TMA 03: Financial management Remember to check the Assessment guidance to see an overview of assessment on B716, practical information about your TMAs and assessment criteria. In this TMA you are asked to conduct a financial analysis of a listed European telecoms company – Vodafone Group plc and its subsidiaries, which together comprise the Vodafone Group – at its financial year end of 31 March 2016. Task 1: Finding financial information and calculating financial ratios (33 marks) Find appropriate financial information from Vodafone Group’s consolidated financial statements and calculate the following ratios for the three financial years ending 31 March 2014, 2015 and 2016: return on capital employed (ROCE) return on sales (ROS) asset utilisation ratio (AUR) gross profit margin current and quick ratios gearing interest cover inventory days trade and other receivables days trade and other payables days return on equity (ROE). Show clearly all steps needed to calculate your results, including ratio definition and input values. (3 marks for each correctly defined and calculated set of ratios.) Task 2: Financial analysis (67 marks) [no more than 2000 words] Conduct a financial analysis of Vodafone Group using the financial ratios you have calculated in Task 1. Describe what you observe about Vodafone Group’s financial performance over the last three financial years ending 31 March 2016. Compare and contrast Vodafone Group’s financial performance against that of the Deutsche Telekom AG and its subsidiaries (which together comprise the DT Group) and the telecoms industry. Explain possible causes for the differences and similarities in performance, and discuss possible implications for Vodafone Group. (57 marks) Your analysis should specifically discuss whether, according to its financial performance, Vodafone Group should be concerned about DT Group and its other telecom industry competitors. (10 marks) Remember that your task is to analyse and comment on the financial performance of Vodafone Group, DT Group and the telecoms industry. You are not asked to describe, comment or speculate on any of the organisation’s grand marketing strategies – you will have plenty of opportunity to consider marketing and strategy later in your MBA studies. To help you in your task, you are provided with supplementary financial information as an Excel spreadsheet in TMA 03 and additional financial information on the B716 website. The supplementary information provides financial ratio analysis of the consolidated financial accounts of DT Group and the telecoms industry for the years ending 31 December 2013, 2014 and 2015. Vodafone Group has a financial year end of 31 March. DT Group has a financial year end of 31 December. You should compare accounts and ratios for the closest match of financial year ends. Vodafone Group DT Group March 2014 December 2013 March 2015 December 2014 March 2016 December 2015 If you use information that is not included in Vodafone Group’s or DT Group’s financial statements but elsewhere in the annual report and accounts (management discussion and analysis, or notes to the accounts) please reference the exact location in the annual report and accounts. All other external sources must be referenced appropriately.
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