you will be performing some financial statement analyses on a publicly traded company: Telus. You are required to follow the steps outlined below and produce a report in the form of an executive summary, The report should stand on its own, so you must include an Excel spreadsheet where all the calculations are available rather than just the answers, but only as a reference tool for the text submitted in a pdf document.
There are 100 marks available for this assignment. See the steps below for mark distribution. Make sure to clearly explain your work so that your Open Learning Faculty Member can give feedback. You may get partial marks, even if your final answer is incorrect.
Step 1: Download the 2019 Annual Report from the company’s website. Since some companies issue financials in both Canadian and US dollars following different accounting rules (e.g., IFRS vs. US-GAAP), make sure to download the statements using Canadian dollars. Transfer the company’s consolidated balance sheets and consolidated statements of operations (i.e., income statement) into an Excel workbook. Note that the annual is a bit tough to read, especially if you haven’t taken an accounting course in a while. You can find the numbers that you need in the consolidated financial statements starting on page 124.
Step 2: Calculate the following ratios for the past 2 fiscal years. You must clearly show the calculations in your spreadsheet and should not download pre-calculated ratios from another source.
Days of inventory on hand
Accounts receivable turnover
Average collection period
Gross profit margin
Net profit margin
Total debt ratio
Return on assets
Return on equity
Interest coverage ratio
Step 3: Perform a 3-stage DuPont analysis. Note that this needs appropriate analysis, not just a calculation. (15 marks)
Step 4: Comment on any areas of strength or weakness of the company, based on your results of Steps 2 and 3 above. Make sure to look, not just at absolute levels, but also trends over time in solvency, liquidity, profitability, and asset management ratios
Step 5: Compare your results with the management discussion and analysis in the annual report. Examine any differences between their comments and your analysis. You will be assessed on correct use of financial statement analysis tools from the course material, providing thoughtful analysis that draws on the theories discussed in the course as well as links to what is happening with Telus in the current market.
Step 6: Explain whether there would be any difference to your analysis if you were an investor or if you were the CFO. How would the data quality differ in those two roles?
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