Consider the annual reports of Vodafone and BT for 2021 and 2022. Using the fin

Consider the annual reports of Vodafone and BT for 2021 and 2022.
Using the financial ratios, presented below, you are required to
1) critically evaluate the financial statements individually across the 2-year period and cross-sectionally (i.e. company by company) and identify their main strengths and weaknesses, and
2) make recommendations for future improvement.
Note: you are expected to comment on the change of company financial performance (income statement) and position (balance sheet) during the 2-year period of examination by looking at the main accounts and how they have changed (information may be taken from the notes to the accounts).

Profitability Ratios

Return on capital employed

Net profit before interest and taxation x 100
Share capital + Reserves + Long-term loans

Efficiency Ratios

Average settlement period for debtors

Trade debtors x 365
Credit sales

Average settlement period for creditors

Trade creditors x 365
Credit purchases

Liquidity Ratios

Current ratio

Current assets
Current liabilities (creditors due within one year)

Gearing Ratios

Gearing ratio

Long-term liabilities x 100
Share capital + Reserves + Long-term liabilities

Investment Ratios

Dividend yield ratio

Dividend per share x 100
Market value per share

Price/earnings ratio (P/E)

Market value per share
Earnings per share

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