Step 1: Download the 2019 Annual Report from the companys website. Since some companies issue financials in both Canadian and US dollars following different accounting rules (e.g., IFRS vs. US-GAAP), make sure to download the statements using Canadian dollars. Transfer the companys consolidated balance sheets and consolidated statements of operations (i.e., income statement) into an Excel workbook. Note that the annual is a bit tough to read, especially if you haven't taken an accounting course in a while. You can find the numbers that you need in the consolidated financial statements starting on page 124.

Step 2: Calculate the following ratios for the past 2 fiscal years. You must clearly show the calculations in your spreadsheet and should not download pre-calculated ratios from another source. (25 marks)

Current ratio

Quick ratio

Inventory turnover

Days of inventory on hand

Accounts receivable turnover

Average collection period

Asset turnover

Gross profit margin

Net profit margin T

otal debt ratio

Return on assets

Return on equity

Interest coverage ratio

Step 3: Perform a 3-stage DuPont analysis. Note that this needs appropriate analysis, not just a calculation. (15 marks)

Step 4: Comment on any areas of strength or weakness of the company, based on your results of Steps 2 and 3 above. Make sure to look, not just at absolute levels, but also trends over time in solvency, liquidity, profitability, and asset management ratios (20 marks).

Step 5: Compare your results with the management discussion and analysis in the annual report. Examine any differences between their comments and your analysis. You will be assessed on correct use of financial statement analysis tools from the course material, providing thoughtful analysis that draws on the theories discussed in the course as well as links to what is happening with Telus in the current market. (20 marks)

Step 6: Explain whether there would be any difference to your analysis if you were an investor or if you were the CFO. How would the data quality differ in those two roles? (20 marks)

Note 2019 2019 2018 Years ended December 31 (millions except per share amounts) Operating Revenues Service Equipment Revenues arising from contracts with customers Other operating income 6 $ 12,400 2,189 14,589 69 14,658 $ 11,882 2,213 14,095 273 14,368 7 Operating Expenses Goods and services purchased Employee benefits expense Depreciation Amortization of intangible assets 8 6,070 3,034 1,929 6,368 2,896 1,669 598 17 18 648 11,681 11,531 2,837 2,977 Operating Income Financing costs Income Before Income Taxes 9 733 661 2,244 2,176 552 Income taxes 10 468 Net Income 1,776 1,624 11 Other Comprehensive Income Items that may subsequently be reclassified to income Change in unrealized fair value of derivatives designated as cash flow hedges Foreign currency translation adjustment arising from translating financial statements of foreign operations 84 (18) 20 (30) (48) 104 Items never subsequently reclassified to income Change in measurement of investment financial assets Employee defined benefit plan re-measurements 12 (1) 333 332 (338) (326) (222) $ 1,554 284 $ 1,908 Comprehensive Income Net Income Attributable to: Common Shares Non-controlling interests $ 1,746 $ 1,600 24 30 $ 1,776 $ 1,624 Comprehensive Income Attributable to: Common Shares Non-controlling interests $ 1,516 38 $ 1,554 $ 1,898 10 $ 1,908 12, 28(b) Net Income Per Common Share Basic $ 2.90 $ 2.68 $ 2.90 $ 2.68 Diluted Total We Common Shares Outstanding 602 597 Basic Diluted 602 597 The accompanying notes are an integral part of these consolidated financial statements. Note 2019 2018 $ $ 414 1,600 6(b) As at December 31 (millions) Assets Current assets Cash and temporary investments, net Accounts receivable Income and other taxes receivable Inventories Contract assets Prepaid expenses Current derivative assets 3 535 1,962 127 437 737 547 376 100) 6(c) 20 4/h) 860 539 8 49 4,353 3,841 17 18 Non-current assets Property, plant and equipment, net Intangible assets, net Goodwill, net Contract assets Other long-term assets 18 6(c) 20 14,232 12,812 5,331 328 919 12,091 10,934 4,747 458 986 33,622 $ 37,975 29,216 $ 33,057 22 $ $ 100 23 2,570 218 Liabilities and Owners' Equity Current liabilities Short-term borrowings Accounts payable and accrued liabilities Income and other taxes payable Dividends payable Advance billings and customer deposits Provisions Current maturities of long-term debt Current derivative liabilities 13 100 2,749 55 352 675 288 1,332 23 24 326 656 129 25 836 26 4(n) 9 5,574 4,844 25 Non-current liabilities Provisions Long-term debt Other long-term liabilities Deferred income taxes 26 590 17,142 806 3,204 728 13,265 731 3,148 27 10 17,872 21,742 27,316 22,716 Liabilities Owners' equity Common equity Non-controlling interests 28 10,548 111 10,259 82 10,341 10,659 $ 37,975 $ 33,057 Note 2019 2019 2018 Years ended December 31 (millions except per share amounts) Operating Revenues Service Equipment Revenues arising from contracts with customers Other operating income 6 $ 12,400 2,189 14,589 69 14,658 $ 11,882 2,213 14,095 273 14,368 7 Operating Expenses Goods and services purchased Employee benefits expense Depreciation Amortization of intangible assets 8 6,070 3,034 1,929 6,368 2,896 1,669 598 17 18 648 11,681 11,531 2,837 2,977 Operating Income Financing costs Income Before Income Taxes 9 733 661 2,244 2,176 552 Income taxes 10 468 Net Income 1,776 1,624 11 Other Comprehensive Income Items that may subsequently be reclassified to income Change in unrealized fair value of derivatives designated as cash flow hedges Foreign currency translation adjustment arising from translating financial statements of foreign operations 84 (18) 20 (30) (48) 104 Items never subsequently reclassified to income Change in measurement of investment financial assets Employee defined benefit plan re-measurements 12 (1) 333 332 (338) (326) (222) $ 1,554 284 $ 1,908 Comprehensive Income Net Income Attributable to: Common Shares Non-controlling interests $ 1,746 $ 1,600 24 30 $ 1,776 $ 1,624 Comprehensive Income Attributable to: Common Shares Non-controlling interests $ 1,516 38 $ 1,554 $ 1,898 10 $ 1,908 12, 28(b) Net Income Per Common Share Basic $ 2.90 $ 2.68 $ 2.90 $ 2.68 Diluted Total We Common Shares Outstanding 602 597 Basic Diluted 602 597 The accompanying notes are an integral part of these consolidated financial statements. Note 2019 2018 $ $ 414 1,600 6(b) As at December 31 (millions) Assets Current assets Cash and temporary investments, net Accounts receivable Income and other taxes receivable Inventories Contract assets Prepaid expenses Current derivative assets 3 535 1,962 127 437 737 547 376 100) 6(c) 20 4/h) 860 539 8 49 4,353 3,841 17 18 Non-current assets Property, plant and equipment, net Intangible assets, net Goodwill, net Contract assets Other long-term assets 18 6(c) 20 14,232 12,812 5,331 328 919 12,091 10,934 4,747 458 986 33,622 $ 37,975 29,216 $ 33,057 22 $ $ 100 23 2,570 218 Liabilities and Owners' Equity Current liabilities Short-term borrowings Accounts payable and accrued liabilities Income and other taxes payable Dividends payable Advance billings and customer deposits Provisions Current maturities of long-term debt Current derivative liabilities 13 100 2,749 55 352 675 288 1,332 23 24 326 656 129 25 836 26 4(n) 9 5,574 4,844 25 Non-current liabilities Provisions Long-term debt Other long-term liabilities Deferred income taxes 26 590 17,142 806 3,204 728 13,265 731 3,148 27 10 17,872 21,742 27,316 22,716 Liabilities Owners' equity Common equity Non-controlling interests 28 10,548 111 10,259 82 10,341 10,659 $ 37,975 $ 33,057