Executive summaryTelstra Corporation Limited is Australia's major telecommunication and a Media corporation, the business currently is wholly privatized individual and has been undergoing a transformation agenda to grow to be more sales and marketing Outsourced service. The company has long history in Australia starting together with Australian post as a government division. At present, the company is entirely Private Corporation as well as has been drastic changes in its administration in an effort on expanding the business growth. Description of business activitiesThe business deals in creating and operating telecommunications system as well as markets voice, mobile, internet right of entry, and pay TV. The company has a long past in Australia, commencing together with Australia Post as a state section.
Nevertheless, the company is facing competition from Optus since 1990.Optus is Australia’s second; largest telecommunication corporation (Damodaran, 2012). A number of growing providers are posing threat to Telstra limited in terms of growth and performance. The company upholds ownership of the fixed line telephone network and also the pay television as well as data cable network foxtel. Other business providing fixe line services ought to deal with Telstra as a result, apart from Optus, transact as well as other business that have installed their own infrastructure.
In early 2010, the company announced a $1billion fighting funds to be employed in a concentrated effort to control the market portion in major sections. The effort deems to have benefit with strong revenue growth realized in February 2011. The customer service revival is part of the company new plans. The business announced its objectives as that of providing good customer services to be significant to everything that the business involves itself in.
RatiosProfitabilityProfitability 20142015Net Margin % (Net profit/sales)(11291/25119)=0.45(10,902/25845)=0.42Return on Equity=(Net income/equity)(11291/39360=0.29(10,902/40445)=0.27The net profit margin and the return on equity are decline from the year 2014. This is an indication that the company is making low sales turnover and consequently, it is unable to repay its equity debt due to adequate funds from retained earnings. ▪ Asset efficiencyAsset efficiency20142015Debtors turnover (Sales/debtors)(11291/4172)=2.7(10,902/4721)=2.3Inventory turnover (COGS/M. inventory)6485/362=17.91(6870/491)=14From the above ratio analysis, it can be observed that both the debtors turnover and inventory turnover is declining. This implies that the company business situation is depicting a decline in value of revenue and consequently a threat to business performance of the company. ▪ LiquidityLiquidity20142015Current ratio(Current/current liability)(11291/4172)=2.7(10,902/4721)=2.3Working capital 9Current asset-current liability)10438/8684=1.2(6970/8129)=0.86▪ Capital structureCapital structure20142015Debt to equity ratio(25538/39360)=0.65(26342/40445)=0.65Financial leverage10438/8684=1.2(6970/8129)=0.86From the above data analysis, it can be observed that the debt to equity ratio is remains constant which is an indication that the company source fiancé didn’t change in each financial period, However, the financial leverage declined from 2014 which implies that the risk of the company source of capital finance is risky since, the company will be at risk of meeting its long-term and shot obligation as and when they fall due. ▪ Market performanceMarket performance20142015Price earnings ratio(common stock price/Net income per share)1621.9Dividend yield8.33.9The price earnings ratio and the dividend yield is decline as well and consequently it implies that the company’s shareholders will not be paid dividend since, there is a not sufficient fund as observed by the decline in net profit margin which has an impact on dividend yield.
The decline in price earnings ratio is an indication that the company stock price is losing value in the stock market which is due to a decline in the company’s performance as observed from the decline in net profit margin (Eugene Brigham, 2011).