Cash Flow Analysis and Statement

The assignment presents a detailed analysis of a company's cash flow statements across multiple periods. The statements are categorized into operating, investing, and financing activities, with specific figures provided for each category. The document delves into the details of investments in property, plant, and equipment, acquisitions, sales/maturities of investments, purchases of intangibles, and other investing activities. Similarly, it covers debt issuance, repayment, common stock issued, dividend payments, and other financing activities. The analysis also includes the effect of exchange rate changes on cash flow and provides a summary of the company's cash position at different points in time.

Running Head: Finance For Business
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Project Report: Finance for business

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Contents
1. Company description...............................................................................................3
2. Ownership governance structure.............................................................................3
3. Performance ratios...................................................................................................4
4. Changes in stock price.............................................................................................5
5. Significant factors....................................................................................................6
6. Calculation of CAPM and beta values.....................................................................6
7. WACC calculations.................................................................................................7
8. Debt ratios................................................................................................................8
9. Dividend policy........................................................................................................8
10. Recommendation and Conclusion...........................................................................8
References.......................................................................................................................10
Appendix.........................................................................................................................11

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1. Company description:
This report has been prepared on an Australian company which name is TPG Telecom
limited. This company is working under the IT industry and the Australian
telecommunication industry. The main services of the company are mobile telephone services
and the internet services. According to a report, TPG telecom is the second largest comapny
in Australian market in internet service provider companies. This company is mainly a
merger between total peripherals group. This company has been founded in 1992 by Vickey
Teoh and David. Basically, this company is performing well in terms of finance as well as in
terms of finance (About us, 2018).
2. Ownership governance structure:
Substantial stakeholders:
Ownership corporate governance of the TPG telecom expresses about the way good
structure of the investors. 82.74% stock of the company own by the top 20 shareholders. The
largest shareholder of the company is WASHINGTON H SOUL PATTINSON AND
COMPANY LIMITED. The company has held 25.15% stock of the company. Currently,
there are 6 stockholders in the company who has more than 5% stock in the company’s shares
and only 1 stockholder has more than 20% stock.

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Figure 1: Top twenty shareholders
(Annual Report, 2018)
Main people:
Further, the annual report describe the CEO, executive directors, non executive
directors, CFO etc of the company has been evaluated and David Teoh is the executive
chairman of the company, Denis Ladbury, Robert Millner, Joseph Pang and Shane Teoh is
the non executive directors of the company. The report of top 20 shareholders of the company
explains that no members of the company have more than 2% stock of the company (Annual
Report, 2018).
3. Performance ratios:
Performance ratios of the company have been described below. Performance ratios
explain about the positive changes, position and the performance of the company. Following
are some of the performance ratios of TPG Telecom as follows:
Return on assets:
Return on assets of the company explains that the performance of the company is
quite better. It explains that how much profit is earned by the company in context with the
total assets. Following is the calculations of return on assets of the company:

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A. Return on assets= NPAT/ total Assets
414/3911
10.59%
(Jiashu, 2009)
Return on equity:
Return on equity of the company explains that the performance of the company is
quite better. It explains that how much profit is earned by the company in context with the
total equity. Following is the calculations of return on equity of the company:
B. Return on Equity=
Net profit after tax/
ordinary equity
414/1449
28.57%
Debt ratios:
Debt ratios of the company explain about the position and the capital structure of the
company. The current capital structure of the company is way better. It explains that how
much total liabilities are held by the company in context with the total liability. Following is
the calculations of debt ratio of the company:
C. Debt Ratios =
Total Liabilities/ total
assets
1516/3911
38.76%
EBIT / TA * NPAT / EBIT * TA/ OE = NPAT / OE
(598/3911)*(414/598)*(3911/1449)
= (414/1449)
28.57% 28.57%
TA/OE:
Total assets and total equity determine the ROA and ROE of the company with the
help of the Net profit after tax. If the total assets and the total equity of an organization
changes than it directly makes an impact over the ROA and the ROE (Deegan, 2013).

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ROA and ROE:
The above calculations on the TPG telecom’s ROE and ROA have been evaluated and
it has been found that the ROA and ROE of the company is 10.59% and 28.57%. It explains
that the return on equity is always greater than the return on assets due to the accounting
principle which states that the assets are the total of liabilities and the equity.
4. Changes in stock price:
The study of stock price has been evaluated further and it has been analyzed that the
stock price of the company and the stock price of AORD, both are quite volatile in nature and
explains about the good performance of the company (Yahoo finance, 2018). The following
graph explains about the stock prices of both the stocks:
Figure 2: Changes in stock price
(Yahoo Finance, 2018)
Evalaution:
Further, the graph epxlains that the correlation of the company is in negative as it
explains about the negative relationship among both the stocks. It epxlains that the changes in
the stock of TPG is quite higher than the volatility of AORD stocks. Further, it explains that
currently the stock price of the company is way better (Brown, Beekes and Verhoeven,
2011).
5. Significant factors:

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Further, the factors has been evalauted which have imapcted on the stock price and due
to which the stock of the company has been changed. The main reason behind chnage is the
competetion level of the company, current report about the company that is the second largest
company in the industry, further, the analysts has described in their report about a better
position of the company in the market (Davies and Crawford, 2011). On the other hand, due
to new technology and compatetion the stock price of the company has been lowered 2 to 3
times.
6. Calculation of CAPM and beta values:
Beta:
The calculation on the stock price of the company depicts that the beta of the
company is 0.7415.
Required rate of return:
The required rate of return of the company is as follows:
Calculation of cost of equity (CAPM)
RF 4.00%
RM 6.00%
Beta 74.15%
Required rate of
return
5.48%
(Morningstar, 2018)
Explanation:
The above calculations express that the company’s cost in terms of equity is 5.48%. If
the company wants to raises the funds through equity than the company has to pay 5.48% of
total profit as cost of equity to the stockholders of the company. The cost of equity of the
company is moderate.
Conservative company:

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According to the evaluation, it has been found that the risk of the company is lower
and return of the company is quite higher and thus the company is a conservative investment.
7. WACC calculations:
Calculations of WACC are as follows:
Calculation of WACC
Price Cost Weight WACC
Debt 949 4.20% 0.39575 0.01662
Equity 1,449 5.48% 0.60425 0.03313
2,398 Kd 4.98%
(Morningstar, 2018)
Working Note:
Calculation of cost of debt
Outstanding debt 949
interest rate 6%
Tax rate 0.3
Kd 4.20%
Calculation of cost of equity
(CAPM)
RF 4.00%
RM 6.00%
Beta 74.51%
Required rate of return 5.48%
Evaluation:
The above calculations express that the company’s cost in terms of equity is 5.48%
and in terms of debt is 4.2%. If the company wants to raises the funds through equity than the
company has to pay 5.48% of total profit as cost of equity to the stockholders of the
company. On the other hand, in terms of debt, company has to pay 4.2%. The cost of equity
of the company is higher than the cost of debt of the company. The above calculations
express that the cost of capital of the company is 4.07%.
8. Debt ratios:

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Optimal capital structure:
Optimal capital structure of the company explains that the liabilities of the company
have been reduced by the company to manage a better capital structure.
2017 2016
Debt Ratios
Total Liabilities/ total
assets
Total Liabilities/ total
assets
1516/3911 1997/3771
38.76% 52.96%
(Brown, Beekes and Verhoeven, 2011)
Gearing ratios:
Gearing ratios of the company explains about the liabilities of the company which has
been reduced and the borrowings of the company has been increased in current month and
thus the gearing ratios of the company has been lowered.
2017 2016
Gearing ratios
Total Liabilities/
Capital employed
Total Liabilities/
Capital employed
1516/(3911-568) 1997/(3771-514)
45.35% 61.31%
9. Dividend policy:
The annual report of the company expresses that the company offers a great dividend to
the company with a 1.25% growth rate each year. It depicts that the company is following
relevant dividend policies (Annual report, 2018). Relevant dividend policies are a part of
dividend policies. These policies explain to the company that they should announce and give
a good amount of dividend to the stockholder so that the investment level of the company
could be enhanced.
10. Recommendation and Conclusion:
To,
The Client.
Date: 29th Jan 2017.

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Subject: Recommendation about investment.
Dear Client,
It is recommended to you to invest into TPG telecom. The report of evaluation of TPG
telecom briefs that the current position of the company is quite attractive. It presents that the
huge profit is earned by the company and the great amount of dividend is given to the
shareholders of the company. The market stock price of the company is also good. It explains
that the investors should invest into the company.
So, it is the best option for you to invest right now.
Faithfully,
Financial Analyst.

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References:
About us. 2018. TPG Telecom Limited. viewed Jan 25, 2018, https://www.tpg.com.au/
Annual Report. 2018. TPG Telecom Limited. viewed Jan 25, 2018,
https://www.tpg.com.au/about/pdfs/FY17%20Annual%20Report.pdf
Brown, P., Beekes, W., and Verhoeven, P. 2011. Corporate governance, accounting and
finance: A review. Accounting & finance, 51(1), 96-172.
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Jiashu, G. 2009. Study on Fair Value Accounting——on the essential characteristics of
financial accounting [J]. Accounting Research, 5, 003.
Morningstar. 2018. TPG Telecom Limited. viewed Jan 25, 2018,
http://financials.morningstar.com/cash-flow/cf.html?t=XBER:YST&region=deu&culture=en-
US
Yahoo Finance. 2018. TPG Telecom Limited. viewed Jan 25, 2018,
https://au.finance.yahoo.com/quote/TPM.AX/chart?p=TPM.AX

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Appendix:
TPG TELECOM LTD (YST) CashFlowFlag INCOME STATEMENT
Fiscal year ends in July. AUD in
millions except per share data.
2017-
07
2016-
07
2015-
07
2014-
07
2013-
07
Revenue 2491 2388 1271 971 725
Gross profit 2491 2388 1271 971 725
Operating expenses
Sales, General and administrative 257 274 139 104 60
Other operating expenses 1636 1610 796 614 449
Total operating expenses 1893 1883 936 718 509
Operating income 598 505 335 253 216
Interest Expense 52 85 21 11 9
Other income (expense) 50 94 5 4 6
Income before taxes 596 514 319 247 212
Provision for income taxes 180 130 95 75 63
Net income from continuing
operations 416 385 224 172 149
Other -2 -5
Net income 414 380 224 172 149
Net income available to common
shareholders 414 380 224 172 149
Earnings per share
Basic 0.47 0.45 0.28 0.21 0.18
Diluted 0.47 0.45 0.28 0.21 0.18
Weighted average shares outstanding
Basic 864 853 808 808 808
Diluted 864 853 808 808 808
EBITDA 892 851 486 365 296
TPG TELECOM LTD (YST) CashFlowFlag BALANCE SHEET
Fiscal year ends in July. AUD in millions
except per share data.
2017-
07
2016-
07
2015-
07
2014-
07
2013-
07
Assets
Current assets
Cash
Cash and cash equivalents 46 39 24 24 26
Short-term investments 1 144 152 99 81
Total cash 48 184 175 123 107
Receivables 132 145 64 86 41
Inventories 6 12 6 3 0
Prepaid expenses 26 14 9 10 6

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Other current assets 4
Total current assets 211 359 254 221 155
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 1773 1471 1032 554 583
Accumulated Depreciation -717 -576 -440 -264
Net property, plant and equipment 1056 895 593 554 319
Equity and other investments 3 23 116 7 7
Goodwill 1911 1911 546 549 392
Intangible assets 722 574 140 163 111
Other long-term assets 9 9 6 14 16
Total non-current assets 3700 3412 1400 1288 844
Total assets 3911 3771 1654 1509 999
Liabilities and stockholders' equity
Liabilities
Current liabilities
Capital leases 32 27 0 0 0
Accounts payable 186 212 76 63 43
Deferred income taxes 54 12 17 34
Deferred revenues 150 142 63 79 59
Other current liabilities 145 132 107 99 59
Total current liabilities 568 514 258 258 195
Non-current liabilities
Long-term debt 872 1316 328 347 39
Capital leases 35 0 0
Deferred taxes liabilities 10 63 17 18 15
Other long-term liabilities 66 70 48 54 33
Total non-current liabilities 949 1483 392 419 88
Total liabilities 1516 1997 651 677 283
Stockholders' equity
Common stock 1449 1052 517 517 517
Retained earnings 963 681 410 267 163
Accumulated other comprehensive income -18 41 76 48 36
Total stockholders' equity 2395 1774 1003 832 716
Total liabilities and stockholders' equity 3911 3771 1654 1509 999
TPG TELECOM LTD (YST) Statement of CASH FLOW
Fiscal year ends in July. AUD in
millions except per share data. TTM
2017-
07
2016-
07
2015-
07
2014-
07
2013-
07
Cash Flows From Operating Activities