FINANCIAL MANAGEMENT

Comparison of Telus and Rogers limited financial ratios

1. Liquid Ratio

i. Current Ratio

Telus’ current ratios during the year 2020, 2019 and 2018 were 0.78:1, 0.78:1 and 0.79:1 respectively. Telus’ current ratio changes minimal, meaning the company might have serious difficulty in repaying its short-term debts (Raisinghani, 2020). However, Telus’ current ratio is likely to change during 2021 to either side, which might as well lead to an increase in the company’s assets and liabilities thus, it would be advisable for investors to avoid investing in the company due to these possible uncertainties. On the other hand, Rogers’s current ratio during the years 2020, 2019, and 2018 were 1.07:1, 2.06:1, and 1.29:1, respectively (Belkhir, Boubakri & Grira, 2017). It indicates that Rogers communications have a higher current ratio than Telus.

2. Turnover Ratio

ii. Receivable Days and Turnover

Telus Communications Inc.’s RTR ratios are 1.93%, 1.93%, and 2.01% in 2018, 2019, and 2020 respectively, thus indicating the company experienced efficiency in its collecting the outstanding sales during the year 2019 as compared to the years 2018 and 2020 when it was slightly lower indicating inefficiency (Berk et al. 2013). Generally, the rise in ART ratio over time shows an increase in the company’s cash collections based on its credit sales. Where is rogers

3. Long-term solvency ratio

Telus debt/equity ratio for the years 2020, 2019, and 2018 are 156%, 170%, and 136.4%, respectively, which shows that Telus profitability dropped between 2019 and 2020 by 15.6%. On the other hand, Rogers’ debt/equity ratio were121.2%, 124.5%, and 125.37% for the three years, thus showing Rogers’ will not struggle as much as Telus will paying its long-term debts. However, both companies have BBB+ rating on fitch Rating for their IDR rating. that Telus profit ratio reduced between 2020 and 2019 (Chahine & Zhang, 2020). But comparing Telus and Rogers’ profitability, the latter’s profitability was higher than the former’s profitability in the 3 years, showing that investing in Rogers might be more profitable than investing in Telus. Wrong this should be profitability ratio portion only talk about long term solvency

4. Profitability ratios

Telus's ROE ratio was 19.5%, 20.78%, and 17.98%, for what years respectively, which clearly shows that for each $100 invested in Telus, the investor will earn $19.5, $20.78 and $17.98 respectively in the 3 years (Jami & Bahar 2016). The Rogers’ ROE ratios for the year 2020,2019 and 2018 are 17.80%, 19.67%, and 16.34% respectively, thus meaning that by investing $100 in the company, the investor will earn $17.80, $19.67and $16.34 respectively for the 3 years less than the one earned by Telus during the same period thus indicating that investing in Telus would be more profitable as compared to Rogers.

5. Market ratio

Telus's book value per share is $10, while its current stock value is $15 per share. In this regard, the company’s M/B ratio is $15 divide by $10 per share, which is 1.5, meaning Telus market value share is 50% greater than its book value (Raisinghani, 2020). On the other side, Rogers’ book value per share is $, while its current stock value is $15 per share. In this regard, the company’s M/B ratio is $10 divide by $8 per share, which is 1.25, meaning Telus market value share is 25% greater than its book value. Therefore, comparing the two companies, it is apparent that investing in Telus would give back more ROI as compared to investing in Rogers (Raisinghani, 2020).

References

Belkhir, M., Boubakri, N., & Grira, J. (2017). Political risk and the cost of capital in the

MENA region. Emerging Markets Review, 33, 155-172.

Chahine, S., & Zhang, Y. (2020). Change gears before speeding up: The roles of Chief

Executive Officer human capital and venture capitalist monitoring in Chief

Executive Officer change before initial public offering. Strategic Management

Journal, 41(9), 1653-1681.

Raisinghani, V. (2020, September 13). The 3 Best 5G Stocks in Canada. Retrieved from https://ca.style.yahoo.com/3-best-5g-stocks-canada-163429008.html#:~:text=BCE Inc (TSX:BCE)(,a blazing fast roll-out.