FINANCIAL ANALYSIS

Financial Analysis of the Company



Financial Analysis of the Company

Introduction

There is a need to conduct a financial analysis of the company. The company must be based in UK and it requires an analysis for two years like 2011 and 2012. The company that has been selected for the assignment is Vodafone Plc Company. There are going to be different questions that would be addressed step by step. All the questions will require an extensive calculation and the interpretation of the data. Therefore, all the issues related to the financial analysis of the data will be discussed in detail.

Discussion

Task One

In the first task, the task is to calculate and interpret the large number of accounting ratios that would be utilized from the Annual Report of the Vodafone Company Plc. There are going to be several ratios that would be calculated for the company. The five ratios that would be used for the research are ROCE, Current or Quick, Gearing, Interest Cover and Dividend yield. All the five ratios would be calculated on step to step to basis. These ratios are important in defining the position of the business. The ratios assist the financial position of the company. It also demonstrates the liquidity position of the business. In the next sections, all the ratios will be calculated in the topic.

ROCE (2011)

= NOPAT/Capital Employed

= 7,003/139,576

= 5%

Current Ratio (2011)

= Current Assets/ Current Liabilities

= 151,220/27,075

= 5.58: 1

Gearing Ratio

= 87,561/151,220

= 0.57: 1

Interest Cover Ratio

= 429/ 45,884

= 9%

ROCE (2012) = NOPAT/Capital Employed

= 7,870/151,220

= 5.2%

Current Ratio (2012)

= Current Assets/ Current Liabilities

= 139,576/24,025

= 5.80: 1

Gearing Ratio

= 78,202/139,576

= 0.56: 1

Interest Cover Ratio

= 1,932/ 46,417 = 4%

The ROCE ratio of the Vodafone Company was 5% in the year 2011. However, the ration increased in the following year 2012 with a percentage known as 5.2%. The increase in the value showed that the company's revenues increased but not that much. The current ratio of the company was 5.58: 1 in the year 2011. The current ratio of organisation was 5.80: 1 in the year 2012. It was noticeable in the following year, which the current ratio of organisation increased because of the better position of cash reserves. This was a positive sign for the company. The gearing ratio of the company in the year 2011 was 0.57: 1. The gearing ratio of the company in the year 2012 was 0.56: 1. The value decreased but not that much as compare to the previous year figure. However, the gearing ratio reflected the overall financial position of the company which was not that strong. The last ratio that was covered in detail was the interest cover ratio. The interest cover ratio in the year 2011 was 9%. The ratio decreased further in the year 2012. The interest cover ratio was 4%. The interest cover figure denotes the percentage of the interest paid in comparison to the net profit amount. Therefore, this was the overall calculation and interpretation of the five ...