Financial Ratio Analysis - Activity 9 - Vodafone Current Ratio

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Activity 9 - Vodafone Current Ratio

Work through the data for Vodafone and calculate their current ratio for the two years for which you have data.

Vodafone Consolidated Balance Sheet	31 March 2002	31 March 2001
	£m	£m
Total Current Assets	9,438	18,182
Creditors: Amounts falling due within one year	13,455	12,377

Fill in this table and discuss what you find:

Current Ratio For Vodafone
31 March 2002	Current Assets: Current Liabilities	_____: _____	___: 1
31 March 2001	Current Assets: Current Liabilities	_____: _____	___: 1

Did you get this?

Vodafone has done almost the exact opposite of the Carphone Warehouse with its current ratio.

This additional information might help your analysis.

Current assets	2002 £m	2001 £m
Stock	513	316
Debtors due within one year	7,053	4,587
Short-term investments	1,792	13,211
Cash at bank and in hand	80	68
Total Current Assets	9,438	18,182
Creditors: Amounts falling due within one year	13,455	12,377
Net current assets (liabilities)	-4,017	5,805

Vodafone has liquidated, or sold, many of its short-term investments. This business has grown at a very rapid rate and has possibly used the cash from having sold its investments to finance that expansion. Overall, Vodafone has lost almost £10 billion of working capital as it has fallen from £5.8 billion to -£4.0. This has left Vodafone in a weak working capital position as its creditors are large but its cash and short-term assets balances are small by comparison.

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