INMARSAT

Inmarsat

Inmarsat

Introduction

In business, control and planning are two important aspects for the success of organization. Most of the business plan emerges from guess work that is taken out from business control and strategy by having solid financial analysis of that plan. That is why, analysis of financial statements of business and management and data are considered important for business that is currently operating. Financial statement analysis is important in analyzing and comparing the financial position of the company. It also helps in identifying misstatements in financial statement of the company (Fridson & Alvarez, 2011, pp. 3-11).

Discussion

Part A

Inmarsat

Inmarsat was established in 1979 to make sure that ships are consistently in touch with the shore irrespective of distance among shore and the ship in the sea. Now a day the clientele of Inmarsat is spread over various sectors. However, customers of Inmarsat commonly belong to the business or organization that needs to communicate in the areas where telecommunication in that area is not provided, or unreliable in nature.

Along with merchant ships, customers of Inmarsat include airline industry, governments, broadcast media, mining industry, agencies of humanitarian aid and oil and gas industry. Customer of Inmarsat is connected with 10 satellites with different equipments, which include satellite phones and internet devices of notebook size and it also includes special terminal antennas which are fitted on ships, road vehicle and aircraft. It is to mention here that Inmarsat is the largest satellite communication portfolio provider and related value added service in the market. Since 1999, rapid growth in the business transformed Inmarsat into private company from intergovernmental organization.

Inmarsat was floated on London stock exchange in 2005. Till date, Inmarsat expanded vertically and horizontally and setup its offices in more than 60 locations in more than 40 counties. Currently Inmarsat employs more than 1,600 employees (Inmarsat, 2013, n.d.).

Profit, earning and dividends

Profitability ratios are referred to the business ability in generating earning in relation with equity, assets and sales of the business. There are various ratios that are used to asses the performance of the business. Most commonly used ratios include return on assets (ROA), return on capital employed (ROCE), Operating profit margin, net profit margin, gross profit margin, earnings before interest and taxes (EBIT) and return on equity (ROE) (Wahlen et al.2011, pp. 246-290). Detailed analysis of profitability ratio is given below.

Return on assets (ROA)

Return on assets refers to the profit percentage that business earn on it total resources or assets of the company. It is an important ratio to evaluate the amount of profit generated by business per dollar of its assets. Formula for computing ROA is as follows:

Computation of ROA for Inmarsat for past 3 years is as follows:

December-12

December-11

December-10

Profit for the year

$ 217,400,000

$ 249,500,000

$ 261,100,000

Total assets

$ 3,753,000,000

$ 3,409,100,000

$ 3,158,000,000

ROA

0.058

0.073

0.083

It is noted that return on assets is decreasing as compared to previous years. This means that profit generated by the Inmarsat per dollar of assets is ...