Executive Summary This report intends to provide an overview of Telstra Corporation Limited and conduct analysis of the several aspects of the financial statements of the company. This shall include various items from the cash flow statements, balance sheets and the profit and loss account for the last six years i. The report intends to address the significant areas of performance by the company by conducting ratio analysis and itemized study of important items and thereby focusing on the areas to be improved by the company. External influences that do not cover the financial aspect but may affect the investor’s decision have been also identified and discussed.
These include the market rating given by various credit rating agencies and the study of the industry in which the company belongs because the company does not function as an independent entity and its success and failure depends on lots of factors. Contents Executive Summary. 4 Analysis of Income Statement. Error! Bookmark not defined.
Analysis of Balance Sheet. Error! Bookmark not defined. Analysis of Cash Flow Statement. Error! Bookmark not defined.
Analysis of Ratios. Error! Bookmark not defined. Error! Bookmark not defined. 15 Appendix A-1 Ratio calculation.
15 Appendix A-2 Ratio calculation. 16 Appendix B Profit and loss account. 17 Appendix C Balance sheet. 18 Appendix D Cash flow statements.
19 Appendix E- Solvency ratio calculation………….………………………………………………………………………………… 17 Appendix F Revenue expenses. 218 Introduction Telstra Corporation Limited is the biggest market player in mobile telecom in Australia (Telstra 2016). The company was founded in the year 1975. The company privatized in the years of 1997, 1999 and the year 2006 in three stages.
The company originated from the Australia post as one of the government departments. It operates mobile towers, pay television, internet access etc. Currently, Andy Penn is the Chief Executive Officer of the company. Warwick Bray is the Chief Financial Officer of the company.
As of 2015, the total revenue of the company stands at $26.6 billion and the profit after tax stands at $4. Telstra has been voted as the most respected company in the year of 2014 by a leading Australian newspaper. Telstra in order to win back its market share has separately allocated a huge sum of money which it intends to spend for the said purpose. Analysis of Income Statement • Operating revenue: The operating revenue of the company has remained almost consistent over the past 6 years.
Minimal growth is present in the revenue. Therefore, it can be stated that the company has tried to retain its customers in the given years but has not been able to attract new customers. This item was selected as the revenue is the main resource of the organization’s survival (Telstra 2016). Following chart shows the revenue and its growth year wise: 26 25.2 Year 2012 Year 2013 25 Year 2014 24.4 1 Depreciation charged to the profit and loss account has been on a reducing trend for the past 6 years which implies that the company has not invested any funds in the procurement of capital assets.
This can be attributable to the nature of industry in which it is involved. However, it can also be commented that the company has not expanded its operations for these years and so, it idi not require any further capital asset. We can study the following chart 3.6 Depriciation ($ billions) • Operating Expense: We can observe that the operating expense has also remained almost consistent in the past 6 years. The main reason behind such consistency would be attributable to the consistent operating revenue.
This can also be seen as a positive factor because it would ensure that the operating margin has not reduced in the years. These expenses are directly attributable to operations therefore, it can be stated that the company is operating efficiently even with consistent revenue.We may look at the following chart: 16 15.5 Year 2012 Year 2013 14 Year 2014 Year 2015 13.5 13 1 Analysis of Balance Sheet • Current Investments: The investments have significantly reduced over the period of 6 years. This shows that the company has relied less on current investments for the income.