Vodafone Interpretation Debt Ratios

Vodafone Interpretation
Debt Ratios:
Debt Ratio:
This ratio measures the scale of the company’s influence or impact, where it can also show how a company would manage their assets which are financed by debt, simply the magnitude to company’s debt. Therefore, based on the Vodafone’s table of comparison of the years 2016 and 2017, the ratio had two similar proportions. In 2017, the debt ratio was 29.3%, and 29.6% in 2016, and that means the company’s total debt dropped by a very small percentage, which did not make a big difference between the two years. To sum up, that is not a healthy situation as long as the ratio is high.

Time Interest earned ratio:
It measures a company’s capability of commitment to cover its debts. In the table there is an obvious big difference between the two years, and that would show the variable debt coverage based on Vodafone’s EBIT and Interest. For 2016 the ratio was $23.4, however in 2017 the interest earned ratio decreased to $9.33. Apparently, Vodafone had the ability to pay the interest to the debtors in 2016 twice the ratio of 2017.

Profitability Ratios:
Gross Profit Margin:
It is a financial method of measuring if the company is financially healthy by showing the proportion of the left-over money from the benefits from the accounting of cost of goods sold. In Vodafone’s case, the proportion in 2016 was 1.44 which is lower than 2017’s ratio of 1.36. Although, Vodafone was able to pay in 2017 for its operating expenses, more than in 2016 by a small ratio.
Operating Profit Margin: (on process)
It measures the amount of profit a company can make on a $1 of sales, and that is after paying for variable costs, such as; production supplies, however that is before paying the tax or interest. (2016, 2017 ratios needed)
Net Profit Margin: (on process)
This ratio measures how much benefit each $1 of sales can be produced, after excluding all expenses like taxes, interest and preferred stock dividends. (2016, 2017 ratios needed)
Earnings Per Share: (on process)
This ratio measures or calculate the share of a company’s benefit that can be assigned to each share from the common stock. (2016, 2017 ratios needed)
Return on Assets: (on process)
It is an indicator of how a company would manage its total assets to obtain profit. This ratio guides the investors, managers, or analysts to properly use their assets and earn from it. (2016, 2017 ratios needed)
Return on Common Equity: (on process)
It measures a company’s financial performance after investing in the firm and earn from it. Moreover, it can represent the proportion of the net income and equity after being calculated. (2016, 2017 ratios needed)