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Financial analysis of Sprint

Subject: Financial Management

Paper Model: APA

Paper Type: Article

Total Words: 649

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Document Outline

Company introduction 
Financial ratios
Analysis
Gross margin: 
Operating margin: 
Net margin: 
Earnings per share: 
Asset turnover ratio: 
Return on equity: 
Return on invested capital: 
Current and quick ratio
Graphical analysis of ratios
Industry comparison
References


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Company introduction

Sprint is American holding company in telecommunication. It provides wireless services to its customers. It is also internet carrier. As per November 2015, it is serving 58.6 million customers. It was formed in 1899. Revenue for 03-2015 has been recorded $34,532million. It also provides messaging, wireless voice and broadband services with contribution of its subsidiaries. In 2013, its majority shares were purchased by Japanese Company. Remaining left shares are trading on NYSE. (sprint.com, 2015)

Financial ratios

Financial ratios have been analyzed for previous two years.

financial ratios

2013-12

2015-2015-03

Gross margin

42.10%

45.10%

Operating margin

-5.70%

-5.50%

Net margin  

-11.01%

-9.69%

Earnings per shares

-0.54

-0.85

Asset turn over

0.85

0.42

Return on asset

-2.7

-4.03

Return on equity

-11.39

-15.41

Return on invested capital

-2.14

-2.87

Interest coverage

-0.98

-0.91

Current ratio

12.2

8.9

Quick ratio

11.1

7.7

 

Analysis

Gross margin: Gross margin has been representing percentage of gross profit in revenue. Its revenue has been increased in 03-2015. That is the reason of increase in its gross margin. It is increased from 42.1% to 45.1%. Increasing trends is goods for Company.

Operating margin: Operating margin is negative in both observed year. Minor improvement in 03-2015 has been analyzed but still this ratio is negative. It is not good for company. It should control its operating expenses.

Net margin: Net margin ratio is used to analyze profitability of company. It is not satisfactory. This ratio is negative. Both years are showing negative results. Despite of increase in revenue, net income margin is negative due to heavy expenses like admin, marketing, operating, etc.

Earnings per share: This ratio indicates profitability as per single owner. Earnings per share have been reduced as compared to previous year. It is showing that company is going into loss as per its shareholders contributions.  

Asset turnover ratio: This ratio is showing that how much revenue has been generated with its assets value. This ratio is also reduced in 03-2015. It is showing that its performance in last latest years has been reduced.

Return on equity: Return on equity is also showing bad results. It is negative in both observed years. Its ability to generate profits from invested money of shareholders has been decreased.

Return on invested capital: this ratio also indicates company’s efficiency. This ratio is negative. It is indicating that company is not allocating its capital in profitable investment.

Interest coverage ratio: it is showing ability of


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