Evaluation of Five Companies in Telecom Industry- myassignmenthelp

Question: Write about theEvaluation of Five Companies in Telecom Industry. Answer: EBIT and Return on Assets of five companies in the telecom industry are evaluated by analyst and gave them rank on the basis of their performance. EBIT Earnings before Interest and Taxes are the operating income of the company. It only considers the internal factors to measure the profit of the company from its main business activities. If the EBIT of a company is higher than the company can easily pay its debts in future. When operating expenses are deducted from the operating income the result is called as Earnings before interest and tax. In the current assignment, the analyst has taken five telecom companies and measures their profits and give them rank. MNF Group Limited is the most profitable company because its EBIT is highest among the five companies. And the second is the Telstra, third is TPG Telecom, fourth is Inabox and the last is Zip Tell Ltd(Telstra, 2014). ROA is the return on the assets invested in the business. It is calculated by the EBIT or net income divided by the total assets. If the EBIT is high than the return on the assets is more but if the EBIT is low than the return on the assets is also low. The return on assets will always dependent on EBIT and they have a direct relationship. The policies framed by the MNF Group are best because their policies help them in earning a good income in the core activities of the business. EBIT($million) Companies 2014 2015 2016 Average MNF Group Limited 5780 7520 9190 7496.67 Telstra Corporation Ltd 7445 6779 6792 7005.33 TPG Telecom Ltd 172 224 380 258.67 Zip Tell Ltd -0.24 -5.68 -14.08 -6.67 Inabox Group Ltd 5.465 1.807 2.4 3.224 Return on Assets (ROA) Return on Assets is the calculation done for finding the profitability of the company by investing in the total assets.It also gives idea that how well the management of the company use the asset of the company to generate the earnings. Return on Assets is always displayed in the percentage. If the return on the total assets is higher than the management of the company use the asset in more efficient and effective way. The return on the total assets is calculated by dividing the EBIT of the company from the Total assets. It is a financial ratio and it is widely used all over the world in all business(JOURNAL OF BUSINESS AND MANAGEMENT Vol. 4, 2015). In the current situation, the best ROA is of Telstra Corporation. It is calculated after analysing the EBIT and the total assets of the company for the past 3 years. And the average is calculated to find the best ROA. The ranks of the company based on the ROA are as follows: Telstra Corporation Limited; MNF Group Limited; TPG Telecom Limited; Inabox Group Limited; Zip Tell Limited; RETURN ON ASSETS (ROA) Year Average Companies 2014 2015 2016 MNF Group Limited 21.15% 9.77% 7.88% 12.93% Telstra Corporation Ltd 18.88% 16.73% 15.67% 17.09% TPG Telecom Ltd 11.40% 13.54% 10.08% 11.67% Zip Tell Ltd -4.50% -86.3% -853.40% -314.73% Inabox Group Ltd 6.87% -1.00% 2.37% 2.75% Return on Assets = Earnings before Interest and Taxes (EBIT) X 100 Total Assets Bibliography JOURNAL OF BUSINESS AND MANAGEMENT Vol. 4, N. 2.-2. (2015). THE IMPACT OF EARNINGS PER SHARE, DEBT TO EQUITY RATIO, AND CURRENT RATIO TOWARDS THE PROFITABILITY OF COMPANIES LISTED IN LQ45 FROM 2009 TO 2013. Telstra. (2014). TELSTRA CORPORATION LIMITED AND CONTROLLED ENTITIES. Retrieved from https://static.ice4.interactiveinvestor.com.au.s3-website-ap-southeast-2.amazonaws.com/telstra/Telstra1401/AnnualReport2014/EN/pdf_full/Telstra_2014_Merged_WithoutCovers-upload.pdf