to
invest their earnings in the right direction
(Almazari 2012).
The company is consistent in providing
earning per share that can significantly affect
the interest of investors in the market. A person
wish to invest in a company in which they can
see increasing profits for the stakeholders.
Fixed EPS do not attract investors in the
company. Increasing return on share prompts
the people to invest and earn in the company
(Brooks, and Mukherjee 2013).

Financial Statement Analysis 11
Emirates Telecommunication Group Company PJSC (Etisalat)
Strength Weakness
The company is progressively increasing the
retained earnings of the business that indicates
that the business is saving money to supply to
the investors in the market. This factor can
easily attract an investor towards the company.
The earning per share of the company has
increased previous year that can act as
advantage for the business (Katchova, and
Enlow 2013).
Poor current ratio can strongly affect the
liquidity position of the company. The
company does not have enough current assets
to pay off its debts in the market. The profit
margin of the company is increasing with a low
rate (Malíková, and Brabec 2012). Investors in
the market want good rate of returns that can
be procured through high profit. Stable profit
growth can detract the interest of the investors
from the business (Dahmen, and Rodríguez
2014).
Opportunities Threats
The company has reduced its long term debts
that can provide opportunity for the company
to significantly maintain its position in the
market. Increase in total stockholder’s equity
might attract the prospective people to invest in
the business. Increasing net income can
increase the returns for the investors as well.
Increasing asset efficiency can act as a benefit
for the company to attract the investors in the
market (Petersen, and Plenborg 2012).
The biggest threat for the company is
complexity in the liquidity ratio of the
company. Day by day it is becoming difficult
for the company to manage the liquidity of the
business. Lack of appropriate current assets
might create difficulty in day to day
functioning of the company (Etisalat 2019).
From the evaluation and analysis of both the companies, following aspects should be noted:
 The liquidity ratio evaluates company’s short term survival in the industry. Also it
explains the ability of the company to repay the liabilities using current assets. This ratio
evaluates the ability of the company to pay its short term debts in the market (Juárez
2013). The liquidity ratio of the company Du is adequate and the same ratio for Etisalat

Financial Statement Analysis 12
is beneficial for the company as in the year 2018, the company Etisalat has current ratio
1.01 and for Du is 1.07.
 In the viewpoint of Palepu, et. al., 2010, the profitability ratio relate to the performance
of the company for a current period, this evaluate the ability of the company to generate
income in the previous year. Usually there are three ratios calculated under profitability
ratio that are profit margin, return on assets and return on equity. Revenue of Etisalat is
comparatively better that revenue of Du. As Etisalat earned 52,338 million AED and Du
earned 13,414 million AED in the previous year (De Franco, Kothari, and Verdi 2011).
 Net earnings and profitability of the business are analysed by reducing expenses from
the revenue of that period. Income statement is one the three most important financial
statements used by the business to evaluate financial performance of the company for a
specific period of time. EPS of Etisalat is growing whereas EPS is Du is constant (Du
2019). The basic and diluted earnings per share for the company are constant whereas
EPS for Etisalat is increasing in the previous year (Van Auken, and Carraher 2013).
 Solvency ratio of Du is poor whereas solvency ratio of Etisalat is fair. Also the debt
equity ratio of Du is explain that the company is unable to allocate their revenue in the
right direction as the debt equity ratio for Du is 0.94 and for Etisalat is 1.079.
 The ROE of Etisalat is comparatively more beneficial for the investors. High ratio in
case of asset efficiency ratio indicates that the company is efficiently using the resources
and vice versa. The receivable turnover ratio of Etisalat for the previous year 2018 is
lower than Du that explains that Du effectively collects the receivables from the market
on time (Minnis 2011).
 The entire four ratios adequately evaluate the financial position of the company in term
of liquidity, profitability, solvency and efficiency as well.
Thus, it should be noted that the investors should invest in the firm Etisalat for better returns.
Conclusion and Recommendation
Thus, in the limelight of above mentioned events, the fact should be noted that the above
mentioned paper evaluated the information about the companies Emirates Integrated
Telecommunications Company (Du) and Emirates Telecommunication Group Company PJSC

Financial Statement Analysis 13
(Etisalat) based in UAE. Both the companies form a part of the telecommunication sector of the
industry. The above mentioned paper explain a review of literatures about the financial analysis
of a company. It elaborates the information about balance sheet, income statement, common size
analysis, ratio analysis and dupont analysis of a company. Further, from the analysis, it is
recommended to the investor that they should invest in Etisalat Company to earn better revenue.
The investors should choose this company because it has better return on equity and good
earnings per share as well. The company struggles with maintain liquidity for business but has
adequate asset efficiency, solvency and profitability. At the end, an investor is always concerned
about the profits and Etisalat provides better profits than Du.
Furthermore, it is recommended to the company Du that they should focus on increasing the
profitability of the company and providing better return to the shareholders so as to attract them
in the business. The company should focus on maintaining solvency for the business. The asset
efficiency ratio of the business indicates that the profits of the company are invested in the wrong
direction (Drake, Quinn, and Thornock 2017). The revenue of the company is considerably low,
so the company need to reassess the resources and capabilities so as to increase the benefits for
the investors. Low net profit affects the interest of the investors in the target market. So, the
company should focus on analysing the areas where the resources of the company are
inefficiently utilized, along with this they should focus on increasing the revenue so as to
increase the net profit margin as well.

Financial Statement Analysis 14
References
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DuPont system of financial analysis. International Journal of Economics and Finance, 4(4),
pp.86-94.
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Brooks, R. and Mukherjee, A.K., 2013. Financial management: core concepts. Pearson.
Chandra, P., 2011. Financial management. Tata McGraw-Hill Education.
Chen, F., Hope, O.K., Li, Q. and Wang, X., 2011. Financial reporting quality and investment
efficiency of private firms in emerging markets. The accounting review, 86(4), pp.1255-1288.
Dahmen, P. and Rodríguez, E., 2014. Financial literacy and the success of small businesses: An
observation from a small business development center. Numeracy, 7(1), p.3.
De Franco, G., Kothari, S.P. and Verdi, R.S., 2011. The benefits of financial statement
comparability. Journal of Accounting Research, 49(4), pp.895-931.
Drake, M.S., Quinn, P.J. and Thornock, J.R., 2017. Who uses financial statements? A
demographic analysis of financial statement downloads from EDGAR. Accounting
Horizons, 31(3), pp.55-68.
Du., (2019) About Us [online]. Available from < https://www.du.ae/about-us> [Accessed on 25
Feb 2019].
Du., (2019) Annual Report [online]. Available from https://www.du.ae/about-us/investor-
relations/reports [Accessed on 25 Feb 2019].
Etisalat., (2019) About Us [online]. Available from <
https://www.etisalat.com/en/about/profile/company-profile.jsp> [Accessed on 25 Feb 2019].

Financial Statement Analysis 15
Etisalat., (2019) Annual Reports [online]. Available from <
https://www.etisalat.com/en/ir/annualreports/annual-reports.jsp> [Accessed on 25 Feb 2019].
Fraser, L.M., Ormiston, A. and Fraser, L.M., 2010. Understanding financial statements. Pearson.
Fridson, M.S. and Alvarez, F., 2011. Financial statement analysis: a practitioner's guide (Vol.
597). John Wiley & Sons.
Hitchner, J.R., 2010. Financial Valuation,+ Website: Applications and Models (Vol. 545). John
Wiley & Sons.
Juárez, F., 2013. Chaos and complexity in financial statements. In Chaos and complexity theory
for management: Nonlinear Dynamics (pp. 1-33). IGI Global.
Katchova, A.L. and Enlow, S.J., 2013. Financial performance of publicly-traded
agribusinesses. Agricultural Finance Review, 73(1), pp.58-73.
Kim, J.B., Li, Y. and Zhang, L., 2011. Corporate tax avoidance and stock price crash risk: Firm-
level analysis. Journal of Financial Economics, 100(3), pp.639-662.
Malíková, O. and Brabec, Z., 2012. The influence of a different accounting system on
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economy, 18(1), pp.149-163.
Minnis, M., 2011. The value of financial statement verification in debt financing: Evidence from
private US firms. Journal of accounting research, 49(2), pp.457-506.
Palepu, K.G., Healy, P.M., Bernard, V.L., Wright, S., Bradbury, M. and Lee, P., 2010. Business
analysis and valuation: Using financial statements.
Petersen, C.V. and Plenborg, T., 2012. Financial statement analysis: valuation, credit analysis
and executive compensation. Pearson Longman.
Rodríguez-González, A., Colomo-Palacios, R., Guldris-Iglesias, F., Gómez-Berbís, J.M. and
García-Crespo, A., 2012. FAST: Fundamental analysis support for financial statements. Using
semantics for trading recommendations. Information Systems Frontiers, 14(5), pp.999-1017.

Financial Statement Analysis 16
Van Auken, H. and Carraher, S., 2013. Influences on frequency of preparation of financial
statements among SMEs. Journal of Innovation Management, 1(1), p.143.
Venkataraman R., Khatoon, G., 2012. Accounting for Management, First Edition, Himalaya
Publishing House.
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concepts, methods and uses. US: Cengage Learning.
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from https://www.morningstar.com/stocks/XDFM/DU/quote.html [Accessed on 3 March 2019].
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Available from https://www.morningstar.com/stocks/XADS/ETISALAT/quote.html> [Accessed
on 3 March 2019].

Financial Statement Analysis 17
Appendices
Du Company
Balance Sheet
EMIRATES INTEGRATED TELECOMMUNICATIONS CO PJSC (DU)
CashFlowFlag BALANCE SHEET
Fiscal year ends in December. AED in millions except per share
data.
2016-
12
2017-
12
2018-12
Assets
Current assets
Cash
Cash and cash equivalents 239 461 497
Short-term investments 6150 5025 4000
Total cash 6389 5486 4497
Receivables 1969 2140 1467
Inventories 40 99 129
Prepaid expenses 311
Other current assets 220 186 773
Total current assets 8618 7912 7176
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 16526 17954 18147
Accumulated Depreciation -8076 -9433 -10335
Net property, plant and equipment 8449 8521 7812
Goodwill 549 549
Intangible assets 1173 581 554
Other long-term assets 171 269 414
Total non-current assets 9794 9920 9329
Total assets 18411 17831 16505

Financial Statement Analysis 18
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 783 1461 1461
Accounts payable 5838 2075 1708
Other current liabilities 13 3754 3549
Total current liabilities 6634 7290 6718
Non-current liabilities
Long-term debt 3596 2156 716
Deferred revenues 191
Pensions and other benefits 236 253
Other long-term liabilities 328 111 116
Total non-current liabilities 3924 2503 1275
Total liabilities 10558 9793 7993
Stockholders' equity
Common stock 4571 4533 4533
Additional paid-in capital 394 232 232
Retained earnings 885 846 2145
Accumulated other comprehensive income 2003 2427 1602
Total stockholders' equity 7853 8038 8512
Total liabilities and stockholders' equity 18411 17831 16505
(Source: Morningstar 2019)
Common Size Balance Sheet

Financial Statement Analysis 19
EMIRATES INTEGRATED TELECOMMUNICATIONS CO PJSC (DU) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. AED in millions except per share data. 2016-12 Percent 2017-12 Percent 2018-12 Percent
Assets
Current assets
Cash
Cash and cash equivalents 239 1% 461 3% 497 3%
Short-term investments 6150 33% 5025 28% 4000 24%
Total cash 6389 35% 5486 31% 4497 27%
Receivables 1969 11% 2140 12% 1467 9%
Inventories 40 0% 99 1% 129 1%
Prepaid expenses 311 2%
Other current assets 220 1% 186 1% 773 5%
Total current assets 8618 47% 7912 44% 7176 43%
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 16526 90% 17954 101% 18147 110%
Accumulated Depreciation -8076 -44% -9433 -53% -10335 -63%
Net property, plant and equipment 8449 46% 8521 48% 7812 47%
Goodwill 549 3% 549 3%
Intangible assets 1173 6% 581 3% 554 3%
Other long-term assets 171 1% 269 2% 414 3%
Total non-current assets 9794 53% 9920 56% 9329 57%
Total assets 18411 100% 17831 100% 16505 100%
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 783 4% 1461 8% 1461 9%
Accounts payable 5838 32% 2075 12% 1708 10%
Other current liabilities 13 0.1% 3754 21% 3549 22%
Total current liabilities 6634 36% 7290 41% 6718 41%
Non-current liabilities
Long-term debt 3596 20% 2156 12% 716 4%
Deferred revenues 191 1%
Pensions and other benefits 236 1% 253 2%
Other long-term liabilities 328 2% 111 1% 116 1%
Total non-current liabilities 3924 21% 2503 14% 1275 8%
Total liabilities 10558 57% 9793 55% 7993 48%
Stockholders' equity
Common stock 4571 25% 4533 25% 4533 27%
Additional paid-in capital 394 2% 232 1% 232 1%
Retained earnings 885 5% 846 5% 2145 13%
Accumulated other comprehensive income 2003 11% 2427 14% 1602 10%
Total stockholders' equity 7853 43% 8038 45% 8512 52%
Total liabilities and stockholders' equity 18411 100% 17831 100% 16505 100%
Income statement

Financial Statement Analysis 20
EMIRATES INTEGRATED TELECOMMUNICATIONS CO PJSC (DU) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. AED in millions except per share data. 2016-12 2017-12 2018-12
Revenue 12727 13004 13414
Cost of revenue 4090 5092 5262
Gross profit 8637 7913 8152
Operating expenses
Sales, General and administrative 852 394 351
Other operating expenses 3815 3540 3793
Total operating expenses 4667 3934 4144
Operating income 3970 3979 4008
Interest Expense 114 108 92
Other income (expense) -2103 -121 -84
Income before taxes 1753 3749 3832
Provision for income taxes 2038 2079
Net income from continuing operations 1753 1712 1753
Net income 1753 1712 1753
Net income available to common shareholders 1753 1712 1753
Earnings per share
Basic 0.38 0.38 0.39
Diluted 0.38 0.38 0.39
Weighted average shares outstanding
Basic 4565 4533 4533
Diluted 4565 4533 4533
EBITDA 3394 5379 5645
Common Size Income Statement
Fiscal year ends in December. AED in millions except per share data. 2016-12 Percent 2017-12 Percent 2018-12 Percent
Revenue 12727 100% 13004 100% 13414 100%
Cost of revenue 4090 32% 5092 39% 5262 39%
Gross profit 8637 68% 7913 61% 8152 61%
Operating expenses
Sales, General and administrative 852 7% 394 3% 351 3%
Other operating expenses 3815 30% 3540 27% 3793 28%
Total operating expenses 4667 37% 3934 30% 4144 31%
Operating income 3970 31% 3979 31% 4008 30%
Interest Expense 114 1% 108 1% 92 1%
Other income (expense) -2103 -17% -121 -1% -84 -1%
Income before taxes 1753 14% 3749 29% 3832 29%
Provision for income taxes 2038 16% 2079 15%
Net income from continuing operations 1753 14% 1712 13% 1753 13%
Net income 1753 14% 1712 13% 1753 13%
Net income available to common shareholders 1753 14% 1712 13% 1753 13%
Earnings per share
Basic 0.38 0.00299% 0.38 0.0029% 0.39 0.00291%
Diluted 0.38 0.00299% 0.38 0.0029% 0.39 0.00291%
Weighted average shares outstanding
Basic 4565 36% 4533 35% 4533 34%
Diluted 4565 36% 4533 35% 4533 34%
EBITDA 3394 27% 5379 41% 5645 42%
Financial Ratios

Financial Statement Analysis 21
Description
2016 2017 2018
Revenue 12,727.00 13,004.00 13,414.00
Cost of goods sold 4,090.00 5,092.00 5,262.00
Gross profit 8,637.00 7,912.00 8,152.00
Operating profit 3,970.00 3,979.00 4,008.00
Net profit 1,753.00 1,712.00 1,753.00
Inventory 40.00 99.00 129.00
Current assets 8,618.00 7,912.00 7,176.00
Receivables 1,969.00 2,140.00 1,467.00
Current liabilities 6,634.00 7,290.00 6,718.00
Payables 5,838.00 2,075.00 1,708.00
Equity 7,853.00 8,038.00 8,512.00
Total liabilities 10,558.00 9,793.00 7,993.00
Total assets 18,411.00 17,831.00 16,505.00
Description Formula
2016 2017 2018
Profitability
Net margin Net profit/revenues 13.77% 13.17% 13.07%
Return on equity Net profit/Equity 22.32% 21.30% 20.59%
Liquidity
Current ratio
Current
assets/current
liabilities 1.30 1.09 1.07
Quick Ratio
Current assets-
Inventory/current
liabilities 1.29 1.07 1.05
Solvency
Debt to Equity Ratio Debt/ Equity 1.34 1.22 0.94
Debt to assets Debt/ Total assets 0.57 0.55 0.48
Asset Efficiency
Receivable tunover ratio
Net Credit
Sales/Account
Receivables 6.46 6.08 9.14
Creditor turnover ratio
Total Supplier
Purchase/ account
payables 0.70 2.45 3.08
Financial Data
EMIRATES INTEGRATED TELECOMMUNICATIONS CO PJSC (DU)
EMIRATES INTEGRATED TELECOMMUNICATIONS CO PJSC (DU)
DuPont Analysis

Financial Statement Analysis 22
Income Statement
Sales $13,414
Expenses (COGS/Oper. Exp.) $5,262 Net Profit After Taxes $1,753
Interest Expense $92 divided by Net Profit 13.07%
Income Taxes $2,079 Sales $13,414 Margin
multiplied by ROA = 10.62%
Balance Sheet Sales $13,414
Current Assets $7,176 divided by T. Asset 0.812723417
Total Assets $16,505 Turnover
Long Term Assets $9,329 ROE
mult. by 19.0035%
Current Liabilities $6,718
Total Liabilities $6,718
Long Term Debt $1,275 T. Assets $15,230
Stockholder Equity $8,512
divided by Fin. Lev. 1.79
Multiplier
Equity $8,512
Before Tax Cost of
Debt 7.50%
Tax Rate 30.00%
After Tax Cost of Debt 5.25%
Etisalat Company
Balance Sheet

Financial Statement Analysis 23
EMIRATES TELECOMMUNICATIONS GROUP CO PJSC (ETISALAT) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. AED in millions except per share data. 2016-12 2017-12 2018-12
Assets
Current assets
Cash
Cash and cash equivalents 23581 26184 28332
Total cash 23581 26184 28332
Receivables 18797 18454 15884
Inventories 709 541 727
Other current assets 1405 1988 2114
Total current assets 44491 47167 47057
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 81588 89207 88874
Accumulated Depreciation -39138 -45401 -45632
Net property, plant and equipment 42450 43806 43243
Goodwill 14098 14803 13714
Intangible assets 14710 15437 13908
Deferred income taxes 128 94 44
Other long-term assets 6669 6975 7277
Total non-current assets 78056 81117 78186
Total assets 122546 128284 125243
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 4075 4670 8552
Capital leases 6 3 2
Accounts payable 8035 6603 6798
Taxes payable 257 225 1718
Other current liabilities 28907 32471 29653
Total current liabilities 41279 43973 46724
Non-current liabilities
Long-term debt 18204 20035 14973
Capital leases 5 2 0
Deferred taxes liabilities 3256 3205 2837
Deferred revenues 21
Pensions and other benefits 1637 1609 1535
Minority interest 13213 13662 12298
Other long-term liabilities 2251 1755 1906
Total non-current liabilities 38566 40268 33572
Total liabilities 79845 84242 80296
Stockholders' equity
Common stock 8697 8697 8697
Retained earnings 7884 8357 9346
Accumulated other comprehensive income 26121 26989 26905
Total stockholders' equity 42701 44042 44947
Total liabilities and stockholders' equity 122546 128284 125243
(Source: Morningstar 2019)
Common Size Balance Sheet

Financial Statement Analysis 24
EMIRATES TELECOMMUNICATIONS GROUP CO PJSC (ETISALAT) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. AED in millions except per share data. 2016-12 Percent 2017-12 Percent 2018-12 Percent
Assets
Current assets
Cash
Cash and cash equivalents 23581 19% 26184 20% 28332 23%
Total cash 23581 19% 26184 20% 28332 23%
Receivables 18797 15% 18454 14% 15884 13%
Inventories 709 1% 541 0% 727 1%
Other current assets 1405 1% 1988 2% 2114 2%
Total current assets 44491 36% 47167 37% 47057 38%
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 81588 67% 89207 70% 88874 71%
Accumulated Depreciation -39138 -32% -45401 -35% -45632 -36%
Net property, plant and equipment 42450 35% 43806 34% 43243 35%
Goodwill 14098 12% 14803 12% 13714 11%
Intangible assets 14710 12% 15437 12% 13908 11%
Deferred income taxes 128 0.1045% 94 0% 44 0.035%
Other long-term assets 6669 5% 6975 5% 7277 5.810%
Total non-current assets 78056 64% 81117 63% 78186 62.427%
Total assets 122546 100% 128284 100% 125243 100.000%
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 4075 3% 4670 4% 8552 7%
Capital leases 6 0.0049% 3 0% 2 0.0016%
Accounts payable 8035 7% 6603 5% 6798 5%
Taxes payable 257 0.210% 225 0.175% 1718 1%
Other current liabilities 28907 24% 32471 25% 29653 24%
Total current liabilities 41279 34% 43973 34% 46724 37%
Non-current liabilities
Long-term debt 18204 15% 20035 16% 14973 12%
Capital leases 5 0.0041% 2 0.0016% 0 0%
Deferred taxes liabilities 3256 3% 3205 2% 2837 2%
Deferred revenues 21 0.017%
Pensions and other benefits 1637 1% 1609 1% 1535 1%
Minority interest 13213 11% 13662 11% 12298 10%
Other long-term liabilities 2251 2% 1755 1% 1906 2%
Total non-current liabilities 38566 31% 40268 31% 33572 27%
Total liabilities 79845 65% 84242 66% 80296 64%
Stockholders' equity
Common stock 8697 7% 8697 7% 8697 7%
Retained earnings 7884 6% 8357 7% 9346 7%
Accumulated other comprehensive income 26121 21% 26989 21% 26905 21%
Total stockholders' equity 42701 35% 44042 34% 44947 36%
Total liabilities and stockholders' equity 122546 100% 128284 100% 125243 100%
Income Statement

Financial Statement Analysis 25
Fiscal year ends in December. AED in millions except per share data. 2016-12 2017-12 2018-12
Revenue 52360 51666 52388
Cost of revenue 16115 15983 16551
Gross profit 36245 35684 35836
Operating expenses
Sales, General and administrative 943 961 1856
Other operating expenses 21573 21936 19642
Total operating expenses 22516 22897 21497
Operating income 13730 12786 14339
Interest Expense 907 965 1010
Other income (expense) -1698 -614 -1086
Income before taxes 11124 11207 12243
Provision for income taxes 1206 1241 1500
Net income from continuing operations 9919 9966 10743
Net income from discontinuing ops -432 -194 -301
Other -1066 -1328 -1827
Net income 8421 8444 8615
Net income available to common shareholders 8421 8444 8615
Earnings per share
Basic 0.97 0.97 0.99
Diluted 0.97 0.97 0.99
Weighted average shares outstanding
Basic 8697 8697 8697
Diluted 8697 8697 8697
EBITDA 19710 19456 20542
Common Size Income Statement
EMIRATES TELECOMMUNICATIONS GROUP CO PJSC (ETISALAT) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. AED in millions except per share data. 2016-12 Percent 2017-12 Percent 2018-12 Percent
Revenue 52360 100% 51666 100% 52388 100%
Cost of revenue 16115 31% 15983 31% 16551 32%
Gross profit 36245 69% 35684 69% 35836 68%
Operating expenses
Sales, General and administrative 943 2% 961 2% 1856 4%
Other operating expenses 21573 41% 21936 42% 19642 37%
Total operating expenses 22516 43% 22897 44% 21497 41%
Operating income 13730 26% 12786 25% 14339 27%
Interest Expense 907 2% 965 2% 1010 2%
Other income (expense) -1698 -3% -614 -1% -1086 -2%
Income before taxes 11124 21% 11207 22% 12243 23%
Provision for income taxes 1206 2% 1241 2% 1500 3%
Net income from continuing operations 9919 19% 9966 19% 10743 21%
Net income from discontinuing ops -432 -1% -194 0% -301 -1%
Other -1066 -2% -1328 -3% -1827 -3%
Net income 8421 16% 8444 16% 8615 16%
Net income available to common shareholders 8421 16% 8444 16% 8615 16%
Earnings per share
Basic 0.97 0.00185% 0.97 0.00188% 0.99 0.0019%
Diluted 0.97 0.00185% 0.97 0.00188% 0.99 0.0019%
Weighted average shares outstanding
Basic 8697 17% 8697 17% 8697 17%
Diluted 8697 17% 8697 17% 8697 17%
EBITDA 19710 38% 19456 38% 20542 39%
Financial Ratios

Financial Statement Analysis 26
Description
2016 2017 2018
Revenue 52,360.00 51,666.00 52,388.00
Cost of goods sold 16,115.00 15,983.00 16,551.00
Gross profit 36,245.00 35,684.00 35,836.00
Operating profit 13,730.00 12,786.00 14,339.00
Net profit 8,421.00 8,444.00 8,615.00
Inventory 709.00 541.00 727.00
Current assets 44,491.00 47,167.00 47,057.00
Receivables 18,797.00 18,454.00 15,884.00
Current liabilities 41,279.00 43,973.00 46,724.00
Payables 8,035.00 6,603.00 6,798.00
Equity 42,701.00 44,042.00 44,947.00
Total liabilities 41,279.00 43,973.00 46,724.00
Total assets 83,980.00 88,015.00 91,671.00
Description Formula
2016 2017 2018
Profitability
Net margin Net profit/revenues 16.08% 16.34% 16.44%
Return on equity Net profit/Equity 19.72% 19.17% 19.17%
Liquidity
Current ratio
Current
assets/current
liabilities 1.08 1.07 1.01
Quick Ratio
Current assets-
Inventory/current
liabilities 1.06 1.06 0.99
Solvency 2016 2017 2018
Debt to Equity Ratio Debt/ Equity 0.97 1.00 1.04
Debt to assets Debt/ Total assets 0.49 0.50 0.51
Asset Efficiency 2016 2017 2018
Receivable Turnover
Ratio
Net Credit
Sales/Account
Receivables 2.79 2.80 3.30
Creditor Turnover
Ratio
Total Supplier
Purchase/ account
payables 2.01 2.42 2.43
Financial Data
Etisalat Co
Etisalat Co

Financial Statement Analysis 27
Dupont Analysis
DuPont Model: What If Analysis
Income Statement
Sales $52,388
Expenses (COGS/Oper. Exp.) $16,551 Net Profit After Taxes $8,615
Interest Expense $1,010 divided by Net Profit 16.44%
Income Taxes $65,658 Sales $52,388 Margin
multiplied by ROA = 6.88%
Balance Sheet Sales $52,388
Current Assets $47,057 divided by T. Asset 0.418290843
Total Assets $125,243 Turnover
Long Term Assets $78,186 ROE
mult. by 14.0292%
Current Liabilities $46,724
Total Liabilities $46,724
Long Term Debt $33,572 T. Assets $91,671
Stockholder Equity $44,947
divided by Fin. Lev. 2.04
Multiplier
Equity $44,947
Before Tax Cost of
Debt 7.50%
Tax Rate 30.00%
After Tax Cost of Debt 5.25%