Strategic Changes and Firm Performance Part 2

Telecom Limited Company

 

Strategic Changes and Firm Performance – Telecom Limited Company Part 2

US$2,202 million. It increased to US$2,851 million in 2013 and US$3,442 million. Strategic Changes and Firm Performance Part 2 This is mainly because the tones of iron ore mined by the firm also increased.

 

3.1 Balance Sheet Analysis

Balance sheet analysis shows an in-depth understanding of the assets, liabilities and equity of a firm through analysis of a financial report. Below are three of the many items in the balance sheet of TPG:

  • Inventories
  • Trade and other payables
  • Deferred Income

A three year comparison of the above items are analysed and interpreted below:

Strategic Changes

3.1.1 Inventories

TPG has a warehouse where they store their stocks and materials which are work in progress (semi-finished goods) and finished goods. These are mostly the iron ore which are in stock.

Year 2012

US$ Million

2013

US$ Million

2014

US$ Million

Inventories 617 961 1,467

Table 3

Analysing from table 3,it is very clear that TPG has high stock of semi – finished and finished goods at stock. The iron ore stockpiles incur a lot of expenses and loose value overtime because most of the goods depreciates given the slow turnover TPG is facing currently. Depreciation broke it ranks and reached US$3,784 million. That is not a good composure for the firm. They also incurred much cost keeping the goods.

3.1.2Property, plant and equipment

Property, plant and equipment change from a recoverable amount of assets.

Year 2012

US$ Million

2013

US$ Million

2014

US$ Million

Property, Plant and

Equipment

11,357

 

17,159 18,068

Table 4

Strategic Changes and Firm Performance – Telecom Limited Company Part 2

Table 4 shows a progressive increase of the costs of property, plant and equipment of TPG from 2012 to 2014. This is because there were various transfers of assets made which were under the intangible assets, equipments, plant and property. These items were evaluated, developed and explored. Also there was a variation in the various past three years because the value of depreciation, disposals, capitalized interest and changes in rehabilitation estimate and restoration thus, a change in the costs of the property, plant and equipment.

3.1.3 Deferred Income

Deferred income signifies payments received but not realised at the end of the reporting period. It is recognised as revenue when the goods are services are finally delivered and offered. TPG’s deferred income shows that it has been performing poorly in this area since the total amount keeps increasing yearly. From the accounting year 2012 to 2013, it increased from $5million to US$331million. It moved higher to US$936 in 2014. Since deferred income is not regarded as revenue until goods n services are delivered and offered, it does not show a good position of the company in this area.

4.1 Cash Flow Statement

A cash flow statement is one of the most important financial statements in business. A cash flow statement listsinflows and outflows of the firm. TPG receives its flow of cash from operating activities, investing activities and financing activities. Listed below are three cash flow statement items from TPG:

  • Proceeds from disposal of plant and equipment and partial sale of jointly controlled assets
  • Repayments of borrowings and finance leases
  • Dividends paid

They are analysed and interpreted below:

4.1.1 Proceeds From Disposal of Plant and Equipment and Partial Sale of Jointly Controlled Assets

Deducing from the consolidated cash flow statement of TPG, there has been a perpetual increase of proceeds that it gains from disposing plants and equipments and a partial sale of jointly controlled assets. For instance in the year 2012, FMG made proceeds of US$71 Million. This amount increased to US$155 million and US$262million for the years 2013 and

 

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