Accounting Question

For Assignment 1, you will be performing some financial statement analyses on a publicly traded company: Telus. You are required to follow the steps outlined below and produce a report in the form of an executive summary. For the required ratios, you must include the ratios and your calculations, rather than just the answers.

See the steps below for mark distribution. Make sure to clearly explain your work so that your Open Learning Faculty Member can give feedback. You may get partial marks, even if your final answer is incorrect. You will submit a single Word document for this assignment, please review the

Submission Guidelines

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Instructions

Complete the following steps:

Step 1: Download the 2021 Annual Report from the company’s website. From the Telus homepage, click “About Us,” and then click “Investor Relations.” You will then be able to find the 2021 Annual Report. Within the Annual Report, locate the Consolidated Financial Statements. Start looking on page 138.

Step 2: Calculate the following ratios for the 2021 and 2020 fiscal years. You must clearly show the calculations and should not download pre-calculated ratios from another source. Once your ratios are complete, please copy the ratios from your spreadsheet to your Word document. Use a basic copy/paste so that you can get feedback on your answers. Do not copy as a picture. (35 marks)

Current ratio

Quick ratio

Times interest earned

Accounts receivable turnover

Average collection period

Asset turnover

Gross profit margin

Net profit margin

Total debt ratio

Return on assets

Return on equity

Step 3: Perform a three-stage DuPont analysis. Once you have calculated the DuPont ratio, provide a written analysis of each section. Tie your analysis into specific accounts and changes from one year to the next. Note that stating “The ratio increased” is not an analysis. (15 marks)

Step 4: Comment on any areas of strength or weakness of the company based on your results of Steps 2 and 3 above. Make sure to look not just at absolute levels, but also at trends over time. Again, be specific. Set up your analysis under the categories of solvency, liquidity, profitability, and asset management. Within each category, discuss why each ratio improved or worsened. (30 marks)

Step 5: Explain whether there would be any difference to your analysis if you were an investor or if you were the CFO. How would the data quality differ in those two roles? (20 marks)