FINANCIAL ANALYSIS

Financial Analysis of Cable & Wireless Communication

Financial Analysis of Cable & Wireless Communication

Introduction

Financial analysis helps the investors and creditors to know about various important variables of the company. It gives insight about the how the company is performing and its creditworthiness. Investors and creditors are more inclined towards their returns & repayments respectively. They have to gauge the performance, repayment capacity and the ability of the company to pay rewards to investors before they take any material interest in the company. Financial analysis assists stakeholders to understand the company using ratio analysis & common-size statements i.e. horizontal & vertical analysis.

It helps company in taking long-term and even in short-term decisions. Because of such surmounting importance, it has become integral part of the planning & budgeting of the company. Therefore, financial analysis has significantly influenced the internal management of the organizations too. Financial analysis aids analysts and interested parties relatively easy about the financial health of the company rather swallowing big numbers aimlessly.

This report focuses on the calculating the financial ratios of cable and wireless communication. In addition, we are also going to study its dividend pattern, and value of a share with respect to net asset value and dividend valuation model.

Discussion

Overview of the Company

Cable & Wireless communication is a public limited multinational company; it is British by its origin. The company is operating successfully in the telecommunication industry and has it's headquarter in London. Cable & Wireless Communication (CWC) own a share of 49% in Monaco Telecom. Shares of CWC are successfully traded on the LSE (London Stock Exchange). The company was established on 1866 by Sir John Pader. Currently, Chairmen Richard lap throne and CEO Tony Rice are overlooking the operations of the company.

A) Financial Ratio Analysis of CWC

When it comes to analyze and evaluate information reported on the annual financial statement of a company, financial ratio analysis is considered as the most appropriate and fundamental method. It is a tool used by investors or other stakeholders in order to conduct a quantitative analysis of company's financials. Financial Ratios (accounting ratios) help investors in making comparative analysis of firm's performance in current year as compared to previous years. It also describes how a company is performing as compared to industry and other competitors. Financial ratios are commonly utilized by all kind of organizations in order to offer statistical information on the financial health of an organization. Financial Ratios enumerate different aspects of an organization and are an essential element of the financial statement analysis (Cable & Wireless Communication, 2013, Pp. 1-30).

Ratio analysis expresses the relationship among selected financial values stated in financial statements). A ratio basically depicts the relationship between one variable and other. Primarily, ratio analysis is conducted in order to identify the relationships among various accounts mentioned in financial statements. Ratio analysis help financial statement users to get clues & insight about the various significant items that may not be apparently witnessed

A.1. Liquidity Ratio

Liquidity ratio explains that how efficient a company is in paying ...