Telus Annual Report Analysis

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TELUS Corporation (The company)

1. Based on your review of the most recent annual financial statements and notes only, briefly assess the company’s performance for this potential investor. (Analyze based on data from Financial reports P71, 73, 74)

By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature
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TELUS will have big expenditures on capital assets replacement in the next few years. It doesn’t have significant amounts of debt due in recent three years, which will assure its liquidity. However, significant amounts of long-term debt mature in next few years, combing with the capital assets replacement expenditure could probably make readers worry about the company’s future financial situation and consequently feel hesitate to invest in the company. Therefore, they may want to know the earnings per share, which can be calculated from information provided in the shareholders’ equity section. This ratio shows how much rewards investors can get by investing at TELUS. Note 18 (g) p110 provides information about shareholders’ equity. It indicates that TELUS spent a lot of money on repurchasing its outstanding shares to maintain high share price. The financial activities also prove that TELUS has the ability to get loans and pay off its debt.
The cash flow statement on p74 is a summary of all the transactions that affected the cash account for the year. The cash flow statement helps to predict future cash flows. It helps to evaluate management decisions. Wise decisions lead to profits and strong cash flows, and vice versa. The investment activities show what investments the company is making. Cash flow statements also determine the company’s ability to pay dividends and debts. From the

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