Financial Statement Analysis of SLT Mobitel from year 2021 to 2022

 

1)      Company profile

SLT Mobitel is Sri Lanka's primary provider of information and communications technology solutions, offering a diverse range of services to both residential and business users. It is completely owned by Sri Lanka Telecom (SLT), the country's largest provider of broadband and backbone infrastructure services.

The organisation is committed to offering the best ICT services and solutions to its consumers. It is also committed to leading the growth of Sri Lanka's digital economy. Through its service offerings, SLT Mobitel aims to transform Sri Lanka into an information and knowledge-rich society. The mission of SLT Mobitel is to Care, Share, and Deliver. SLT Mobitel is a young and innovative company that is constantly looking for new ways to serve its clients and contribute to the expansion of Sri Lanka's digital economy. With approximately 2,000 people, SLT Mobitel is a major employer in Sri Lanka. The headquarters of the corporation are in Colombo, Sri Lanka.

 

 

2)      SLT Mobitel company financial statement analysis

SLT Mobitel is a Sri Lankan telecommunications company that provides a wide range of services, including fixed-line telephony, mobile telephony, broadband internet, and television. The company is the largest telecommunications provider in Sri Lanka, with over 10 million subscribers. SLT Mobitel's financial performance has been strong in recent years. The company is well-positioned to benefit from the continued growth of the Sri Lankan telecommunications market. Here is a more detailed analysis of SLT Mobitel's financial statements for the year 2021 to 2022.

 

 

 

 

 

 

 

 

 

 

      I.            Horizontal Analysis

 

Horizontal analysis is a type of financial analysis. Horizontal analysis examines the financial performance of a corporation throughout time.

 

Table 1 – Horizontal analysis

	2022	2021	Dollar Change	Percentage change
Assets
Non-current assets
Property, Plant & Equipment	127,061,000,000	105,854,000,000	21,207,000,000	20.03%
Right of use asset	613,000,000	805,000,000	-192,000,000	-23.85%
Intangible assets	3,643,000,000	2,832,000,000	811,000,000	28.64%
Investments in subsidiaries	14,431,000,000	14,431,000,000	0	0.00%
Investments in associates	439,000,000	214,000,000	225,000,000	105.14%
Contract assets	313,000,000	233,000,000	80,000,000	34.33%
Other receivables	3,295,000,000	2,657,000,000	638,000,000	24.01%
Total non-current assets	149,795,000,000	127,026,000,000	22,769,000,000	17.92%
Current assets
Inventories	2,405,000,000	2,039,000,000	366,000,000	17.95%
Trade and other receivables	23,677,000,000	18,682,000,000	4,995,000,000	26.74%
Contract assets	122,000,000	164,000,000	-42,000,000	-25.61%
Other investments	3,976,000,000	8,288,000,000	-4,312,000,000	-52.03%
Cash and cash equivalents	6,051,000,000	1,615,000,000
Total current assets	36,231,000,000	31,178,000,000	5,053,000,000	16.21%
Total assets	186,026,000,000	158,204,000,000	27,822,000,000	17.59%
Equity Capital and Reserve
Stated Capital	18,049,000,000	18,049,000,000	0	0.00%
Insurance Reserve	300,000,000	1,105,000,000	-805,000,000	-72.85%
Retained Earnings	51,197,000,000	46,518,000,000	4,679,000,000	10.06%
Total equity	69,546,000,000	65,672,000,000	3,874,000,000	5.90%
Current liabilities
Trade and other payables	32,399,000,000	22,805,000,000	9,594,000,000	42.07%
Borrowings	13,310,000,000	7,256,000,000	6,054,000,000	83.43%
Vendor financing	1,745,000,000	171,000,000	1,574,000,000	920.47%
Lease liability	227,000,000	216,000,000	11,000,000	5.09%
contract liabilities	716,000,000	684,000,000	32,000,000	4.68%
Deferred income	221,000,000	383,000,000	-162,000,000	-42.30%
Current tax liabilities	441,000,000	1,474,000,000	-1,033,000,000	-70.08%
Total current liabilities	49,059,000,000	32,989,000,000	16,070,000,000	48.71%
Non-current liabilities
Trade and other payables	7,804,000,000	5,283,000,000	2,521,000,000	47.72%
Borrowings	30,332,000,000	35,807,000,000	-5,475,000,000	-15.29%
Vendor financing	13,057,000,000	5,961,000,000	7,096,000,000	119.04%
Lease liability	428,000,000	613,000,000	-185,000,000	-30.18%
contract liabilities	1,483,000,000	1,071,000,000	412,000,000	38.47%
Deferred income	1,469,000,000	1,666,000,000	-197,000,000	-11.82%
Deferred tax liabilities	8,002,000,000	4,870,000,000	3,132,000,000	64.31%
Employee benefits	4,846,000,000	4,272,000,000	574,000,000	13.44%
Total Non-current liabilities	67,421,000,000	59,543,000,000	7,878,000,000	13.23%
Total liabilities	116,480,000,000	92,532,000,000	23,948,000,000	25.88%
Total equity and liabilities	186,026,000,000	158,204,000,000	27,822,000,000	17.59%
Revenue	67,569,000,000	59,811,000,000	7,758,000,000	12.97%
Direct costs	-38,542,000,000	-34,919,000,000	-3,623,000,000	10.38%
Gross profit	29,027,000,000	24,892,000,000	4,135,000,000	16.61%
Sales and Marketing cost	-6,066,000,000	-5,599,000,000	-467,000,000	8.34%
Administrative Cost	-17,004,000,000	-15,957,000,000	-1,047,000,000	6.56%
Operating profit	5,957,000,000	3,336,000,000	2,621,000,000	78.57%
Other income	1,083,000,000	1,293,000,000	-210,000,000	-16.24%
Dividend income	2,297,000,000	1,489,000,000	808,000,000	54.26%
Interest expense and finance costs	-3,782,000,000	-1,825,000,000	-1,957,000,000	107.23%
Foreign exchange (loss)/gain	5,152,000,000	76,000,000	5,076,000,000	6678.95%
Interest income	1,717,000,000	630,000,000	1,087,000,000	172.54%
Share of profit from associates’ company	224,000,000	86,000,000	138,000,000	160.47%
Profit before tax	12,648,000,000	5,085,000,000	7,563,000,000	148.73%
Income tax (expenses)	-4,185,000,000	780,000,000	-4,965,000,000	-636.54%
Profit for the year	8,463,000,000	5,865,000,000	2,598,000,000	44.30%

 

 

 

 

The horizontal analysis shows that revenue increased by 12.97% from 2022 to 2023. Cost of goods sold increased by 10.38%, which is slightly lower than the increase in revenue. This resulted in an increase in gross profit from 16.61%. Operating profit increased by 78.57%, which is higher than the increase in cost of goods sold. Net income increased by 44.30%, which is higher than the increase in revenue and lower than the increase in operating expenses.

Overall, the horizontal analysis shows that revenue is increasing, but costs and expenses are increasing at a slightly lower rate. This is resulting in an increase in margins and a decrease in net income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   II.            Trend Analysis

 

Trend analysis examines the changes in a company's financial performance over time. This can help you comprehend the company's overall growth trajectory.

Table 2 – Trend analysis

	2022	2021	Trend precent
Assets
Non-current assets
Property, Plant & Equipment	127,061,000,000	105,854,000,000	120.03%
Right of use asset	613,000,000	805,000,000	76.15%
Intangible assets	3,643,000,000	2,832,000,000	128.64%
Investments in subsidiaries	14,431,000,000	14,431,000,000	100.00%
Investments in associates	439,000,000	214,000,000	205.14%
Contract assets	313,000,000	233,000,000	134.33%
Other receivables	3,295,000,000	2,657,000,000	124.01%
Total non-current assets	149,795,000,000	127,026,000,000	117.92%
Current assets
Inventories	2,405,000,000	2,039,000,000	117.95%
Trade and other receivables	23,677,000,000	18,682,000,000	126.74%
Contract assets	122,000,000	164,000,000	74.39%
Other investments	3,976,000,000	8,288,000,000
Cash and cash equivalents	6,051,000,000	1,615,000,000	374.67%
Total current assets	36,231,000,000	31,178,000,000	116.21%
Total assets	186,026,000,000	158,204,000,000	117.59%
Equity Capital and Reserve
Stated Capital	18,049,000,000	18,049,000,000	100.00%
Insurance Reserve	300,000,000	1,105,000,000	27.15%
Retained Earnings	51,197,000,000	46,518,000,000	110.06%
Total equity	69,546,000,000	65,672,000,000	105.90%
Current liabilities
Trade and other payables	32,399,000,000	22,805,000,000	142.07%
Borrowings	13,310,000,000	7,256,000,000	183.43%
Vendor financing	1,745,000,000	171,000,000	1020.47%
Lease liability	227,000,000	216,000,000	105.09%
contract liabilities	716,000,000	684,000,000	104.68%
Deferred income	221,000,000	383,000,000	57.70%
Current tax liabilities	441,000,000	1,474,000,000	29.92%
Total current liabilities	49,059,000,000	32,989,000,000	148.71%
Non-current liabilities
Trade and other payables	7,804,000,000	5,283,000,000	147.72%
Borrowings	30,332,000,000	35,807,000,000	84.71%
Vendor financing	13,057,000,000	5,961,000,000	219.04%
Lease liability	428,000,000	613,000,000	69.82%
contract liabilities	1,483,000,000	1,071,000,000	138.47%
Deferred income	1,469,000,000	1,666,000,000	88.18%
Deferred tax liabilities	8,002,000,000	4,870,000,000	164.31%
Employee benefits	4,846,000,000	4,272,000,000	113.44%
Total Non-current liabilities	67,421,000,000	59,543,000,000	113.23%
Total liabilities	116,480,000,000	92,532,000,000	125.88%
Total equity and liabilities	186,026,000,000	158,204,000,000	117.59%
Revenue	67,569,000,000	59,811,000,000	112.97%
Direct costs	-38,542,000,000	-34,919,000,000	110.38%
Gross profit	29,027,000,000	24,892,000,000	116.61%
Sales and Marketing cost	-6,066,000,000	-5,599,000,000	108.34%
Administrative Cost	-17,004,000,000	-15,957,000,000	106.56%
Operating profit	5,957,000,000	3,336,000,000	178.57%
Other income	1,083,000,000	1,293,000,000	83.76%
Dividend income	2,297,000,000	1,489,000,000	154.26%
Interest expense and finance costs	-3,782,000,000	-1,825,000,000	207.23%
Foreign exchange (loss)/gain	5,152,000,000	76,000,000	6778.95%
Interest income	1,717,000,000	630,000,000	272.54%
Share of profit from associates’ company	224,000,000	86,000,000	260.47%
Profit before tax	12,648,000,000	5,085,000,000	248.73%
Income tax (expenses)	-4,185,000,000	780,000,000	-536.54%
Profit for the year	8,463,000,000	5,865,000,000	144.30%

 

 

Graph 1 – Trend analysis 2022 -2021

 

Trend analysis shows that the company's revenue has been increasing. The company's cost of goods sold has also been increasing, but at a slower rate than revenue. This has resulted in an increase in gross profit margin. The company's operating profit have also been increasing, but at a lower rate than re. The company's net income has also been increasing, but at a higher rate than revenue. This has resulted in an increase in net income margin.

Overall, the trend analysis shows that the company is still growing. The company's margins are also increasing, which suggests that the company is becoming more efficient. However, the company's net income margin is increasing.

 

 

III.            Vertical analysis

 

Vertical analysis is a useful method for determining trends and evaluating a company's financial performance. It can help investors, analysts, and managers make sound judgements.

Table 3 – Vertical analysis part 1

	2022	Common size precents	2021	Common size precents
Assets
Non-current assets
Property, Plant & Equipment	127,061,000,000	68.30%	105,854,000,000	66.91%
Right of use asset	613,000,000	0.33%	805,000,000	0.51%
Intangible assets	3,643,000,000	1.96%	2,832,000,000	1.79%
Investments in subsidiaries	14,431,000,000	7.76%	14,431,000,000	9.12%
Investments in associates	439,000,000	0.24%	214,000,000	0.14%
Contract assets	313,000,000	0.17%	233,000,000	0.15%
Other receivables	3,295,000,000	1.77%	2,657,000,000	1.68%
Total non-current assets	149,795,000,000	80.52%	127,026,000,000	80.29%
Current assets
Inventories	2,405,000,000	1.29%	2,039,000,000	1.29%
Trade and other receivables	23,677,000,000	12.73%	18,682,000,000	11.81%
Contract assets	122,000,000	0.07%	164,000,000	0.10%
Other investments	3,976,000,000	2.14%	8,288,000,000	5.24%
Cash and cash equivalents	6,051,000,000	3.25%	1,615,000,000	1.02%
Total current assets	36,231,000,000	19.48%	31,178,000,000	19.71%
Total assets	186,026,000,000	100.00%	158,204,000,000	100.00%

 

 

Graph 2 – Vertical analysis 2022-2021 assets

 

 

 

 

Table 4 – Vertical analysis part 2

	2022	Common size precents	2021	Common size precents
Equity Capital and Reserve
Stated Capital	18,049,000,000	9.70%	18,049,000,000	11.41%
Insurance Reserve	300,000,000	0.16%	1,105,000,000	0.70%
Retained Earnings	51,197,000,000	27.52%	46,518,000,000	29.40%
Total equity	69,546,000,000	37.39%	65,672,000,000	41.51%
Current liabilities				0.00%
Trade and other payables	32,399,000,000	17.42%	22,805,000,000	14.41%
Borrowings	13,310,000,000	7.15%	7,256,000,000	4.59%
Vendor financing	1,745,000,000	0.94%	171,000,000	0.11%
Lease liability	227,000,000	0.12%	216,000,000	0.14%
contract liabilities	716,000,000	0.38%	684,000,000	0.43%
Deferred income	221,000,000	0.12%	383,000,000	0.24%
Current tax liabilities	441,000,000	0.24%	1,474,000,000	0.93%
Total current liabilities	49,059,000,000	26.37%	32,989,000,000	20.85%
Non-current liabilities
Trade and other payables	7,804,000,000	4.20%	5,283,000,000	3.34%
Borrowings	30,332,000,000	16.31%	35,807,000,000	22.63%
Vendor financing	13,057,000,000	7.02%	5,961,000,000	3.77%
Lease liability	428,000,000	0.23%	613,000,000	0.39%
contract liabilities	1,483,000,000	0.80%	1,071,000,000	0.68%
Deferred income	1,469,000,000	0.79%	1,666,000,000	1.05%
Deferred tax liabilities	8,002,000,000	4.30%	4,870,000,000	3.08%
Employee benefits	4,846,000,000	2.61%	4,272,000,000	2.70%
Total Non-current liabilities	67,421,000,000	36.24%	59,543,000,000	37.64%
Total liabilities	116,480,000,000	62.61%	92,532,000,000	58.49%
Total equity and liabilities	186,026,000,000	100.00%	158,204,000,000	100.00%

 

 

 

Graph 3 – Trend analysis 2022 -2021 Equity and liabilities

 

 

 

Table 5– Vertical analysis part 3

	2022	Common size precents	2021	Common size precents
Revenue	67,569,000,000	100.00%	59,811,000,000	100.00%
Direct costs	-38,542,000,000	-57.04%	-34,919,000,000	-58.38%
Gross profit	29,027,000,000	42.96%	24,892,000,000	41.62%
Sales and Marketing cost	-6,066,000,000	-8.98%	-5,599,000,000	-9.36%
Administrative Cost	-17,004,000,000	-25.17%	-15,957,000,000	-26.68%
Operating profit	5,957,000,000	8.82%	3,336,000,000	5.58%
Other income	1,083,000,000	1.60%	1,293,000,000	2.16%
Dividend income	2,297,000,000	3.40%	1,489,000,000	2.49%
Interest expense and finance costs	-3,782,000,000	-5.60%	-1,825,000,000	-3.05%
Foreign exchange (loss)/gain	5,152,000,000	7.62%	76,000,000	0.13%
Interest income	1,717,000,000	2.54%	630,000,000	1.05%
Share of profit from associates’ company	224,000,000	0.33%	86,000,000	0.14%
Profit before tax	12,648,000,000	18.72%	5,085,000,000	8.50%
Income tax (expenses)	-4,185,000,000	-6.19%	780,000,000	1.30%
Profit for the year	8,463,000,000	12.52%	5,865,000,000	9.81%

 

 

Graph 4 – vertical analysis 2022 -2021 financial statement

 

 

                   

 

 

 

 

 

IV.            Liquidity and Efficiency

 

Both liquidity and efficiency are critical financial measures for firms. Liquidity is vital because it enables firms to satisfy their short-term obligations, such as bill payment and payroll. Efficiency is crucial because it enables firms to earn more money with less resources, resulting in better profits.

 

Table 6 – liquidity and efficiency analysis

	2022	2021
Total current assets	36,231,000,000	31,178,000,000
Total current liabilities	49,059,000,000	32,989,000,000
Working capital	-12,828,000,000	-1,811,000,000
Current ratio	0.738518926	0.945102913
Quick assets	33,826,000,000	29,139,000,000
Acid Test ratio	0.6895	0.8833
Revenue	67,569,000,000	59,811,000,000
This year accounts receivables	23,677,000,000	18,682,000,000
last year account receivable	18,682,000,000	17,932,000,000
Average accounts receivable	21,179,500,000	18,307,000,000
Accounts receivable turnover	3.1903	3.2671
Direct costs	38,542,000,000	34,919,000,000
This year Inventory	2,405,000,000	2,039,000,000
Last year inventory	2,039,000,000	2,634,000,000
Average inventory	2,222,000,000	2,336,500,000
Merchandise turnover	17.3456	14.9450
Revenue	67,569,000,000	59,811,000,000
Accounts Receivable	23,677,000,000	18,682,000,000
Days sales uncollected	127	114
Inventory	2,405,000,000	2,039,000,000
Cost of sales	38,542,000,000	34,919,000,000
Days sales inventory	22	21
Revenue	67,569,000,000	59,811,000,000
This year Total assets	186,026,000,000	158,204,000,000
Last year total assets	158,204,000,000	146,189,000,000
average total assets	172,115,000,000	152,196,500,000
Total asset turnover	0.3926	0.3930

 

The current ratio fell from 0.9451 in 2021 to 0.7385 in 2022, indicating a company's capacity to satisfy its short-term obligations. This suggests that SLT Mobitel has more current liabilities than current assets, which is a bad trend.

The acid-test ratio fell from 0.8833 in 2021 to 0.6895 in 2022, indicating a company's capacity to pay short-term obligations without selling inventories. This also suggests that SLT Mobitel's liquidity may deteriorate in 2022.This mean without inventories and repayment company is in difficulty to pay short term liability.

The accounts receivable turnover ratio, which measures how quickly a company collects its accounts receivable, increased from 3.267 times in 2021 to 3.19 times in 2022. This indicates that SLT Mobitel is collecting its accounts receivable slowly, which is a negative development.

The merchandise turnover ratio, which measures how quickly a company sells its inventory, increased from 14.945 times in 2021 to 17.3456 times in 2022. This indicates that SLT Mobitel is selling its inventory slowly, which is also a negative development.

Days Sales Uncollected is a financial ratio that measures the average number of days it takes a company to collect its accounts receivable. 114 days in 2021 to 127 days in 2022. DSU has been increased. It’s not good sign.

Days sales inventory (DSI) is a financial ratio that measures the average number of days it takes a company to sell its inventory. 21 days in 2021 to 22 days in 2022. DSU has been increased by 1 day. A higher DSI can indicate that a company is having difficulty selling its inventory, which can tie up cash and impact its cash flow.

Total asset turnover is a financial ratio that measures how efficiently a company is using its assets to generate revenue. 0.3930 times in 2021 to 0.3926 times in 2022.

 

 

 

 

 

 

 

 

 

 

 

 

   V.            Solvency

 

The ability of a corporation to satisfy its long-term debt obligations is referred to as its solvency.

 

 

 

Table 7 – solvency analysis

	2022	2021
Total liabilities	116,480,000,000	92,532,000,000
Total assets	186,026,000,000	158,204,000,000
Debt ratio	62.61%	58.49%
Total equity	69,546,000,000	65,672,000,000
Total assets	186,026,000,000	158,204,000,000
Equity ratio	37.39%	41.51%
Debt ratio + equity ratio	100.00%	100.00%
Profit before tax	12,648,000,000	5,085,000,000
Income tax (expenses)/reversal	-4,185,000,000	780,000,000
Net income before interest expense and income tax	8,463,000,000	5,865,000,000
Times interest earn	-2.022222222	7.519230769

 

 

 

The debt ratio is a measure of how much debt a company has relative to its assets. A higher debt ratio indicates that the company is more leveraged and at greater risk of defaulting on its debt obligations. The debt ratio of the company increased from 58.49% in 2021 to 62.61% in 2022, which is a negative development.

The equity ratio is a measure of how much equity a company has relative to its assets. A higher equity ratio indicates that the company is less leveraged and more financially stable. The equity ratio of the company decreased from 41.51% in 2021 to 37.39% in 2022, which is also a negative development.

The times interest earned ratio is a measure of a company's ability to generate enough cash flow to cover its interest payments. A higher times interest earned ratio indicates that the company is better able to meet its interest obligations. The times interest earned ratio of the company decreased from 7.52 in 2021 to -2.02 in 2022, which is a very negative development. A negative times interest earned ratio indicates that the company is not generating enough cash flow to cover its interest payments.

Overall, the financial statement shows that the company's financial performance deteriorated in 2022. The company's debt ratio increased, its equity ratio decreased, and its times interest earned ratio became negative. These are all signs that the company is at risk of defaulting on its debt obligations.

The company should take steps to improve its financial performance and reduce its risk of bankruptcy. Some possible steps are reducing debt, increasing cash flow, diversifying business operations, improving operational efficiency.

If the company is unable to improve its financial performance, it may need to consider filing for bankruptcy. Bankruptcy can give the company time to reorganize its finances and develop a plan to pay off its creditors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VI.            Profitability

 

Profitability is a company's ability to create profit. It is determined by the amount of profit generated by a firm in relation to its revenue, costs, and assets.

 

 

 

Table 8 – profitability analysis

	2022	2021
Net income	8,463,000,000	5,865,000,000
Net Sales	67,569,000,000	59,811,000,000
profit margin	12.52%	9.81%
Gross profit	29,027,000,000	24,892,000,000
Net Sales	67,569,000,000	59,811,000,000
Gross margin	42.96%	41.62%
Net income	8,463,000,000	5,865,000,000
average total assets	4,231,500,000	2,932,500,000
Return on total assets	200.00%	200.00%
Net profit after tax	8,463,000,000	5,865,000,000
Total equity	69,546,000,000	65,672,000,000
Last year Shareholder's equity	65,672,000,000	62,443,000,000
Average Shareholder's equity	67,609,000,000	64,057,500,000
Return on common shareholders’ equity	12.52%	9.16%
Stated Capital	18,049,000,000	18,049,000,000
Common shares Outstanding	18,049,000,000	18,049,000,000
Book value per common share	1	1
Net profit after tax	8,463,000,000	5,865,000,000
Common shares Outstanding	1,805,000,000	1,805,000,000
Basic Earnings per share	4.69	3.25

 

 

The company's profit margin improved from 9.81% in 2021 to 12.52% in 2022.This is a favourable trend since it signifies that the company is becoming more profitable and making more money from its revenue.

The company's gross margin improved from 41.62% in 2021 to 42.96% in 2022. This is a great development since it shows that the company can create more profit from its sales.

The return on total assets (ROA) of the company was 200.00% in both 2021 and 2022. This is an exceptionally high ROA, and it indicates that the company is very efficient at generating profit from its assets.

The return on common shareholders' equity (ROE) of the company increased from 9.16% in 2021 to 12.52% in 2022. This is a positive development, as it indicates that the company is more efficiently generating profit from its equity.

In 2021 and 2022, the company's book value per common share remained constant. This means the company's net assets per share remained unchanged. It should be noted that book value per common share is only one indicator of a company's financial health. Other aspects to examine include the company's market capitalization and price-to-book ratio. Overall, the company's book value per common share being constant in 2021 and 2022 is not always a bad thing. It simply signifies that the company's net assets per share have remained constant.

The basic earnings per share (EPS) of the company increased from 3.25 in 2021 to 4.69 in 2022. This is a positive development, as it indicates that the company is more profitable and is generating more profit per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VII.            Market

 

The market can be utilised as a financial analysis tool to evaluate a company's or industry's   performance.

 

Table 9 – Market analysis

	2022	2021
Market price per share	122.7	70.02
Earnings per share	4.69	3.25
PE Ratio	26.162	21.5446
Dividend per share	0.25	2.02
Market price per share	68	38.8
Dividend yield	0.37%	5.21%

 

 

The price-to-earnings (P/E) ratio of the company increased from 21.5446 in 2021 to 26.162 in 2022. This means that investors are willing to pay more per share for the company's earnings in 2022 than they were in 2021. Overall, the rising P/E ratio is a positive indicator for the company. It shows that investors are optimistic about the company's future growth potential.

However, high P/E ratio also indicates that the stock is more costly. As a result, before investing, investors should thoroughly analyse the company's fundamentals. To reduce the P/E ratio can increase earnings, reduce the stock price.

 

 

The dividend yield of the company decreased from 5.21% in 2021 to 0.37% in 2022. This is a significant decrease, and it indicates that the company is paying out a smaller portion of its earnings to shareholders in the form of dividends. It's crucial to remember that dividend yield is only one factor to consider when deciding on a stock. Other things to evaluate include the company's financial condition, competitive landscape, and management team. Overall, the decline in dividend yield is a bad sign for shareholders. This means that they will receive less money from dividends.

 

3)    Conclusion

To complete the financial statement analysis, we should look to the future based on past performance. It is commonly known that past performance does not guarantee future performance. We cannot, however, forecast a company's future without looking at the history. In this regard, I have evaluated "Altman's Z-score" among many other tools.

 

 

Altman Z-Score

 

	2022	2021
Working capital	-12,828,000,000	-1,811,000,000
Total assets	186,026,000,000	158,204,000,000
X1	-0.0690	-0.0114
Retained Earnings	51,197,000,000	46,518,000,000
Total assets	186,026,000,000	158,204,000,000
X2	0.2752	0.2940
Earning before tax	12,648,000,000	5,085,000,000
Total asset	186,026,000,000	158,204,000,000
X3	0.0680	0.0321
Market price per share	122.7	70.02
No. of shares	1,805,000,000	1,805,000,000
Market value of equity	221,473,500,000	126,386,100,000
Total liabilities	116,480,000,000	92,532,000,000
X4	1.9014	1.3659
Revenue	67,569,000,000	59,811,000,000
Total assets	186,026,000,000	158,204,000,000
X5	0.3632	0.3781
Z	2.5389	2.0587
	Grey Zone	Grey Zone

 

Evaluation of Z-score results

Z > 2.99	“Safe” Zone
1.80 < Z > 2.99	“Gray” Zone
Z < 1.80	“Stress” Zone

 

 

According to the z-score of SLT Mobitel, SLT Mobitel is in the “Grey Zone’’ during the past 2 year.

It should be noted that the Altman Z-Score is only one indicator of bankruptcy risk. Other aspects to examine when assessing a company's bankruptcy risk include its industry, competitive landscape, and management team.

Overall, the increase in SLT Mobitel's Altman Z-Score is a favorable sign. It suggests that the company's chances of going bankrupt have lessened.

There are several plausible explanations for the increase in SLT Mobitel's Altman Z-Score. Increased revenue and lower costs are two examples. Better financial management, A more stable economic climate.

SLT Mobitel is a financially sound company with a strong track record of growth and profitability. The company is well-positioned to benefit from the continued growth of the Sri Lankan telecommunications market.