Financial Statement Analysis

Report On Financial
Statement Analysis

Table of Contents
INVESTMENT ANALYSIS OF VODAFONE PLC......................................................................1
Summary.....................................................................................................................................4
INVESTMENT ANALYSIS OF BT PLC.......................................................................................4
Financial ratio Analysis...............................................................................................................4
Summary.....................................................................................................................................6
Comparative Analysis of financial year ending 2020......................................................................7
Investment Advice...........................................................................................................................7
REFERENCES................................................................................................................................9

INVESTMENT ANALYSIS OF VODAFONE PLC
Financial Ratio Analysis:
Liquidity ratio analysis:
Current ratio: Current Assets/Current liabilities
Particulars 2016 2017 2018 2019 2020
Current Assets 26.57 40.11 32.31 50.37 34.25
Current
liabilities
31.63 33.53 33.31 32.5 33.51
Calculation 26.57/31.63 40.11/33.53 32.31/33.31 50.37/32.5 34.25/33.51
Results 0.29 1.19 0.9 0.36 0.23
Quick ratio: Quick assets/Current liabilities
Particulars 2016 2017 2018 2019 2020
Quick Assets 26.56 38.31 32.31 48.56 34.51
Current
liabilities
31.63 33.53 33.31 32.5 33.51
Calculation 26.56/31.63 38.31/33.53 32.31/33.31 48.56/32.5 34.51/33.51
Results 0.84 1.17 0.97 1.55 1.02
Interpretation: As per the above mentioned liquidity ratios this can be stated that
company is not able to meet ideal form of current ratio which is of 2:1 times. This is so because
of less number of current assets compared to current liabilities. In addition to this, quick ratio of
above company is also poor as it is lower than ideal form which is of 1.5: 1
Profitability ratio
It is referred to measurement tool of organisational capacity of earning profits. It is
important so that profits can be managed with expenses in effective manner. Higher profitability
ratio is considered as favourable whereas lower profitability ratio is considered as unfavourable
for an organisation.
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Net profit margin ratio: Net profit / Sales*100
Particulars 2016 2017 2018 2019 2020
Net profit -6069 -6910.32 3235.82 -9287.16 -1023.04
Sales 61795.48 52270.26 61785.75 50565.23 50011.09
Calculation -
6069/61795.4
8*100
-
6910.32/5227
0.26*100
3235.82/6178
5.75*100
-
9287.16/5056
5.23*100
-
1023.04/50011.
09*100
Results -9.82% -13.22% 5.23% -18.36% -2.04%
Gross profit ratio: Gross profit / Net sales * 100
Particulars 2016 2017 2018 2019 2020
Gross Profit 15893.41 14326.55 18308.46 15639.95 15892.71
Sales 61795.48 52270.26 61785.75 50565.23 50011.09
Calculation 15893.41/617
95.48*100
14326.55/522
70.26*100
18308.46/617
85.75*100
15639.95/505
65.23*100
15892.71/5001
1.09*100
Results 25.71% 27.40% 29.63% 30.93% 31.77%
In terms of above performed profitability ratios this can be inferred that company’s
performance is too poor. As they are not able to meet enough amount of return in different years.
This has been justified by above computed ratio like net profit ratio, return on capital employed
etc. Under each ratio there is significant decline in different kinds of ratio.
Gearing Ratio:
Based on equity issues and a reduction in long-term loans, the turnover declined. It can
be considered safe, given that 32.5% of the business equity is represented by all bonds (long and
the short). In comparison, EBITDA about 9 times exceeds interest costs. In view of the current
low rates, capital financing improvements could be made – when necessary – by raising leverage
over a long period with fixed rates via lengthy securities. Vodafone, however, has introduced
cost cutting and productivity measures, which are projected to minimise capital spending and set
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