Managing Financial Resources and Performance

Running head: MANAGING FINANCIAL RESOURCES AND PERFORMANCE
Managing financial resources and performance
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1MANAGING FINANCIAL RESOURCES AND PERFORMANCE
Table of Contents
Introduction......................................................................................................................................2
Task 1 – Finding financial performance..........................................................................................2
Task 2 – financial analysis...............................................................................................................4
Performance of Vodafone................................................................................................................4
Performance of Deutsche Telekom.................................................................................................6
Reason of difference in performance...............................................................................................6
Vodafone to be concerned about Deutsche Telekom......................................................................8
Conclusion.......................................................................................................................................8
Reference.......................................................................................................................................10

2MANAGING FINANCIAL RESOURCES AND PERFORMANCE
Introduction
The main objective of the report to carry out the financial performance analysis of
Vodafone for the year ended 2016 as well as 2017. Financial performance will be analyzed
though carrying out difference financial ratios. Further the financial performance of the company
will be compared with one of its main competitor Deutsche Telekom. Based on the comparison
of their performance the report will highlight whether Vodafone is required to be worried about
the performance of its competitor Deutsche (DeFusco et al. 2015).
Task 1 – Finding financial performance
Ratio Definition 2017 2016
Return on capital employed ROCE is the financial ration used for
measuring the profitability of the entity an
its efficiency with which the capitals are
used.
Net operating profit -6079 -5122
Total asset - current liabilities 124089 127310
Net operating profit/(total assets-
current liabilities) -0.049 -0.0402
Return on sales it is used for analysing the operational
efficiency of the entity and it provides
insight into the fact of how much profit is
generated by the entity with each dollar of
sales
Net income -6079 -5122
Sales 47631 49810
Net income /sales -12.76% -10.28%
Asset utilisation ratio it is used for computing total revenue
earned by the entity with each dollar of
the assets owned by the entity
Sales 47631 49810
Average total assets 161895.5 169343
Sales/average total assets 0.29 0.29
Gross profit margin It is used for assessing the financial health
of the entity and the business model
through revealing the money left from the
sales after deducting COGS (Grimm and
Blazovich 2016)
Gross profit 13055 13097
Total sales 47631 49810
Gross profit/total sales 27.41% 26.29%
Current ratio current ratio is the liquidity ratio that
reveals the current assets proportion of theCurrent assets 25542 31938

3MANAGING FINANCIAL RESOURCES AND PERFORMANCE
entity against its current liabilities
Current liabilities 30595 41797
Current assets/current liabilities 0.83 0.76
Quick ratio quick ratio is used to measure the short
term liquidity of the entity and measures
its ability for meeting the short term
obligation with the most liquid assets.
Current assets 25542 31938
Inventories 576 716
Current liabilities 30595 41797
(current
assets-inventories)/current
liabilities 0.82 0.75
Gearing ratio it measures proportion of the company's
borrowed funds against the equity. it
indicates the business risk to which the
business is exposed as higher debt can
result into financial difficulties
(Loughran and McDonald 2014)
Long term liabilities 38576 41736
Total asset - current liabilities 124089 127310
long term liabilities/(total assets-
current liabilities) 0.31 0.33
Interest coverage ratio it is used for determining the efficiency
with which the entity can pay off its
interest obligations.
EBIT 3725 1320
Interest 1406 2046
EBIT/Interest 2.65 0.65
Stock days it is the financial ratio used for indicating
the average time taken by the entity to sell
its entire stock of inventories or the
inventories remain in stock before its sales
COGS 34576 36713
Average inventory 776 691.5
365/(COGS/Average inventory) 8.19 6.87
Current trade receivable days it is the time taken by the entity for
collecting its dues from the debtor to
whom credit sales are made (Brigham et
al. 2016).
Credit sales 47631 49810
Average trade receivables 5269.5 4172.5
365/(Credit sales/average trade
receivable) 40.38 30.58
Current trade payable days it is the time taken by the entity for paying
the dues from the creditor from whom
credit purchases are made.
COGS 34576 36713
Average payables 6816 5460.5
365/(COGS/average payables) 71.95 54.29
Return on equity it measures the efficiency of the entity
regarding generation of income from the
shareholder's equity investment (Nobes
2014)
net income -6079 -5122
average shareholder’s equity 79427.5 89422
net income/total equity -0.08 -0.06