Vodafone: Analysis of its financial statements

Résumé du document

To know if investing in the global market telecommunication, or to be more precise in Vodafone PLC, is a good idea or not, I think it's a good point to make a rapid overview of its environment. Indeed, to understand Vodafone's result and to know if they are supposed to become better or worse, it is important to know what the firm has to face, or what can benefit to Vodafone Plc. To achieve this analysis, we will study Vodafone's environment thanks to a SWOT analysis. A SWOT Analysis is a way of identifying its strengths and weaknesses, and examining the opportunities and threats a firm has to face.

Advantages of joint ventures: Having a lot of joint ventures can be a good thing for Vodafone. Indeed, there is a diminution of risks. First, it reduced financial risks and costs because they are theoretically shared between partners. And second it reduced commercial risk because the company can benefit from market experience (culture, regulations, contacts) and management skills of its local partner. The exporter learns and adapts accordingly more easily to the conditions and needs of the foreign market.

Weakness:
i. No Network in Rural Areas- If Vodafone are present in city, we can notice a lack of store in small city or in rural area.
ii. Problem caused by a lot of joint venture

As we have seen, they are a lot of advantages caused by a joint venture. They are also very important disadvantages to underline. First of all, potential benefits are lower because they must be shared. Secondly, decisions are not only made by Vodafone but also by their partner, they are in a certain point of view dependant of another brand.

Extraits

[...] Analysis of the financial statements Calculate it. As the decline is very slight 3.9 It cannot be considerate as very dangerous for the future of the firm. Cash and cash equivalent as made a drop of which means that the equivalent of money Vodafone has has made a decrease in 2010. This point is also not that serious, as this asset is very various and is changing a lot. Liabilities : The total liabilities of Vodafone group Plc has made a slight growth in 2010. [...]

[...] We can also note that the income decreased already between 2008 and 2009. I would like to explain what's happened in Vodafone to have this decreased. Let's first focus on the gain on revaluation of available for sale investments. We can note that they have made a very positive increased from -2383 t o206 million pounds. Those figures represent the gain made by Vodafone in 2010 for some upward revaluation for their investment. However this picture does not explain why the income has made a 33% decreased. [...]

[...] And second it reduced commercial risk because the company can benefit from market experience (culture, regulations, contacts . ) and management skills of its local partner. The exporter learns and adapts accordingly more easily to the conditions and needs of the foreign market. Weakness No Network in Rural Areas If Vodafone are very present in city, we can notice a lack of store in small city or in rural area. Problem caused by a lot of joint venture. As we have seen, they are a lot of advantages caused by a joint venture. [...]

[...] Gross profit: revenue and cost of sales. The revenue has made a slight growth of However, the gross profit remains study. This is due because of the cost of sales. They have increased more than the revenue the sales price has risen faster than income, and, thereby, has created a lower margin. PART Lease European groups have the obligation to apply international accounting standards IAS / IFRS for consolidated accounts and that, since the 1 January 2005. The adoption of IAS / IFRS has introduced many changes in accounting practices including the case of the rent. [...]

[...] That means that Vodafone is not very well known in this country. And it is maybe now too late to solve this problem. In truth, those two brands have at the present time strong positions of leaders and it will be difficult for Vodafone to take their place. Regulation by government Any type of government regulation across borders is bad for business, however, if prices are artificially high because of government regulation, this may help increase profits over the short term. [...]