Strategic Changes and Firm Performance – Telecom Limited Company Part 4

Equity Leverage of TPG

Commentary:

Strategic Changes and Firm Performance – Telecom Limited Company  Part 4 From the appendix, it is obvious that the common equity leverage of TPG is not strong since it has not been really reducing at a greater value. This means that TPG borrows a lot of debt to pay its staff and cover other operating expenses.

 

5.1.3 Profitability ratio

This ratio analysis shows the percentage at which a company’s profitability on a historical basis is compared to the previous years or a different company. Below are some of the items identified and analysed from TPG’s income statement:

  • Return on asset ratio
  • Return on equity ratio

    Strategic Changes and Firm Performance

5.1.3.1 Return on asset ratio

This ratio measures how efficient management uses assets to generate earnings. A higher number of ratios here is preferable.

Strategic Changes and Firm Performance – Telecom Limited Company Part 4

Commentary:

From the appendix, it is clear that ROA decreased in 2013 but increased in the year 2014. This shows that the company did well in the year 2014 more than all the other years.

5.1.3.2 Return on equity ratio

In the same way, a higher figure here is preferable

Commentary:

Deducing from the appendix, it is obvious that ROE decreased from 0.41 to 0.33 in 2013 and increased slightly to 0.36. This means that the ROE in 2014 was satisfactory than that of 2013.

 

5.1.4 Operation efficiency ratios

These ratios depicts how well a company turns its assets into revenue as well as how efficiently a company converts its sales into cash. The items chosen under this type of ratio are:

  • Fixed asset turnover
  • Sales to revenue per employee

5.1.4.1 Fixed asset turnover

A high value here demonstrates the company’s strength.

Strategic Changes and Firm Performance – Telecom Limited Company Part 4

Commentary:

From the appendix, it is very clear that fixed asset turn over dropped in the 2013 and increased in the year 2014. This is favorable for the current financial position of TPG. It shows improvement in the sale of fixed assets.

5.1.4.2 Sales/Revenue per Employee

This shows how well employees are able to generate slaes in the business. A higher figure here will demonstrate the strength of the firm.

Commentary:

From the appendix, TPG has been doing very well in this area since it has maintained high values of ratios throughout.

 

6.1 Other relevant factors

6.1.1 Market share

Fortescue has assuredly established itself as one of the world’s leaders in iron ore production and sea-borne trading. Fortescue controls a large market share both in Australia and the world.

Fortescue’s dwellings are located all through the resource rich Pilbara region of Western Australia and in such close nearness to the world’s major markets of China and Asia, making the Pilbara extensively viewed as the world’s best address for iron ore.

6.1.2 The Pricing of iron ore

Fortescue presumes iron ore to trade in the range of $US110 to $130 per tonne for the rest of the year, iron ore price is expected to range between $US139 and $US140 a tonne for the short term, moving to $US120-$US130 a tonne in the future. FMG has some fluctuations and in the short term – they see this sort of price level of $US139, $US140 a tonne continuing because there are very low iron ore stocks.

Conclusion

 

 

 

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