Financial analysis of Etisalat Group telecommunication industry

Etisalat Groups is one of the largest and most successful companies of the telecommunication industry. The company was started as a local telecom service providing company about four decades ago. From that day to now the strong financial position is the evidence of its success in the targeted market.  The company is currently operating in more than 15 countries around the world including the geographical regions of Africa, the Middle East and Asia (Etisalat.com, 2019).

Etisalat Group Etisalat Group telecommunication industry

In following heading provide brief details about the mission, vision, organizational structure, field of work, and locations of the company. 

·       Mission of Etisalat Group telecommunication industr

The mission presented by the company is based on three points. The first is to provide high and best experiences to the customer, retailer, and business. Moreover, the second point of the mission is that company want to deliver attractive returns on investment to their investors or shareholders to ensure long term goals. Thirdly, the mission of Etisalat Company is to provide support to the overall national economic development and provide job opportunities as a socially responsible company.     

Vision of Etisalat Group telecommunication industry

The vision of Etisalat Group is to become a highly admired and leading company in the emerging market

Organizational Structure of Etisalat Group telecommunication industry

The organizational structure represents the managerial system of the organization. The presented below chart is a graphical representation of the information flow and hierarchy of control in the Etisalat Group. According to this, the whole organization is headed by the Board of Directors. Moreover, each department related committee is also working under the supervision of Directors to ensure organizational goals.   

Structured and organized hierarchy of control enables each worker and employees to understand who he/she has to report and from whom he/she has to follow up orders and instructions. Somehow, a narrow span of control enables the managers and supervisors to monitor and control the work related activities of their subordinates in an effective manner. 

Fields of Work of Etisalat Group telecommunication industry

Etisalat Group as a blue-chip organization works in the Telecommunication sector. The company covers all major services and products related to the telecommunication field. Service includes solutions for mobiles, electronic devices, internet calling plans, apps, and other E-bill system. Moreover, the company also provide apps with roaming packages to save the internet and watch television shows on mobile phones. Excluding this, the company provides unlimited entertainment with Wi-Fi packages. 

 Location of Etisalat Group telecommunication industry

 The company operating successfully in the local and international market. Selected locations include geographical areas of the Middle East, Africa, and Asia. The key geographical locations from which company is earning millions of dollars revenue are Saudi Arabia, Afghanistan, Pakistan, United Arab Emirates, Morocco, Egypt and Sir Lanka (Etisalat.com, 2019).     

Financial Ratios Analysis of Etisalat Group telecommunication industry

 Financial ratios analysis represents the financial position and strength of the company in 4-year duration from 2014 to 2017. Financial ratios include liquidity analysis, profitability analysis, asset management capabilities, and solvency analysis (Etisalat.com, 2017).    

Liquidity Ratio of Etisalat Group telecommunication industry

 Liquidity ratio represents the capability and strength of the company in dealing with the current obligations of the company. Current ratios are calculated by dividing the current assets by current liabilities. Financial data is collected from the annual reports of 2014, 2015, 2016, 2017 published by the Etisalat Company. The following table represents the results of the current ratio and quick ratio.  

In accordance with the above-mentioned table and the following line graph, we can say that the current ratio and quick ratio are gradually improving. Results of both ratios were below the required limit of 1 in 2014 and 2015 that conclude that in past company was not effectively managing the balance between current assets and current liabilities. Somehow, now ratios of 2016, and 2017 are presenting strength of Etisalat Company to pay back its current liabilities by liquidating its current assets (Tulsian, 2002).   

·         Profitability Ratio of Etisalat Group telecommunication industry

The profitability ratios present the ability of company to generate profit in the future. Profitability ratios include key ratios of profit margin, return on asset, and return on equity. The following table represents that ROE and ROA are less than 1. Even the company is improving these ratios but still, these are insufficient (SAUNDERS, 2011).     

The following graphs represent how the ratios of return on asset and return on equity are gradually increasing in the company but with very minor changes (Etisalat.com, 2019). Somehow, changes in the profit margin ratio are different.

In 2014 the profit margin ratio was greater than the ratios of 2017, 2016 and 2015. The major reason behind this declining trend is an increase in the costs and expenses of the company in the year 2017, 2016, and 2015. In past years, the cost of operations was not high therefore the company was capable to save high percentages of sales as net profit (Loughran, 2011). 

·         Asset Management Ratios of Etisalat Group telecommunication industry

 Asset management ratio describes the capability and efficiency of managerial staff in utilizing assets to generate revenue and profit. Total asset turnover ratio represents percentages of net sales generated from each dollar of asset.   

 

The financial ratio of total asset turnover indicates that turnover is increased from 2014 to 2017. Somehow, the maximum turnover was 0.42 on each dollar of asset.

·         Solvency Ratios of Etisalat Group telecommunication industry

Solvency ratio demonstrates the time's interest earned ratio of Etisalat Company. The time's interest ratio is fluctuating randomly in these years. Therefore the following graph is unable to show a specific trend of growth or decline in the ratio (Etisalat.com, 2017). Somehow, ratios are more than 5 that represents the strength of the company in paying back its debt payment. See the table and graph to understand results of times interest earned ratio.     

Average and Standard Deviation of Etisalat Group telecommunication industry

 The following table shows the average and standard deviation of all financial ratios in the four-year duration. Average represents the average or mean of ratios while standard deviation shows variance in these ratios. Standard deviation values are less than 1 that presents values are really close to each other. While times interest ratio represents standard deviation value greater than 1 to show that these ratios have great difference and variance.

Ratio	Average	STD
Current Ratio	1.022836	0.0706
Quick Ratio	1.0069054	0.0714
Profit Margin Ratio	0.1878238	0.00703
ROA Ratio	0.075601	0.00149505
ROE Ratio	0.1645036	0.00581107
Total Asset Turnover Ratio	0.4030292	0.0198868
Times Interest Earned Ratio	7.4021262	1.69258668

Conclusion and Recommendations of Etisalat Group telecommunication industry

The whole discussion concludes that Etisalat Groups is headquartered in Abu Dhabi but it works in local and international markets. Key services include internet services, mobile solutions, and apps for other electronic devices. Financial analysis of company project that the company is successfully managing its operations from 2014 to 2017, therefore, financial position is continuously improving. Average financial ratios are greater than the minimum require percentages and values of ratios that represent that strength of Etisalat management. Somehow, some areas require recommendations for further improvement. I would recommend the Etisalat group to control their cost and expense to ensure the increase in profit margin.       

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