INTERNATIONAL ACCOUNTING AND FINANCE PROJECT (BT GROUP)
The B.T. Group plc is a multinational telecommunication company that is British international. The company got first founded as an electronic telegraph company in the year 1846. The got its current to headquarters ‘ location in London, the U.K. The other services offered by this company are the mobile service, I.T. services, broadband, and television subscription. This company has turned out to be the best service provider among around 180 countries in which it operates. The company also controls a sizable number of subsidiaries.
A company’s business model, subsequently, can preferably be perceived to be a simple form of yet focused as a representation of the company’s related activities, which alternatively gets to describes the value creation of the corporation mainly in the context of services, products, and information. Given the ultimate significance of Internet service and telecommunication infrastructures within a newly Internet-based logics of business, notably, there is some form of the positive relationship that shows between the subsequent growth of Internet service-based infrastructure and the value of GDP growth. This content paper generally elaborates on a business model for broadband and telecommunication service providers. The results outcome of this researched study focuses on raising the conditional awareness of the telecommunication executives as well as this business’s different aspects for new entrants.
The company’s general activities mainly revolve around service production to the consumers. The company is a telecommunication service based corporation that provides services to a wide range of clientele. The company has to sectors mainly, the broadband service provision and the telecommunication sector. Mostly, the most conventional way to meet customer type satisfaction, the company uses the general information and feedback offered by loyal clients as well as those complaining about better service, and the corporation has subsequently developed over the past five years with the help of subjected feedbacks from the consumers. The company being a telecommunication based service creator and provider, a variety of devices, gadgets, and services, gets incorporated into its worldwide service delivery.
The central aspect of the implemented business model rationally officiates the general workflow from the leadership to the corporation’s regular employees. The company has been able to capture the intended values in terms of service creation, which is the telecommunication services and other customized telecommunication appliances and gadgets. Among the main targets are the big and small businesses and homesteads for the broadband and a wide range of consumers for the telecommunication services, which incorporates international and local calls and messaging. The gadgets sold by the company include phones, sim cards, and customized mobile Wi-Fi, amongst other many. The interactive consumers may vary depending on the specific service required as per the consumer’s satisfaction. The digital world is the biggest consumer of the company’s facilities around the globe. The company has received minimal competition from competitors such as Vodacom and virgin group, because of its outstanding business model that mainly levers on the valued price and the ultimate costs incurred. The company generally buys internet services to sell it, making it the final profit. Subsequently, the company’s outstanding leadership team has effectively implemented a form of adaptive growth counters that have helped the corporation grow all through years and stay up to date. The company’s adaptive measures have helped the corporation counter both ready and upcoming market competition propelling it through success advantageously. Typically, the company’s general service structure corporation’s top creation for income, several features might affect the effective service delivery, for example, power availability for the power-intensive processes and the service availability from its primary provider, among others—the features of power dependence and service availability act limitations to the company’s effective value delivery.
Concurrent to most of the research, the subject set of consumers within the digital world mainly relies on the age aspect where youths outstand as the most significant broadband consumers. However, the old aged also participate in the same. Being a digitally based platform of service, digital marketing, and service delivery is an essential formation to meeting the corporation’s objectives in values delivery and creation.
Generally, the company gets driven by the acquisition of service to sell at a profit. The outstanding services in the broadband and telecommunication sectors have stood to be the key drivers to the company’s success in business. The efficiency and reliability of service also play a significant role as its priority is to deliver satisfactory service to its clientele. The business formation is in contracts hence guarantee protection in terms of delivery. The ultimate business model is the best suit for interactions with the online customers’ type where broadband is a vitality. In the coming time, online business platforms will overtake all the other business execution structures. Mainly, bandwidth-intensive businesses are the most significant revenue and profit producers for this company. The biggest environmental challenge faced by this company is primarily technological environment issues such as downtimes and destruction of infrastructure.
The company’s sector review for the market force that drives the company is the telecommunication and broadband sectors where outstanding demand and supply of services show that the most dependent on industry for this company is the telecommunication service sector. As technology grows, the broadband demand increases by the competition posed within the online businesses based platforms; therefore, an extensive study about the prices and cost drives the broadband and telecommunication business communities. Commendably, the company has been considering the broadband supply as the most highly contributing sector of the company even though below it on the graph, the company also relies on the telecommunication sector that effectively delivers the calls and messaging services.
The internet supply sector outstands to be the most technical department of the company. It relies entirely on I.T. services as well as 24/7 monitoring alertness for efficient service delivery. The telecommunication service sector gets further subdivided into departments for effective service delivery. Some of the most crucial departments required to run the broadband providing company are the service delivery team, the marketing team, and the service support team. In case of service downtimes experienced by the client, the support team stays alert to resolve any arising issues with the help of the service monitoring team. The most fundamental market force driving the telecommunication market is generally the efficiency and reliability of the service. The company has outshined the competitors by delivering efficient service and the incredible service issues response by the technical team, which is always on toes to act upon any alerted issue by the monitoring team.
The other sector that contributes majorly to the company is the telecommunication service. The mainly incorporated services under the telecommunication sector are generally communication services categorized into the general calling and messaging ratings even though sim card data is also a service offered by the company. The most prominent drive force for the telecommunication sector’s market is the communication rates ranging from the calling price to the data rates. The standards have proven to be cheaper with credible service delivery as compared to the competitor’s rates. This aspect of the market force generally convinces the target market, which is that the consumer considers the company an option for the service value over the competitors. Prosperity has followed the company since the implementation of unlimited calls subscription options, which saw clients flooding into the company’s telecommunication sector market. The other vital market force towards the company’s telecommunication sector is the provision of international communications through the same sim cards. With this, the company has guaranteed overwhelming communications between clients along with a full rand of distance.
In this context, we will focus on the telecommunication service sector since it’s the company’s primary revenue income source. In the broadband service providers sector, there are essential driving forces for successful service delivery, mainly the price and cost. In terms of price, economic fluctuations stand as the main risk for a telecommunication company. The value-added tax, which is increasingly imposed by the government as the economy drops directly affects the internet supply sector since the same fee raised, is applied to the telecommunication companies. With the taxation adjustment, the internet supply price gets correspondently adjusted to meet the taxation level.
On the other hand, the customer has to pay the price. Therefore, she ends up preferring for the best price for the same service. The excellent way the company can retain its clientele is by adjusting its broadband supply price to be pocket friendly to the client, which might affect the company’s financial income. Therefore, the global company’s future remains at stake as long as the economic blow affects the company’s operations. With the ongoing trend of the economic disaster, the company is most likely to lose some profit and affect the company’s financial statements. The pricing factor outstands the company’s primary commercial drive since it affects the costing and taxing among the other company’s sector management processes that run the corporation’s sector.
The company’s sector management has subsequently drafted an effective counter plan for economic adjustment issues. The most appropriate way that was reached into as the conclusion was mainly increasing the market shares, which has seen the company through a successful profit increment by the intriguing possibilities. On the other hand, the company cannot suggestively seek stocks mainly because further exaggerated gains might bring about antitrust between the company’s management and the other shareholders. In some proven cases, the company may even require to consider giving up some portion of the shares to counter the tide.
By this company getting to acquire a high market in terms of shares, it generally exposes the corporation to some form of risks that its smaller service competitors subjectively get not to encounter. Governmental authorities, consumers, and competitors are all likely to be taking some specific actions plan against the high-share corporations than against the small-shares. For instance, smaller market competitors can generally direct some form of attack projected against larger organizations. The attacks would not guarantee to work as more effective against smaller companies or eve those equal capacity. The general strike has been filing of the private antitrust suits to demonstrate the notion that the subjected larger competitor violates antitrust laws in the assumption of the company’s dominant share market. Compared to its peers’ the company has made critical steps to counter its environmental challenges, which turn out to be a solution enough. Statistically, there has been improvement since the shares’ regulation marked a plan where the company’s financial income has recovered to stability and gain. In last year when the company was experiencing the economic blow, the profit income as fluctuating between 40-30 %, respectively, whereas, after the implementation of the strategic shares marketing plan, the company has flourished to the success of financial income increment up to a range of between 70-80 % respectively. The general data subscription previously in the last yeas stood at 30 million subscriptions with which most of the subscriptions were broadband. In the effect of the new shares market management plan, the company has grown to a subscription range of 53.76 million subscriptions, which is an excellent boost to its economic stability.
The company’s past statistical graph for the total cash and S.T. investments shows some fluctuations in terms of values with the year 2019, recording the highest value in assets. The past five years’ income trend reveals that the company has been doing well in recent years except for the year 2017, where it experienced some economic blow out of the government’s oppressive taxation on the internet supply corporations. At this point, we will analyze the company’s general financial trend with the focus of the company’s performance.
This company shows its assets to be the highest in 2015 and 2019, respectively, by the total cash and S.T. investments. Between 2015 and 2016, the general financial curve for assets shows fluctuations in 2017, recording the smallest value in terms of assets. On the other hand, the total current assets show a different formation where there is gradual growth from the year 2017 and its highest in 2019. Between 2015 and 2017, there are some unpredictable fluctuations with the current assets. The lowest recorded value was in 2017 and the highest in 2016, even though it is not as high as the value recorded in 2019. When we stream down to the net property, plant, and equipment, the graph again fluctuates even though 2019 remains the best year for the company’s assets market in terms of net property, plant, and equipment. The general rise of values recorded in this sector is uniform, with the year 2015 recording the lowest cost and 2019 having the highest value.
The statistics show that the company recorded most of its total receivables in 2019 and the lowest total receivable values recorded in 2015. With all this information, certain total assets show the year 2016, followed by the years 2018, 2015, and 2019. The evident fluctuation of values along the years from 2015 to 2019 demonstrates a non-uniform graphical representation of the total assets recorded by this company.
Another financial ratio studied within the research on the company is the total liabilities and equity. On the total current liabilities, the values recorded are highest in the year 2017, with 2015 having the lowest total current liabilities value. The company did best in the year 2017 on current liabilities statistics. Since then, there is a steady drop both to the right and to the left. On the other hand, the total liabilities graph demonstrates a non-stable and non-uniformly rising curve across 2015 and 2019. The highest total liabilities value recorded was in 2019, whereas the lowest amount of the total liabilities recorded was in 2015. In the total current equity, some apparent drop and rise in the graph are evident with the year 2019 remains the best year and 2015 being the worst. 2016 had a more significant value though it was smaller than the amount recorded in 2019. With this valid information, the final point for the total liabilities and equity ratio, as evident in the statistic recorded by the company, is that the general ratio graph rises between 2015 and 2016 when the highest total value of liabilities and equity and fluctuates down in 2017, up in 2018 and then don to the lowest cost recorded within the past five years in 2019.
For the past five years, this company’s income statement is another research aspect that is statistically informative in regards to the company’s financial statement. The company’s total revenue statistical trend for the past five years has been unpredictable due to the non-uniform fluctuation. 2017, according to the statistics, recorded the highest total revenue while the lowest recorded total revenue value was in 2015. A uniform statistical rise of the total revenue value gets observed between 2015 and 2017, where the cost starts to drop uniformly up the o year 2019. This statistical information about the company’s total revenue demonstrates a non-uniform curve on the graph cutting across the five years. The gross profit is another aspect of the income statement that translates the company’s activity in terms of financial income. In the company’s statistics provided, the company’s gross profit produces a rising curve between 2015 and 2016, which records the highest gross profit amongst the five years. The trajectory of the uniformly drops with the year 2019, marking the lowest total profit value on the graph. This profit is a clear demonstration of the company’s cutting gross profit within the past five years, with the current position being the worst. On the operating income sector on the financial income statistics, the best year for the company stands to be the year 2017 residing a uniform drop of recorded values within the following years up to 2019, though the year 2015 marked the lowest operating income becoming the worst year in terms of the operating profit in the company
In terms of the total net income, the company had exhibited a growth potential between the years 2015 and 2016 when the highest net income value got recorded, presiding a massive drop in the year 2017, which on the other hand, had the lowest annual net income. Following the drastic fall of the net income in 2017, uniformly substantial growth is evident in the following two years: 2018 and 2019. 2019 was statistically the second-best year, as noted from the five-year net income trend. Conclusively, the global company’s direction for the past five years in terms of the net income exhibits a non-uniform curve on the graph with the years 2016 and 2017 generating the highest and the lowest net income.
The company’s profitability is another analysis that propels this content paper. In these past five years, as indicated on the corporation’s statistical statements, the global company’s profitability sector suggests 2015 as its best year. The year 2019 became the worst recording the lowest total profitably. The essential areas that got examined to come up with the profitability actual statistics are the return on asset, the return on capital, the performance in equity, and the recovery in joint ownership, among others. Analyzing more profound, the return on assets shows a uniformly evident rise in terms of the values recorded for each year between 2015 and 2019 with the highest and the lowest return on assets values recorded respectively. Adjacently, the return on capital indicates a uniformly growing pick for the company within the past five years. The years 2015 and 2019 brought the highest and the lowest returns on capital, respectively, for the company. This analysis is a clear indication of the company’s overall growth in assets and capital analysis. Subjectively, the highest and the lowest return on equity GOT exhibited. 2017 became the company’s worst year after which, the company experienced a rise in 2018 and another drop in 2019. This analysis is evident that the company’s return on equity is generally non-uniform and unpredictable along the past five years. Subsequently, the statistical data for the return on typical investment is another unpredictably and non-uniformly trending curve cutting across the past five years, showing a similar trend to the statistics provided for the return on equity. As indicated by the company’s statistical statement, the general trend for the standard equity return shows 2015 to be the company’s best year and 2017 being the worst with the lowers returns on common equity. In conclusion to the company’s general profitability, the company has been doing wrong in the past five years, with the current position being the worst.
The company’s short term liquidity is also an analysis concluded in the company’s statistical statement. There is a general rise of the short term liquidity between 2015 and 2016, after which; a drastic drop got experienced with the following year recording the worst short term liquidity value. After then, consistent growth has been bringing out the year 2019 as the company’s best year in the short term liquidity. In the long term solvency sector, an abnormally maneuvering curve is evident with a drastic drop in the values recorded between 2015 and 2016. The highest long term solvency was in 2016, while the worst was in the year 2016.
2019 turns out as the overall worst year for the company after a steady drop in both the revenue and the total gross profits recorded. According to the statements provided, 2017 was evident to be the company’s uptime year with most of the sectors, including the total gross profit and total revenue, having recorded promising values. In conclusion to my research study, the company has deteriorated within the past five years. 2019 was the company’s volatile moment, with most sectors performing poorly, as evident in the company’s statement’s total revenue and operating income statistics. Ever since 2017, the company has experienced some form of deterioration, which has been uniform, as evident in the statistics on the company’s financial income statements provided in the data for the total revenue and the total gross profit. Therefore, according to the general economic trend, the company proves to be unreliable in delivering a sustainable financial growth as per the past three years, as there has been earnings drop as indicated on the financial statements provided for example, as noticed on the total revenue statistics for the past three years.
Compared to its peers, the company has done worst in terms of overall growth according to the company’s statements provided, as evident in the total revenue and gross profit percentage growth. With this potential advancement, the company has turned out to be relatively unstable compared to its peers, such as the virgin group, which has had substantial growth for the past five years. Financially, the company has exhibited unreliable performance in terms of level growth compared to the same peer company, a formation that has seen the company dropping through the chain. Even though the company’s operations have had hitches here and there, it has elaborated poor operation efficiency compared to most of its peers. For instance, the virgin group has had a relatively good performance, as noted in its five years’ company’s statements. Conclusively, according to the research, the company sticks in a better position as compared to the peers, and there is unlimited growth potential within the last three years.
In forecasting the global company’s well-being in terms of growth, there is a predictive drop in the next year’s analysis. The company has shown some form of unreliable sustainability, which is evident in the total revenue growth over the prior years. In my view, predict a 0.1% drop in the total revenue earned by the company in the next year. The drop prediction comes from the company’s loss of markets brought about by the reduced service demand, which subjectively affects the price and net income. Subsequently, the total gross profit growth also remains at the stalk, as statistics show, the company has experienced poor performance in recent years. There might be no drop or rise in the gross profit as its drop from the year 2018 to 2019 was not as drastic as the total revenue recorded.
On the other hand, the company’s expenses have been constant, which led the company’s operation to reduce wages to counter the company’s abnormally high costs compared to the net income. Generally, the company’s dividends per share have grown dramatically in the prior years, with the bonuses dropping to zero. The dividends per share information provided in the statements show no growth in the past three years. My general assumption regarding the dividends and the payout ratio is that there will be no negative or positive achievement in the next evaluation. My general rise predictions are no change in the dividends per share with a 5% drop in the payout ratio. The company’s cash flow also remains at the stalk, for there has been reduced cash flow for the past five years. The worst year being the last year, there is a predictive assumption that the company might perform worst this year. A general drop of 1% can be predicted compared to the drastic reductions in the last three years. The working capital and the accruals are the major sectors contributing to the general cash flow traffic, as evident in the company’s statistics for the recent three years. The cash flow relies on the retained earnings from the customers who pay for the services they require; therefore, if the net income drops, the general cash flow is concurrently affected.
Dividend Discount Model (DDC) is one of the predictive valuations used to forecast the company’s future. Generally, in this sector, we will convert the dividend forecast into the dividend discount model. The formulae for this is:
The present value is equal to the future value getting divided by value number one plus the Rate of interest percent, i.e.
P/V value = F/V value / (1+ I.R. value); P/V is the present value record, F/V being future value record, and the I.R. is the rate of respectively.
Therefore, the company’s dividend discount model is;
0.15 / (1 + 0) = 0.15
The dividend discount model therefore is 0.15 since the forecasted interest rate is zero.
The Discounted Cash Flow (DCF) is the other aspect of the company’s valuation. The conversion of the free cash flow into the Discounted Cash Flow is necessary to achieve more accurate predictions. The general formulae to accomplish the transformation is:
The discounted Cash Flow is equal to the cash flow year one you divide it by (one + the Rate of discount) added to cash flow for year two, share it by (one + the Rate of discount) i.e.
Discounted cash flow equals to C.F. year one divide (1 + Rate of discount) plus C.F. year two / (1 + Rate of discount); C.F. is the cash flow rate per year (it is 70 as in the statements), and R is the discount rate (it is 1%), respectively.
Therefore, the company’s DCF is;
70 / (1 + 1) + 67 / (1 + 1) = 35 + 33.5 = 68.5
Answer = 68.5
From the company’s first year earnings and sales forecast, some fundamental ratios have to get calculated. These ratios are;
The P/E (the Price-Earning) ratio whose general formulae is; P/E ratio is equal to the market value per share getting divided by the earnings gotten from shares i.e.
P/E = market value per share (it is five as in the statements) / the earnings per share (it is 1.2 as in the comments), which is,
P/E = 5 / 1.2 = 4.17
Answer = 4.17
The P/Sales (the price-to-sales) ratio whose general formulae is; Price-to-sale Rate is equal to the market value price (MVS) per share divided by the sales per gotten share (SPS) i.e.
P/S = MVS / SPS where the MVS is the market value per share (it is five as in the statements) and the SPS is the sales per share (it is 0.26 as in the comments), respectively. Therefore;
P/S = 5 / 0.26 = 19.23
Answer = 19.23
The P/Book ratio (Price-to-book) ratio whose general formulae is; price-to-book equals the market price per share (MVS) divided by the book value per share (BVS) i.e.
P/B = MVS / BVS = 5 / 0.26 = 19.23
Answer = 19.23
In comparison to the company’s peers, there is a drawn conclusion that the company is doing better than its peers, for example, the virgin group.
According to my findings, the company needs to boost most of its sector’s performance to achieve sustainable results in the coming assessment year. The general ratios attained confirm some hopes for the company, such as the Price-Earnings ratio (4.17) and the Price-To-Book ratio (19.23), in the successful curbing of the current financial trend. With the sector’s information acquired, the company’s operating management can get recommended to consider more efficient shares marketing plans to attain the desired results in the next year. The best recommendations for the operation plans in terms of shares marketing are the building of referral programs to start getting new customers. Increased one-on-one engagement with potential clients is essential to retain existing customers. This engagement will reduce the number of customers terminating their participation in the program. The other most effective shares marketing plan is the general perception of staying ahead of the competitor. Offering more attractive deals than your competitors earns the company the customer’s market for the company’s shares hence improving the company’s statistical data for the shares market.
In conclusion to this case study, my findings show that the company’s growth is at stalk with the general trend exhibited by the statements provided. The company’s five years began well in 2015, recording a substantial increase to 2017, which turned out to be the company’s best year. After then, the company has recorded deteriorating results in terms of growth. The gross profit shows a clear description of the company’s struggling position. 2019 was the worst year for the company. Even though there is the hope of sustaining the company’s current situation, the company needs to entirely beef up the general operations in terms of marketing to increase its clientele and, on the contrary increasing the income rate.
INTERNATIONAL ACCOUNTING AND FINANCE PROJECT (BT GROUP)
SUMMARY
A summary of my case study outcomes is fro thorough research done on the B.T. Group company’s statements provided for the past five years. The case study gets statistically proven by the company’s accounts for the prior years. This paper is a summary of the general research study as well as the findings
Introduction
This case study’s introduction mainly touches on the company’s background as well as creating a good understanding of what a business model is and how it can get effectively implemented. The introduction also elaborates on the company’s market force as well as the commodity. The presentation further goes ahead to explain the company’s operations and the overall expectations after this case study
Literature Review
According to the previously done research, the detailed statistical findings can also get used for the company’s future predictions. This case study has statistically evident information that can get used for future reference. All the data got attained from the company’s statements provided for the prior years. One of the used sources is;
SARSFIELD, STEVE. “CASE STUDY â” B.T.” In The Data Governance Imperative, 155-59. I.T. Governance Publishing, 2009. Accessed August 25, 2020. http://www.jstor.org/stable/j.ctt5hh6sb.16.
Methodology
The method used to achieve this research is the statistical method helped by the qualitative analysis method. With the data provided, I was able to join information from different entries included in the company’s statements. With this, the research findings are a statistical evidence representation of the company’s operations. The methodologies applied in this case study were the most appropriate since the research did not necessarily require fieldwork; therefore, the analysis of the company’s financial statistics provided was the driving thrust for this case study.