FINANCE FOR EFFECTIVE MARKETING (FEM)

Assignment Topic Financial performance analysis and making corporate finance

decision

Student Name B.M.A. R. Bandaranayaka

Reg. No. 0000037705

December 2019 Examination

Postgraduate Diploma in Marketing

Sri Lanka Institute of Marketing

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 Financial performance analysis and making corporate finance
decision
BACKGROUND

Financial statements are used as a yard stick to measure the performance of an organization.
Ratio analysis has been identified as one such performance measuring criteria. However,
depending solely on financial measurements to measure business performance is not
recommended as non-financial factors too play a vital role. You are required to select two
companies in the same industry listed in the Colombo Stock Exchange and carryout the
following tasks based on the information available in their annual reports and other supportive
industry related external information. Avoid selecting companies from banking, finance and
insurance sectors.

Financing Decision is yet another crucial decision made by the finance department relating to
the financing-mix of an organization. It is concerned with identifying alternative sources of
funds, assessing their relative merits and demerits, and its impact on the overall cost of capital
and value of the firm. Part two of the assignment requires you to assess the balance sheet and
other related factors that support corporate financing decisions.

TASK ONE

Present a brief background study about the two companies you have chosen for your analysis
including the nature of their business and industry trends.

Guideline Note 01

You are required to highlight the nature of the business, turnover, products and services offers,
key milestone of each company and general information about the micro and macro
environmental factors affecting the company and its industry.

TASK TWO

Using financial ratios, you are required to produce a critical analysis of the financial performance
and the stability of the two selected companies.

You should perform an assessment of each individual firm’s financial performance and stability
by comparing their most recent financial statements with prior period results. You may consider
the financial statements for three consecutive financial years. Your analysis should be further
extended to perform a comparison of financial performance and stability between the two
selected companies. Your analysis should take account of the competitive and macro-economic

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influences on these ratios. Based on your analysis, chose a company having better financial
performance and strong financial stability.

Guideline Note 02

You may use the relevant financial indicators such as profitability, working capital, liquidity,
financial leverage, to assess the financial performance and stability. (You will need to show all
relevant workings and supporting documentation). Your analysis will be based upon the ratios
calculated and utilizing any background industry/company information you think is relevant.

TASK THREE

Your chosen company is seeking to purchase a building complex to expand its business
operations. The proposed investment represents 25% of its net assets employed. You are
required to make a proposal as to how the company should access the funds required to finance
the proposed investment. This might be from internal or external sources but must be based
upon the company performance and capital structure. Justify your choice.

Guideline Note 03

You are required to evaluate the current capital structure and the financial ratios calculated in
Task 01

IMPORTANT:

Please refrain from copying-and-pasting information from the Internet or another source and
make sure to reference your work according to the Harvard referencing format.

Word allocation for each task

Task Content Weightage
Task one 40%
Task two 30%
Task three 30%
Total (word count 2000 – 2500) 100%

Note: Please refer the given assignment marking scheme for marks allocation.

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 ASSIGNMENT CHECKLIST & DECLARATION

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Student Name

Registration No ( As per registration book )

Cover page with relevant colour code of the stage

Stage 1 – Blue

Stage 2 – Green

Stage 3 – Pink

Assignment checklist & declaration form ( This sheet)

Assignment marking scheme is attached

Assignment sheet is attached

Table of contents

Body of the assignment

References

Course fee paid in full (coaching/registration/exam and membership)

Exam registration completed

Assignment emailed to relevant email address

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I, the undersigned, confirm that I have read and understood the statement about plagiarism
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Signature: _________________ Date: _________________

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 Assignment Marking
Scheme
December 2019
Subject Finance for Effective Marketing (FEM)

Student Registration Number

Marks
Criteria
Allocated Awarded

Aligning to the purpose of the assignment 20

Some of the answer addresses to the purpose of the question 1-5
This has addressed the purpose of the assignment 6-10
Has addressed the purpose of the assignment coherently 11-15
This has addressed the purpose of assignment comprehensively 16-20
Clarity of expression 20
An attempt to organize in a logical manner 1-5
Satisfactory showing of logical manner and organization 6-10
Shows higher level of Carefully and logically organized 11-15
Shows coherent structure with clearly expressed ideas 16-20
Using examples/evidences 20
Shows a little use of examples 1-5
Some use of examples. Some evaluation attempted 6-10
Some use of examples. Well evaluated 11-15
Shows appropriate examples are fully and reliably evaluated 16-20
Critical analysis of concepts, theories, conclusions 20
Demonstrates limited evidence of critical analysis 1-5
Demonstrates some critical analysis of relevant theory 6-10
Demonstrates application of theory through critical analysis 11-15
Demonstrates application of critical analysis well integrated 16-20
Following assignment guidelines 20
Limited follow-up of assignment guidelines 1-5
Some level of follow-up of assignment guidelines 6-10
Good display of adherence to assignment guidelines 11-15
Excellent adherence to assignment guidelines 16-20
Total
100
Special Remarks

Signature of the Examiner

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 Acknowledgement

I Am Undergraduate Student Of The Sabaragamuwa University Of Sri Lanka,and I

am Studying Marketing Management as My Degree Program (Bsc. Honours In Marketing
Management Degree [Four Year Degree]).

Even the University Studies I Thought Join to Slim Business School to Enhance My
Academic and Professional Qualification Then I Choose the Postgraduate Diploma in
Marketing. And Also, I Would Like to Pay My Sincere Gratitude to Many Individuals Who
Have Given the Support to Complete This Assignment.

First At All I Wish To Express My Sincere Gratitude To Lecturer Mr.Aruna Chaminda

Who Has Given A Lot Of Encouragement, Valuable Advices And Guidance To Complete
This Assignment Successfully.

And Also I Would Like To Thank Mr.Pawan Hettiarachchi, Mr.Numesh Kalhara And Mr.
Aravinda Lorensuhewa Of SLIM Matara Branch For Their Valuable Support Throughout
This Assignment And My Studies.

Further I Wish to Thank My Friends of PGDIP Managerial Level- Diploma in Marketing, To

the Great Support and Sharing Knowledge During This Assignment and My Studies.

Finally, It Is My Privilege to Express My Gratitude to My Parents and My Family

Members for The Understand and Endless Support Throughout This Period.

B.M.A.R Bandaranayaka

Reg. No.0000037705

Student- Managerial Level- Diploma in Marketing

Postgraduate Diploma in Marketing

SLIM-Matara.
 Executive Summery

This assignment, which is given under the subject of FEM, consists of three parts, the first part of
this asked to select two companies in the same industry listed in the Colombo Stock Exchange
and carryout the following tasks based on the information available in their annual reports and
other supportive industry related external information.

According to that the two companies I have chosen are “Sri Lanka Telecom PLC (SLT)” and
“Dialog Axiata PLC” That both companies are representing the telecommunications industry.

Under the task one I’ll Present a brief background study about the two companies including
nature of the business, turnover, products and services offers, key milestone of each company
and general information, moreover micro and macro environmental analysis related to company
and industry.

Under the task two using financial ratio such as profitability, working capital, liquidity, financial
leverage I’ll did a critical analysis regarding each individual firm with comparing their financial
performance.

Under the task three Dialog Axiata PLC Decide to purchase a building complex to expand their
business Operation. Under the evaluating current capital structure and the financial ratios I’ve
suggest a Stock issuance as a suitable way to fund for purchase building complex avoiding the
two another way to fund as by borrowing.
 Table of Content

Title of the Section Pages

Nos.

Acknowledgement 7
Executive Summery 8
Table of Content 9

Task 01: Introduction 11

1.1. Sales Promotion 11

1.1.1 Trade Promotion Tools 11
1.1.2 Consumer Promotion 13
1.2. Conclusion 13

Task 02: Message Strategy Introduction 14

2.1. Cognitive strategies 15

2.2. Affective strategies 16
2.3. Conative strategies 17
2.4. Conclusion 17

Task 03: The hierarchy of effects model Introduction 18

3.1. Message strategies with the Hierarchy of Effects Model 19

3.2. Hierarchy of Effect Model Strategy with examples 20
3.3. Conclusion 21

Reference 22
TASK 1
Introduction

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-
related transactions to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a
monetary investment.

Under this section we have to select two entities considered for analysis their financial status, the
two institutions I choose for this study are

i. Sri Lanka Telecom PLC (SLT) and

ii. Dialog Axiata PLC.

Sri Lanka Telecom

Sri Lanka Telecom PLC (SLT) is the one of premier telecommunication service provider in Sri
Lanka. and one of the country's most valuable blue-chip company with an annual turnover in
excess of Rs 40 billion. It is a biggest telecommunication company in Sri Lanka with above Rs.
800 million profit and 32% market share. The company provides a huge range of domestic and
international service which includes fixed and wireless voice, internet and data services that
carry out a wide audience comprising of both corporate and domestic customers. Sri Lanka
Telecom now operating in 330 regional offices in Sri Lanka.

Sri Lanka Telecom started its operations in 1858 with the establishment of telegraphic circuit
between Colombo and Galle. In 1991 Sri Lanka telecom become a corporation. In 1997 it was
privatized. In 2008 Sri Lanka Telecom listed in Colombo Stock Exchange (CSE). Now 49.5%
owned by the government.

The achievement of Sri Lanka Telecoms

  Long Term Foreign Currency Rating "B+"
 Long Term Local Currency Rating "BB-"
 National Long-Term Rating "AAA"

Sri Lanka Telecom Vision

"All Sri Lankan's seamlessly connected with world-class information, communication and
entertainment services."

Sri Lanka Telecom Mission

"Your trusted and proven partner for innovative and exciting communication experiences
delivered with passion, quality and commitment"

Micro Environmental Factors

Management Capabilities
The Management team members in Sri Lanka telecom have MBA. Most of them have
masters in mass media and telecommunication.
 Marketing
SLT has a good Brand Name and strong market position with 32% market share. It uses
powerful advertising technique to reach everyone. And also, it has more than 100 regional offices
in Sri Lanka.
 Product and service
SLT provides good quality Telephone, Internet, TV Based product and service with lower
rate.
 Finance
SLT is one of the Largest capitalized companies in CSE with annual turnover more than
40 Billion. Reserve capital is currently Rs. 46,599 Million.
 Human Resources
SLT has the Largest Workforce with experience. Employees are well trained and
deployed for better productivity. Performance Evaluation are introduced to motivate and online
attendance monitoring system introduced to improve efficiency.

Dialog Axiata PLC

Dialog Axiata PLC Is the one of Sri Lanka's largest telecommunications service provider with
the country's largest mobile network operator of 11.8 million customers and authority a 50% of
the Sri Lankan mobile market. Dialog is an ancillary of Axiata Group Berhad which owns
83.32% controlling stake of the company while the rest is held by the shareholders. The
Company is also one of the important listed company on the Colombo Stock Exchange in terms
of market capitalization.

Dialog is also Sri Lanka’s largest Foreign Direct Investor (FDI) with investments value over
USD 1.9 billion. Dialog Company was founded in 1993 August 27, earlier it’s an MTN Networks
(Pvt) Ltd (1993-2005) after listed (2005) on the Colombo Stock Exchange it was became Dialog
Telecom PLC (2005-2010). In 2005 was a significant year for Dialog Telecom PLC as planned to
go ahead with largest Initial public offering (IPO) notice by the Sri Lankan capital markets in an
attempt to finance widen network. Dialog Telecom made history on the first trading day when
trading commenced at a price of LKR 14.25 making Dialog Telecom the first Sri Lankan
Company to attain the USD1 billion market capitalization. In 2010, after happened in few
capitalization changes Dialog Telekom PLC became Dialog Axiata PLC.

In 2016 "Dialog" brand name was valued at LKR 26,098 Million and as the 4th most valuable
brand in the country by business magazine LMD in its annual facts. And Dialog has topped Sri
Lanka’s Corporate Accountability rankings for the past 5 years in succession. And this Company
has received numerous local and international awards including the National Quality Award and
Sri Lanka Business Excellence Award.

Dialog Axiata supplements its market leading position in the Mobile Telecommunications sector
with a powerful footprint and strong market presence in Sri Lanka. Dialog Axiata is also control
and owns different subsidiary companies: -

 Dialog Broadband Networks (Pvt) Ltd

 Dialog Television (Pvt) Ltd
 Dialog Holdings Lanka (Pvt) Ltd
 Digital Commerce Lanka (Pvt) Ltd
 Digital Health (Pvt) Ltd
 Dialog Business Services (Pvt) Ltd

Dialog Axiata is an investor under the sponsor of the Board of Investment of Sri Lanka and
invested over USD1.96 billion towards the development of telecommunications infrastructure,
then turn into the single largest contributor to Sri Lankan foreign direct investment (FDI). For all
of this Business Operations ‘Dialog Axiata PLC’ needs to raise funds. For that they used many
internal and external sources. By developing this report, we have discussed how they collect
these funds, what sources they used for the fund-raising purpose and how they maintain their
business functions by that sources.
TASK 2