Finance and Accounting Essay Example | Topics and Well Written Essays - 1250 words - 1

Finance and Accounting - Essay ExampleBoth these proportionalitys address the bankruptcy issue. According to the calculated dimensions, Qatar Telecoms liquidity position seems to be strong as compared to Vodafone in both(prenominal) the years 2010 and 2011. Qatar Telecoms personal liquidity ratios have deteriorated in 2011, compared to 2010, hardly then even the club has a stronger position as compared to Vodafone, which almost has balanced proportion between its current liabilities and its current assets. Vodafones personal current and acid test ratio has reduced in the year 2011 and it currently has a ratio of 0.491 and a 0.481 current and acid test ratio. Gearing Ratios Gearing ratios examine the proportion of debt to equity at bottom the financing of a company. These ratios illustrate as to how much a company is financed via and how much via equity. A company having more loans and less(prenominal) equity is said to be highly geared and is considered to be more risky but ha ving said that, it can never be stated that a low geared company is good, since it is considered to be taking less initiative, hence a balance is to be maintained. According to the calculated ratios, Qatar Telecom is highly geared as compared to Vodafone. The ratios clearly illustrates that the Qtels debt financing is 1.59 times its equity financing. Qtel has reduced its debt financing by paying off some of its debt as compared to the year 2010 but this has not been a significant reduction. Qtels debts almost amount to 61% (0.61) of their total assets, hence it can be seen that the company has heavily relied upon debts. Vodafone on the other(a) hand has too little debt financing and it can be seen from the ratios that the company prefers equity financing over debt financing. As...By June 2008, Vodafone received was awarded telecom operating license indoors the country, making the company as the second mobile phone service provider within the country. Vodafone started its services within Qatar on 1st March 2009.This ratio provides an idea to the investors as to the return that that would extract from the company. The return on investment for Qtel has improved and has increased by 1.79% (5.82-4.03). Vodafones return on investment has also improved but the companys losses would not be able to make them give any good to their investors.Since both the companies operate within the same sector, a fair comparison between the performances of the two would be more fruitful. The best technique available to analyze the financial performance of both the companies would be to use ratio analysis. There are various ratios which can be used to evaluate the performance. Following are the ratios which have been calculated to assess the financial performance of both the telecom service providers. From the ratios, it can be derived that the financial performance of Qtel is way better than Vodafone but it can be argued that Vodafone is even-tempered within its early and growin g phase and that the company has shown good prospects, hence it can improve with the passage of time.