Analyst Management Summary Report of Vodafone UK Essay

Analyst Management Summary Report of Vodafone UK - Essay Example Such a thorough assessment and comparative study with one of its peers, namely France Telecom-Orange, would enable one to recommend whether or not to make an investment of ?1Million in the stocks of Vodafone. Company Profile Vodafone is a global telecommunication company, operating in above 30 nations across the world and with more than 404 million customers (Vodafone, 2012). The company is listed in the London Stock Exchange and has 49,180.6 million shares outstanding (Bloomberg, 2012). ... Additionally, the company had been continuously giving out dividends to its shareholders since the last four years. Financial Ratio Analysis The liquidity position of an organization can be evaluated with the assistance of its current ratio and quick ratio. These ratios establish the organization’s capacity to meet its short-term liabilities. The current ratio can be determined as the ratio of the current assets to the current liabilities of the company, while the quick ratio is computed by dividing the quick assets by the current liabilities. It should be noted that the quick asset of an organization cosist of its cash, receivables and short term marketable investments (Brigham & Ehrhardt, 2010). The liquidity ratios of Vodafone are as follows: Year Mar-11 Mar-12 Current Ratio 0.63 0.83 Quick Ratio 0.61 0.81 The analysis of a company’s capability to generate cost-effective sales by means of its resources can be assessed by means of its profitability ratios. These ratio s include the gross profit margin, the net profit margin as well as the returns on equity and assets of the company. The gross profit margin of a firm is the ratio of its gross profit to revenue, while net profit margin is the ratio of net profit to revenue. Then again, the return on equity (ROE) of a company is the value of net income as a percentage of total shareholders’ equity while the return on asset is the value of net income as a percentage of its total assets (Brigham & Ehrhardt, 2010). The profitability ratios of Vodafone are as follows: Year Mar-11 Mar-12 Gross Profit Margin 32.84% 32.04% Net Profit Margin 17.37% 14.99% Return on Equity 9.10% 9.04% Return on Asset 5.27% 4.98% The solvency position of a company can be determined by means of