Years ended December 31 (millions except per share amounts)					Note						2019		2018
Operating Revenues
Service											$ 12,400		$ 11,882
Equipment											2,189		2,213
Revenues arising from contracts with customers					6						14,589		14,095
Other operating income					7						69		273
											14,658		14,368
Operating Expenses
Goods and services purchased											6,070		6,368
Employee benefits expense					8						3,034		2,896
Depreciation					17						1,929		1,669
Amortization of intangible assets					18						648		598
											11,681		11,531
Operating Income											2,977		2,837
Financing costs					9						733		661
Income Before Income Taxes											2,244		2,176
Income taxes					10						468		552
Net Income											1,776		1,624
Other Comprehensive Income					11
Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as cash flow hedges											84		(18)
Foreign currency translation adjustment arising from translating financial statements of foreign operations											20		(30)
											104		(48)
Items never subsequently reclassified to income
Change in measurement of investment financial assets											12		(1)
Employee defined benefit plan re-measurements											(338)		333
											(326)		332
											(222)		284
Comprehensive Income											$ 1,554		$ 1,908
Net Income Attributable to:
Common Shares											$ 1,746		$ 1,600
Non-controlling interests											30		24
											$ 1,776		$ 1,624
Comprehensive Income Attributable to:
Common Shares											$ 1,516		$ 1,898
Non-controlling interests											38		10
											$ 1,554		$ 1,908
Net Income Per Common Share					12, 28(b)
Basic											$ 2.90		$ 2.68
Diluted											$ 2.90		$ 2.68
Total Weighted Average Common Shares Outstanding
Basic											602		597
Diluted											602		597
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31 (millions)								Note			2019		2018
Cash and temporary investments, net											$ 535		$ 414
Accounts receivable								6(b)			1,962		1,600
Income and other taxes receivable											127		3
Inventories								1(l)			437		376
Contract assets								6(c)			737		860
Prepaid expenses								20			547		539
Current derivative assets								4(h)			8		49
											4,353		3,841
Non-current assets Property, plant and equipment, net								17			14,232		12,091
Intangible assets, net								18			12,812		10,934
Goodwill, net								18			5,331		4,747
Contract assets								6(c)			328		458
Other long-term assets								20			919		986
											33,622		29,216
											$ 37,975		$ 33,057
Short term borrowing								22			$ 100		$ 100
Accounts payable and accrued liabilities								23			2,749		2,570
Income and other taxes payable											55		218
Dividends payable								13			352		326
Advance billings and customer deposits								24			675		656
Provisions								25			288		129
Current maturities of long-term debt								26			1,332		836
Current derivative liabilities								4(h)			23		9
											5,574		4,844
Non-current liabilities Provisions								25			590		728
Long-term debt								26			17,142		13,265
Other long-term liabilities								27			806		731
Deferred income taxes								10			3,204		3,148
											21,742		17,872
Liabilities											27,316		22,716
Owners equity Common equity								28			10,548		10,259
Non-controlling interests											111		82
											10,659		10,341
											$ 37,975		$ 33,057
Contingent liabilities								29
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Directors:
David L. Mowat Director			R.H. Auchinleck Director
TELUS 2019 ANNUAL REPORT 125
CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS EQUITY
Common equity
Equity contributed
		Common Shares (Note 28)							Accumulated other comprehensive income			Non- controlling interests
(millions)	Note	Number of shares		Share capital		Contributed surplus	Retained earnings			Total				Total
Balance as at January 1, 2018		595		$ 5,205		$ 370	$ 3,794		$ 47	$ 9,416		$ 42		$ 9,458
Net income	2(c)						1,600			1,600		24		1,624
Other comprehensive income	11						333		(35)	298		(14)		284
Dividends	13						(1,253)			(1,253)				(1,253)
Dividends reinvested and optional cash payments	13(b), 14(c)	2		86						86				86
Treasury shares acquired	16(c), 28(c)	(2)		(100)						(100)				(100)
Shares settled from Treasury	16(c), 28(c)	2		100						100				100
Share option award net-equity settlement feature	14(d)			1		(1)
Issue of shares in business combination		2		98						98				98
Change in ownership interests of subsidiary	31(a)					14				14		30		44
Balance as at December 31, 2018		599		$ 5,390		$ 383	$ 4,474		$ 12	$ 10,259		$ 82		$ 10,341
Balance as at January 1, 2019
As previously reported		599		$ 5,390		$ 383	$ 4,474		$ 12	$ 10,259		$ 82		$ 10,341
IFRS 16, Leases transitional amount	2(c)						(153)		(1)	(154)		(8)		(162)
As adjusted		599		5,390		383	4,321		11	10,105		74		10,179
Net income							1,746			1,746		30		1,776
Other comprehensive income	11						(338)		108	(230)		8		(222)
Dividends	13						(1,358)			(1,358)				(1,358)
Dividends reinvested and optional cash payments	13(b), 14(c)	4		184						184				184
Equity accounted share-based compensation	14(b)			13		20				33				33
Share option award net-equity settlement feature	14(d)			1		(1)
Issue of shares in business combination	18(b)	2		72						72				72
Change in ownership interests of subsidiary						(4)				(4)		(1)		(5)
Balance as at December 31, 2019		605		$ 5,660		$ 398	$ 4,371		$ 119	$ 10,548		$ 111		$ 10,659
The accompanying notes are an integral part of these consolidated financial statements.
126 TELUS 2019 ANNUAL REPORT
TELUS 2019 ANNUAL REPORT 127
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31 (millions)								Note			2019		2018
Operating Activities
Net income											$ 1,776		$ 1,624
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization											2,577		2,267
Deferred income taxes								10			115		74
Share-based compensation expense, net								14(a)			(2)		16
Net employee defined benefit plans expense								15(b)			78		95
Employer contributions to employee defined benefit plans											(41)		(53)
Non-current contract assets											130		(62)
Non-current unbilled customer finance receivables								20			(178)		(8)
Loss (income) from equity accounted investments								7, 21			(4)		(170)
Shares settled from Treasury								16(c)					100
Other											(192)		(81)
Net change in non-cash operating working capital								31(a)			(332)		256
Cash provided by operating activities											3,927		4,058
Investing Activities
Cash payments for capital assets, excluding spectrum licences								31(a)			(2,952)		(2,874)
Cash payments for spectrum licences								18(a)			(942)		(1)
Cash payments for acquisitions, net								18(b)			(1,105)		(280)
Advances to real estate joint ventures								21			(35)		(22)
Real estate joint venture receipts								21			7		184
Proceeds on dispositions											16		38
Other											(33)		22
Cash used by investing activities											(5,044)		2,977
Financing Activities								31(b)
Dividends paid to holders of Common Shares								13(a)			(1,149)		(1,141)
Treasury shares acquired													(100)
Issue (repayment) of short-term borrowings, net											(1)		(67)
Long-term debt issued								26			7,705		5,500
Redemptions and repayment of long-term debt								26			(5,261)		(5,377)
Shares of subsidiary (purchased from) issued to non-controlling interests								31(a)			(9)		24
Other											(47)		15
Cash provided (used) by financing activities											1,238		1,176
Cash Position
Increase (decrease) in cash and temporary investments, net											121		(95)
Cash and temporary investments, net, beginning of period											414		509
Cash and temporary investments, net, end of period											$ 535		$ 414
Supplemental Disclosure of Operating Cash Flows
Interest paid											($ 714)		($ 608)
Interest received											$ 7		$ 9
Income taxes paid, net
In respect of comprehensive income											($ 629)		($ 197)
In respect of business acquisitions											(15)
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)											($ 644)