There are 100 marks available for this assignment. This assignment is worth 10% of your course grade.
For Assignment 1, 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. For the required ratios, you must include the ratios and your calculations, rather than just the answers. 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. So you should have 1 pdf file plus 1 Excel file for your submission.
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. You will submit 1 pdf file plus 1 Excel file for this assignment.
Instructions
Complete the following steps:
- Step 1: Download the 2021 Annual Report from the company’s website. From the Telus homepage, click “About Us,” and then click “Investor Relations.” You will then be able to find the 2021 Annual Report. Within the Annual Report, locate the Consolidated Financial Statements. Start looking on page 138. Transfer this data to Excel.
- Step 2: Calculate the following ratios for the 2021 and 2020 fiscal years. You must clearly show the calculations and should not download pre-calculated ratios from another source. Once your ratios are complete, please copy the ratios from your spreadsheet to your document. Use a basic copy/paste so that you can get feedback on your answers. Do not copy as a picture. (35 marks)
- Current ratio
- Quick ratio
- Times interest earned
- Accounts receivable turnover
- Average collection period
- Asset turnover
- Gross profit margin
- Net profit margin
- Total debt ratio
- Return on assets
- Return on equity
- Step 3: Perform a three-stage DuPont analysis. Once you have calculated the DuPont ratio, provide a written analysis of each section. Tie your analysis into specific accounts and changes from one year to the next. Note that stating “The ratio increased” is not an analysis. (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 at trends over time. Again, be specific. Set up your analysis under the categories of solvency, liquidity, profitability, and asset management. Within each category, discuss why each ratio improved or worsened. (30 marks)
- Step 5: 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? (20 marks)