Financial Decision Making Report: Singtel Financial Analysis

This report provides a comprehensive financial analysis of Singapore Telecommunications Limited (Singtel), examining its performance from 2012 to 2016. It begins with an introduction to Singtel and its position in the telecommunications market, followed by a trend analysis of sales revenue, profits, assets, and liabilities. The report then delves into profitability analysis, comparing Singtel's financial ratios (gross profit, net profit, return on assets, and operating ratios) to industry averages. Dividend ratios, including dividend yield, payout, and earnings per share, are analyzed and compared to a competitor, Starhub. The report assesses Singtel's short-term and long-term financial stability and liquidity using debt-to-equity, current, quick, and interest coverage ratios. Efficiency ratios such as asset turnover, inventory turnover, and debtor turnover ratios are also calculated and compared. Finally, the report examines other financial metrics such as return on investment, asset value per share, and market share price, concluding with a comparative analysis of Singtel's financial performance.

Running head: FINANCIAL DECISION MAKING
Financial decision making
Name of the student
Name of the university
Author note

1FINANCIAL DECISION MAKING
Table of Contents
Section A....................................................................................................................................2
1. Selection of the company....................................................................................................2
2. Introduction.........................................................................................................................2
3. Trend on vertical and horizontal analysis regarding profits, sales, liabilities and assets. . .3
4. Identification of profits.......................................................................................................3
5. Identification of dividends..................................................................................................5
6. Satiability and liquidity.......................................................................................................7
7. Other ratios.......................................................................................................................10
8. Asset value per share and market share price...................................................................11
9. Non-financial parameters..................................................................................................12
10. Comparative analysis....................................................................................................13
Section B..................................................................................................................................13
Answer to Question 1...............................................................................................................13
Answer to Question 2...............................................................................................................14
Answer to Question 3...............................................................................................................14
Answer to Question 4...............................................................................................................15
Conclusion................................................................................................................................15
References................................................................................................................................17
Appendix..................................................................................................................................20

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Section A
1. Selection of the company
Singapore Telecommunication Limited, Singapore
2. Introduction
Singapore Telecommunication Limited known as Singtel is the biggest network
operator for mobile in Singapore. It has 4.1 million subscribers and has more than 640
million customers with regard to subscriber base for mobile. The company has their head
quarter in Singapore and it has more than 130 years of experience in operation. Further, it has
invested in the leading companies all over Africa, Asia that includes Telkomsel, Bharti Airtel,
Advance Info Service and Globe Telecom. Singtel is committed for delivering one stop, end
to end ICT solutions for improving the business agility, driving growth and improve the
profitability (Singtel.com 2018). Various products and services provided by the company are
the mobile services, cloud services, internet services, international roaming and calling, data
connectivity, managed hosting and services, Singtel TV business, conferencing and telephony
and cyber security. The company employs more than 25,000 employees. The turnover of the
company that is the net income of the company is more than $ 3500 million for all the past 5
years and for the year ended 2017 its net income was $ 3,853 million. Top competitors for
Singtel are Telstra Corporation Limited, Vodafone Group Public Limited Company and
Hutchison Telecommunication (Australia) Limited.
3. Trend on vertical and horizontal analysis regarding profits, sales, liabilities and
assets
Looking at the trend of Singtel, it is recognized that the sales revenue of the company
are in decreasing trend as compared to the year 2012. However, it went up in the year 2015

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and again went down in the year 2016 (Delen, Kuzey and Uyar 2013). Whereas, the sales
trend in Singapore telecommunication industry is in increasing trend for the last 5 years. The
profit of the company through went down in 2013 as compared to 2012, after 2013 it is in
increasing trend till the year 2016. However, the industry growth with regard to the profits
was higher as compared to Singtel. On the other hand under the balance sheet the assets of
the company are in increasing trend whereas the liabilities of the companies are in decreasing
trend (Singtel.com 2018).
4. Identification of profits
Profits of the company for last 5 years –
 2012 – $ 3989.5 million
 2013 – $ 3510.6 million
 2014 – $ 3656.9 million
 2015 - $ 3784.5 million
 2016 – $ 3858.3 million
a. Economic condition
Entry of Colt in the Singapore Telco market was the biggest shakeup for the industry.
TPG telecom became the 4th telecom operator in Singapore in the year 2016 after 3 biggest
companies like M1, Starhub and Singtel. During the past 5 years the Telco industry grown at
14.7% rate which were influenced by upsurge in the output form in the manufacturing
industry of the country (Weygandt, Kimmel and Kieso 2015). Along with the outstanding
Telco market, the industry were able to build sophisticated telecom infrastructure and
successfully promoted themselves for achieving excellence in telecommunication and over
20% of the homes installed 2 fixed line services.

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b. Financial ratios for profit
Singtel -
Ratio Formula 2012 2013 2014 2015 2016
Gross profit ratio Gross profit /sales 0.28 0.29 0.31 0.30 0.30
Net profit ratio Net profit/sales 0.21 0.19 0.22 0.22 0.23
Return on Assets Sales/Total assets 1.35 0.91 0.82 0.82 0.78
Operating ratio Operating profit/sales 0.17 0.17 0.19 0.17 0.17
2012 2013 2014 2015 2016
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Profitability
Gross profit ratio
Net profit ratio
Return on Assets
Operating ratio
Industry average
Ratio 2012 2013 2014 2015 2016
Gross profit ratio
0.30 0.31 0.30 0.29 0.27
Net profit ratio
0.14 0.16 0.17 0.20 0.20
Return on Assets
0.95 0.92 0.97 0.88 0.76
Operating ratio
0.20 0.20 0.21 0.19 0.18
c. Comment on profitability

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From the above tables it can be identified that the gross profit ratio of the company is
moving between 0.28 and 0.31 whereas the industry average for the same is moving between
0.27 and 0.31. Therefore, the gross profit ratio of the company is more or same with the
industry average. On the other hand the net profit ratio of Singtel is high as compared to the
industry average for the last 5 years. The net profit ratio of the company as well as the
industry both are in increasing trend except the net profit of Singtel for the year 2013 that was
in decreasing trend (Singtel.com 2018). Return on assets of Singtel for 2012 is significantly
higher as compared to the industry and for the years from 2013 to 2016 the ratios were as per
the industry average. Finally the operating ratios of the company for all the 5 years were
lower as compared to the industry average. Therefore, the company shall control the
operating expenses to achieve the operating ratio as per the industry average.
5. Identification of dividends
a. Dividend ratio
For Singtel –
Ratio Formula 2012 2013 2014 2015 2016
Dividend Yield ratio Dividend per share/
Market value per share 5.37 5.42 4.49 5.21 4.52
Dividend payout
ratio Dividend /net income 1.03 0.72 0.73 0.71 0.72
Price earnings ratio Market value per
share/EPS 0.12 0.14 0.16 0.14 0.16
Earnings per share
ratio
Net income/no. of
shares 25.04 22.02 22.92 23.73 24.29

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2012 2013 2014 2015 2016
0.00
5.00
10.00
15.00
20.00
25.00
30.00
Dividend
Dividend Yield ratio
Dividend payout ratio
Price earning ratio
Earning per share ratio
For competitor – Starhub
Ratio 2012 2013 2014 2015 2016
Dividend Yield ratio 0.14 0.13 0.14 0.19 0.15
Dividend payout
ratio 0.79 0.90 0.76 0.99 0.89
Price earnings ratio -2.11 0.02 0.07 0.08 -3.98
Earnings per share
ratio -11.05 8.07 8.05 1.06 -15.26
Looking at the dividend ratios of the company and its competitor Starhub it is
identified that all the dividend related ratio of Singtel is significantly high as compared to its
competitor Starhub (Singtel.com 2018). Moreover for the year 2012 and 2016 the P/E ratio
and EPS of Starhub is in negative figures as the company could not earn the positive income
for those years (Leary and Roberts 2014). Moreover, all the dividend related ratios of Singtel
are stable and not fluctuated much in the last 5 years. Therefore, with the investment aspect,
Singtel will be considered as better as it is paying regular and stable return on the
shareholders investment (Starhub.com 2018).

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6. Satiability and liquidity
a. Short term and long term position
Looking at the financial report of Singtel if the short term position of the company is
considered it is recognized that the company is in a good position to pay off its short term
obligation efficiently (Baños-Caballero, García-Teruel and Martínez-Solano 2014). On the
other hand, if the long term position is considered it is identified that the debt of the company
is comparatively lower than the equity for all the last 5 years. Further, the company had
sufficient earning to cover up the interest payment on the borrowings.
b. Ratio calculation
For Singtel –
Ratio Formula 2012 2013 2014 2015 2016
Debt to equity ratio Total liability/ shareholder's
equity 0.41 0.25 0.22 0.20 0.19
Current ratio Current assets / Current
liabilities 1.20 1.13 1.38 1.61 1.78
Quick ratio Current assets less inventory
/ current liabilities 1.18 1.12 1.37 1.60 1.76
Interest coverage
ratio EBIT / Interest expense 11.79 12.84 14.81 15.13 13.48

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2012 2013 2014 2015 2016
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
Debt to equity ratio
Quick ratio
Stability and liquidity
Debt to equity ratio
Current ratio
Quick ratio
Interest coverage ratio
For competitor – Starhub
Ratio 2012 2013 2014 2015 2016
Debt to equity ratio 15.80 8.31 3.27 2.93 5.02
Current ratio 0.70 0.68 0.56 0.59 0.87
Quick ratio 0.54 0.63 0.53 0.36 0.59
Interest coverage ratio 22.57 24.79 21.18 25.73 16.66
c. Comment on liquidity and stability
If is identified from the above tables that the current ratio of Singtel for all the years
are better than its competitor Starhub (Starhub.com 2018). Further, the current ratio of the
company is revealing that it has sufficient short term assets to pay-off the short term
obligations. Moreover the burden of debt on the company is significantly lower as compared
to Starhub (Brigham and Ehrhardt 2013). However, the interest coverage ratio of Starhub is
considerable better than Singtel. Therefore, Singtel must take the steps to increase its
operating income to achieve better interest coverage ratio.
Efficiency ratio –
For Singtel –

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Ratio Formula 2012 2013 2014 2015 2016
Asset turnover ratio Net sales/Total
assets 1.35 0.91 0.82 0.82 0.78
Inventory turnover ratio Sales/ inventory 605.3
2
656.4
3
864.0
1
642.6
5
788.8
9
Current asset turnover
ratio
Net sales/ current
assets 6.60 7.07 6.21 6.67 5.39
Debtors turnover ratio
Net sales/
accounts
receivable
7.35 7.66 6.52 7.05 5.60
2012 2013 2014 2015 2016
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
900.00
Efficiency
Asset turnover ratio
Inventory turnover ratio
Current asset turnover
ratio
Debtors turnover ratio
For competitor – Starhub
Ratio 2012 2013 2014 2015 2016
Asset turnover ratio 1.37 1.29 1.24 1.25 1.17
Inventory turnover ratio 36.92 26.41 22.17 21.78 18.76
Current asset turnover
ratio 3.12 2.86 2.70 2.71 2.65
Debtors turnover ratio 16.46 17.75 16.74 15.52 14.73
The asset turnover ratio for Singtel has been computed for the financial years of 2012
to 2016. The asset turnover ratio reflects a decreasing trend. This means that the capacity of
the company to derive returns or generate sales from its assets has decreased over the years.
The asset turnover ratio of the competitors also signifies a decreasing trend indicating that

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Singtel has been performing at par with the industry standards (Weil, Schipper and Francis
2013). The inventory turnover ratio for Singtel represents a fluctuating trend where as the
inventory turnover ratio of the industry reflects a decreasing trend over the years. This means
that the capacity of the company to utilize its inventory has been much better as per industry
standards. The current asset turnover ratio of Singtel represents greater ability of the company
to derive returns from the sale of the current assets in comparison to the current asset turnover
ratio of the industry. The debtors turnover ratio of Singtel represent a much higher rate than
that of the competitor firm signifying the fact that the time cycle within which Singtel
receives the due amount from its debtors is much more frequent compared to the competitor
firm (Mohr 2017).
7. Other ratios
Singtel -
Ratio Formula 2012 2013 2014 2015 2016
Return on investment Net profit/investment 0.54 0.26 0.26 0.27 0.26
Return on asset Sales/Total assets 1.35 0.91 0.82 0.82 0.78
Return on equity Net income/shareholders
equity 0.41 0.22 0.22 0.22 0.21
2012 2013 2014 2015 2016
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Return on investment
Return on asset
Return on equity

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For Starhub -
Ratio 2012 2013 2014 2015 2016
Return on investment 0.41 0.51 0.43 0.45 0.35
Return on asset 0.20 0.20 0.19 0.19 0.17
Return on equity 13.14 58.74 31.98 22.12 17.58
The return on asset represents the capability of a firm to derive optimum returns from
the assets of the company. The return on assets for Singtel represents a uniform trend from
the financial year of 2013. However, in the financial year of 2012 the return on assets
represents an unprecedented higher value indicating that the company had been able to derive
much higher returns in that particular year. The return on assets of the competitive firm
reflect a decreasing trend indicating the fact that Singtel had been able to obtain more returns
from its assets in comparison to the competitor firm (Jones and Godday 2015).
The return on investment for Singtel represents a stable graph except the financial
year of 2012 that represents an abruptly higher value of 0.54. However, it can be evidently
concluded from the financial data that the company had been deriving optimum returns from
the investments in comparison to its competitor firm.
The return on equity represents the portion of the total profit that has been generated
by utilizing the money that the shareholders have invested in business. The return on equity
of the company has been poorer in comparison to the industry standards (Lundholm and
Sloan 2013).
8. Asset value per share and market share price
Net asset per share of the company for the year ended 31st March 2016 is 157 cents.
Current market price of the share is 3.61

12FINANCIAL DECISION MAKING
On the other hand, the market price of Strait Times Index (STI) is 3592.08
1 year’s range for Singtel share is 3.57 to 4.02. Therefore, the return =
(4.02-3.57)/3.57 = 12.61%. on the other hand the 1 year range for Strait Times Index is
3,008.02 to 3,611.69. Therefore, the return is (3611.69-3008.02)/3008.02 = 20.07%. Thus,
the return of Singtel share is not linear with STI and is considerable low as compared to the
return of STI.
9. Non-financial parameters
The non-financial parameter for Singtel that has been analyzed in this particular study
are as follows:
SWOT Analysis
 Strengths – The strengths of Singtel can be identified from the market position it
enjoys in Singapore. The entity is the market leader in the broadband and mobile
markets in Singapore. It was one of the earlier companies to introduce nationwide 4G
coverage with a network speed of up to 150 Mbps.
 Weaknesses - The Company had been acquiring companies, which turned out to be
bad acquisition practices.
 Opportunities – Singtel can explore its opportunities in the international market
segments.
 Threats – The particular threats that Singtel has been facing are the impacts that the
regulatory changes may have on the business operations.
CSR activities

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An instance of the CSR activities that have been conducted by the organization of
Singtel is that the company gives a day of voluntary service leave per year to its employees
for performing charity work (Jaber 2015).
Sustainable activity
A single sustainable activity that has been undertaken by the organization of Singtel is
that Singtel has been a signatory of the UN Global Compact since the year of 2007 and has
contributed significantly in the fields of labour, environment and human rights (Bull 2016).
10. Comparative analysis
The strengths of StarHub Limited are decreased costs related to labour. The
weaknesses of the company include business operation in a highly competitive market and
higher degree of investment in research and development. The opportunities of the company
include growing demand and new good acquisitions. The threats of the company include
technological problems, increasing costs and tax changes. An instance of the sustainability
activities undertaken by the company is the promotion of sustained and economic growth of
the company. A CSR activity of the company includes the maintenance of a fund for
empowering the less privileged in Singapore (Heng 2014).
Section B
Answer to Question 1
The acquisition that has been processed by Singtel, in the financial year of 2017 has
been the acquisition of the ad tech company, Turn by Amobee, the ad tech division of Singtel
for the particular value of $310 million. The particular acquisition facilitates the
strengthening of the ad tech division of Singtel. The acquisition of Turn has helped the

14FINANCIAL DECISION MAKING
company in boosting its capabilities in regards to ad tech. The scope of ad tech had moved
beyond mobile phones and the potential customer base of the company across Europe and
North America has increased. Thus, the particular acquisition by Singtel has been beneficial
for business (Business Insider, 2018).
Answer to Question 2
A particular incident that resulted in criticism of the brand value of the company is
that the publishing of the new advertisement slogan for the company, “Let’s make everyday
better”. The company had undergone the process of rebranding in the financial year of 2017.
The management of Singtel had introduced a new logo and the new slogan , “Let’s make
everyday better”. However, the critics had pointed out a grammatical error in the slogan of
the corporate entity. The particular grammatical error was that a “the” was missing before the
word “everyday” in the slogan (Hicks and Hicks, 2018).
Answer to Question 3
The directors of the company are Simon Israel, Chua Sock Koong, Venky Ganesan,
Low Check Kian, Peter Mason Am, Cristina Ong, Peter Ong, Teo Swee Lian and Bobby
Chin.
The directors of the company (executive) are as follows:
 Chua Sock Koong – She is an executive non-independent director of the company,
and is a board member of Bharti Airtel Limited and Bharti Telecom Limited and
subsidiaries of the Singtel group
The non-executive directors of the company are as follows:

15FINANCIAL DECISION MAKING
 Simon Israel – He is a non-executive director and is the chairman of Singapore Post
Limited.
 Venky Ganesan - He is a non-executive director and is one of the managing partners
of Menlo Ventures.
 Low Check Kian - He is a non-executive director and is a director of Cluny Park
Capital.
 Peter Mason Am - He is a non-executive director and is a chairman of AusNet
Services Limited.
 Christina Ong - She is a non-executive director and is a co-chairman and senior
partner of Allen and Gledhill LLP.
 Peter Ong - He is a non-executive director and is the head of Singapore’s Civil
Service and Permanent Secretary
 Teo Swee Lian - She is a non-executive director and independent director of AIA
group Limited
 Bobby Chin - He is a non-executive director and is a member of the Council of
Presidential Advisers
Answer to Question 4
The strategic financial goal and vision of the company shall be to reduce the operating
expenses to achieve higher level of income. Further, if the additional finance is required by
the company it shall raise through debt instead of equity (Grinblatt and Titman 2016).
Conclusion
It is concluded from the above analysis and discussion that the net profit ratio and
return on assets of Singtel is high as compared to the industry average for the last 5 years
However, the operating ratios of the company for all the 5 years were lower as compared to

16FINANCIAL DECISION MAKING
the industry average. Therefore, the company shall control the operating expenses to achieve
the operating ratio as per the industry average. Further, the debt component of the company
in the capital structure is significantly low as compared to the equity component. Therefore, if
the additional finance is required by the company it shall raise through debt instead of equity
to maintain the debt equity ratio.

17FINANCIAL DECISION MAKING
References
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management, corporate performance, and financial constraints. Journal of Business
Research, 67(3), pp.332-338.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C.,
Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E., 2016. Strengths,
weaknesses, opportunities and threats: A SWOT analysis of the ecosystem services
framework. Ecosystem services, 17, pp.99-111.
Business Insider. (2018). Ad tech firm Turn acquired by Singapore telco
Singtel for $310 million. [online] Available at:
https://www.businessinsider.in/Ad-tech-firm-Turn-acquired-by-Singapore-
telco-Singtel-for-310-million/articleshow/57309124.cms [Accessed 24 Jan.
2018].
Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios:
A decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.
Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy.
Heng, H.K., 2014. The Marketing of the F1 SingTel Singapore Grand Prix. Strategies in
Sports Marketing: Technologies and Emerging Trends, pp.29-40.
Hicks, R. and Hicks, R. (2018). Singtel draws criticism over slogan
grammar - Mumbrella Asia. [online] Mumbrella Asia. Available at:

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https://www.mumbrella.asia/2015/01/singtel-draws-criticism-slogan-
grammar [Accessed 24 Jan. 2018].
Ho, W.H., Koenig, K.L. and Quek, L.S., 2014. Formula One Night Race in Singapore: A 4-
Year Analysis of a Planned Mass Gathering. Prehospital and disaster medicine, 29(5),
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August. Traffic measurement and route recommendation system for mass rapid transit (mrt).
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Investment Decisions: A Study of Selected Organizations in Delta State. Journal of Policy
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Singtel.com., 2018. Singtel.com. [online] Available at: https://www.singtel.com/ [Accessed
24 Jan. 2018].
Starhub.com., 2018. Personal Mobile Phones, Broadband, TV, Voice and Rewards | StarHub.
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John Wiley & Sons.

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Appendix
Profitability ratio
Ratio 2012 2013 2014 2015 2016
Gross profit ratio 0.28 0.29 0.31 0.30 0.30
Net profit ratio 0.21 0.19 0.22 0.22 0.23
Return on Assets 1.35 0.91 0.82 0.82 0.78
Operating ratio 0.17 0.17 0.19 0.17 0.17
Dividend ratio
Ratio 2012 2013 2014 2015 2016
Dividend Yield ratio 5.37 5.42 4.49 5.21 4.52
Dividend payout ratio 1.03 0.72 0.73 0.71 0.72
Price earnings ratio 0.12 0.14 0.16 0.14 0.16
Earnings per share ratio 25.04 22.02 22.92 23.73 24.29
Stability and Liquidity
ratio
Ratio 2012 2013 2014 2015 2016
Debt to equity ratio 0.41 0.25 0.22 0.20 0.19
Current ratio 1.20 1.13 1.38 1.61 1.78
Quick ratio 1.18 1.12 1.37 1.60 1.76
Interest coverage ratio 11.79 12.84 14.81 15.13 13.48
Efficiency ratio
Ratio 2012 2013 2014 2015 2016
Asset turnover ratio 1.35 0.91 0.82 0.82 0.78
Inventory turnover ratio 605.32 656.43 864.01 642.65 788.89
Current asset turnover
ratio 6.60 7.07 6.21 6.67 5.39
Debtors turnover ratio 7.35 7.66 6.52 7.05 5.60
Other ratios
Ratio 2012 2013 2014 2015 2016
Return on investment 0.54 0.26 0.26 0.27 0.26
Return on asset 1.35 0.91 0.82 0.82 0.78
Return on equity 0.41 0.22 0.22 0.22 0.21

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