Telus Annual Report Analysis
TELUS Corporation （The company）
1. Based on your review of the most recent annual financial statements and notes only, briefly assess the company’s performance for this potential investor. (Analyze based on data from Financial reports P71, 73, 74)
By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature expense, net income and EPS in 2007 still increased 9.9% and 13.8% ($112.9 million and 46 cents) respectively from 2006. The income statement figures indicate that TELUS is profitable in 2007. On its balance sheet, TELUS had much lower current liabilities compared to 2006, which deceased 29% ($1095.3 million) mainly because the company made periodic instalment payments or repayment to reduce its current liabilities (P35-explanation of the change in balance). It proves that TELUS has no problem to pay off its loans. The company’s return on asset ratio, which is used to measure profitability, was increased to 18.7 % from 16.8% in 2006. Its return on common equity was also increased from 16.4% in 2006 to 18.1% in 2007. This indicates that income earned with the money invested by common shareholders was increased. In addition, TELUS’ dividend payout rate and ESP also increased, which shows a sign of good investment return (P8). On the consolidated cash flow statement, cash provided by operating activities increased by $368.0 million in 2007 compared to 2006. Cash flow from operation activities is the most important source of cash for business. The increase of this figure shows that TELUS has a good ability to generate
1. Based on your review of the most recent annual financial statements and notes only, briefly assess the company’s performance for this potential investor. (Analyze based on data from Financial reports P71, 73, 74)
By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature expense, net income and EPS in 2007 still increased 9.9% and 13.8% ($112.9 million and 46 cents) respectively from 2006. The income statement figures indicate that TELUS is profitable in 2007. On its balance sheet, TELUS had much lower current liabilities compared to 2006, which deceased 29% ($1095.3 million) mainly because the company made periodic instalment payments or repayment to reduce its current liabilities (P35-explanation of the change in balance). It proves that TELUS has no problem to pay off its loans. The company’s return on asset ratio, which is used to measure profitability, was increased to 18.7 % from 16.8% in 2006. Its return on common equity was also increased from 16.4% in 2006 to 18.1% in 2007. This indicates that income earned with the money invested by common shareholders was increased. In addition, TELUS’ dividend payout rate and ESP also increased, which shows a sign of good investment return (P8). On the consolidated cash flow statement, cash provided by operating activities increased by $368.0 million in 2007 compared to 2006. Cash flow from operation activities is the most important source of cash for business. The increase of this figure shows that TELUS has a good ability to generate