FINANCIAL STATEMENT ANALYSIS OF MULTINATIONAL COMPANY

FINANCIAL STATEMENT ANALYSIS OF

MULTINATIONAL COMPANY

Dulan Mahendra

Introduction• Financial statement analysis (or financial analysis) is

the process of reviewing and analyzing a company's financial statements to make better economic decisions

• These statements include the income statement, balance sheet, statement of cash flows, and a statement of changes in equity

Cont.

• Financial statement analysis is a method or process involving specific techniques for evaluating risks, performance, financial health, and future prospects of an organization

Objectives

• Assessment of Past Performance• Assessment of current position• Prediction of profitability and growth

prospects• Assessment of the operational efficiency

Users of Financial Statement Analysis

• Financial statement analysis is an exceptionally powerful tool for a variety of users of financial statements, such as,–Creditors– Investors–Management–Regulatory authorities

Multinational Company?

• An enterprise operating in several countries but managed from one (home) country

• Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation

Definition……..

“Mr. Jacques Maisonrouge, President, IBM world trade corporation describe MNCs”

• It operates in many countries at different levels of economics development

• Its local subsidiaries are managed by nationals• It maintains complete industrial organization

including research & development facilities in several countries

Cont.

• It has a multinational central management• It has multinational stock ownership

According to the ILO

“The essential nature of the multinational enterprises lies in the fact that its managerial

headquarters are located in one country, While the enterprise carries out operations in

a number of other countries as well”

History• The Dutch East India Company

was the first multinational corporation in the world & the first company to issue stock

• The first modern multinational corporation is generally thought to be the East India Company

Multinational Companies In

SRI LANKA

Axiata Group

Axiata Group is a Malaysian telecommunications

conglomerate with extensive operations in Asia.

Axiata Group

• Axiata’s primary business is in investment holding and the provision of telecommunication and consultancy services on an international scale. Their main focus being emerging markets in Asia, some with low mobile penetration in South and Southeast Asia

Axiata Group• Formerly known as TM International Bhd (TMI),

the company was incorporated on 12 June 1992• Axiata has controlling interests in mobile

operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia, with significant strategic stakes in India, Singapore and Iran. The Group also has stakes in non-mobile telecommunication operations in Thailand and Pakistan.

Subsidiary holdings• In their website in 2015, it was announced

that Axiata had over 260 million subscriber across Asia and a Group revenue of USD5.7 billion in 2014. Its market capitalization stood at over USD18.5 billion at the end of 2014. It was also reported that the company provided employment to 25,000 people in 10 countries

Introduction to the Company

• Dialog Axiata PLC, a subsidiary of Axiata Group Berhad (Axiata), operates Sri Lanka’s largest and fastest growing mobile telecommunications network. The Company is also one of the largest listed companies on the Colombo Stock Exchange in terms of market capitalization. Dialog is also Sri Lanka’s largest Foreign Direct Investor (FDI) with investments totaling over USD 1.9 billion.

Cont.

• Dialog, a winner of six GSMA Mobile World Awards has the distinction of being voted by Sri Lankan consumers as the Telecom Service Provider of the Year for five successive years and Internet Service Provider of the Year at the SLIM-Nielsen People’s Choice Awards

Cont.

• Dialog has topped Sri Lanka’s Corporate Accountability rankings for the past six years in succession and is an ISO 9001 certified company. The Company has received numerous local and international awards including the National Quality Award and Sri Lanka Business Excellence Award.

• Dialog was Listed on the Colombo Stock Exchange in 2005 June As of February 2016 Dialog Axiata holds LKR 81.4 billion (USD 566 Million) in market capitalization and the 5th largest listed company in Sri Lanka by Market Capitalization

• In 2015 "Dialog" brand name was valued at LKR 28.6 billion (US$204 million) and as the 3rd most valuable brand in the country by business magazine LMD in its annual study. In 2014 the company received the highest "Platinum" rating in the country's Corporate Accountability Index for the 4th consecutive year

Mobile Telephony Market Shares (Subscriber Based) 2010‐

Vision

• To be the undisputed leader in the provision of multi-sensory connectivity resulting always, in the empowerment and enrichment of Sri Lankan lives and enterprises.

Mission

• through the delivery of quality service and leading edge technology unparalleled by any other, spurred by an empowered set of dedicated individuals who are driven by an irrepressible desire to work as one towards a common goal in the truest sense of the team spirit.

Dialog Values

• Service from the Heart •Create the Future • Champions of Change • Exceptional Performance • Uncompromising Integrity • Responsible Leadership • One Team

ANALYSIS & INTERPRETATION

• Tools used,– Income statement– Balance sheet– Cash flow statement– Statement of Changes in equity

Income statement of Dialog Axiata PLC

Gross Incomeyear 2012 2013 2014 2015

Income(Rs.) 6,021,425,000 5,194,142,000 5,872,250,000 5,340,145,000

2012 2013 2014 20154,600,000,0004,800,000,0005,000,000,0005,200,000,0005,400,000,0005,600,000,0005,800,000,0006,000,000,0006,200,000,000

Income

• Gross income was higher of last four year in 2012

• It was high, due to high Revenue was at 2012.Because of that 2012 is the most gross income than other years.

Income tax expensesYear 2012 2013 2014 2015

Tax (Rs.) 1,970,532,000 1,126,896,000 1,232,438,000 1,517,537,000

2012 2013 2014 20150

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

Tax

• There was high tax expenses in 2012• Because there was a high gross income in

2012

Cash Flow Statement

Net cash (used in) / generated from financing activities

year 2012 2013 2014 2015

Cash Flow (Rs.) 8,654,251,000 345,790,000 635,622,000 2,409,089,000

2012 2013 2014 20150

1,000,000,0002,000,000,0003,000,000,0004,000,000,0005,000,000,0006,000,000,0007,000,000,0008,000,000,0009,000,000,000

10,000,000,000

Net cash (used in) / generated from financing activities

Net (decrease) / increase in cash and cash equivalents

Year 2012 2013 2014 2015

Cash Flow (Rs.) 3,790,025,000 7,264,523,000 5,380,465,000 1,690,280,000

2012 2013 2014 20150

1,000,000,0002,000,000,0003,000,000,0004,000,000,0005,000,000,0006,000,000,0007,000,000,0008,000,000,000

Net (decrease) / increase in cash and cash equivalents

Net cash used in investing activitiesYear 2012 2013 2014 2015

Cash Flow (Rs.) 16,614,148,000 17,004,152,000 27,902,783,000 20,797,336,000

2012 2013 2014 20150

5,000,000,000

10,000,000,000

15,000,000,000

20,000,000,000

25,000,000,000

30,000,000,000

Net cash used in investing activities

Net cash generated from operating activities

Year 2012 2013 2014 2015

Cash Flow (Rs.) 21,516,145,000 21,886,696,000 24,614,465,000 21,478,374,000

2012 2013 2014 201519,000,000,000

20,000,000,000

21,000,000,000

22,000,000,000

23,000,000,000

24,000,000,000

25,000,000,000

Net cash generated from operating activ-ities

• Net cash generated from operating activities were highest in year 2014 and lowest in year 2012

• Because, in 2014 have highest increase in cash and cash equivalents

STATEMENT OF CHANGES IN EQUITY

Shareholders fundYear 2012 2013 2014 2015

Shareholders fund (Rs.)

37,181,545,000 39,735,570,000 44,832,290,000 47,317,652,000

2012 2013 2014 20150

5,000,000,00010,000,000,00015,000,000,00020,000,000,00025,000,000,00030,000,000,00035,000,000,00040,000,000,00045,000,000,00050,000,000,000

Shareholders fund

Total EquityYear 2012 2013 2014 2015Total Equity (Rs.)

62,230,728,000 69,092,923,000 74,743,818,000 72,724,196,000

2012 2013 2014 20150

10,000,000,00020,000,000,00030,000,000,00040,000,000,00050,000,000,00060,000,000,00070,000,000,00080,000,000,000

Total Equity

• Shareholder funds is high in 2015.But total equity is higher in 2014

• Due to variation of property, plant & equipment and Other non-current assets

BALANCE SHEET

BALANCE SHEET

• A balance sheet is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders.

Current assetsYear 2012 2013 2014 2015

Current assets (Rs.)

20,806,549,000 18,375,237,000 24,280,875,000 20,329,223,000

2012 2013 2014 20150

5,000,000,000

10,000,000,000

15,000,000,000

20,000,000,000

25,000,000,000

30,000,000,000

Current assets

LiabilitiesYear 2012 2013 2014 2015

Liabilities (Rs.) 28,303,008,000 35,311,226,000 37,435,326,000 44,127,064,000

2012 2013 2014 20150

5,000,000,00010,000,000,00015,000,000,00020,000,000,00025,000,000,00030,000,000,00035,000,000,00040,000,000,00045,000,000,00050,000,000,000

Liabilities

• Current assets are high in 2014, But Liabilities is higher in 2015

• But finally net assets are high in 2014, due to high current assets

Thank You!