BT Group Plc - Financial Analysis and Source of Financing - Case Study Example

The paper "BT Group Plc - Financial Analysis and Source of Financing" is a brilliant example of a case study on finance and accounting. This paper seeks to produce an overall assessment of whether it is a good investment for BT Group PLC to raise 10% of Net Assets employed by analyzing the industry of the company, its strategies, and certain financial ratios that would be extracted from the financial statements for the years 2002, 2007 and 2012.  The second part of this paper will analyze whether it would be better to purchase ordinary shares or debentures in this company, based upon the performance of the company and capital structure.

         To raise 10% of Net Asset of employed is to set the target of 10% ROCE and whether there is justification to attain the same. The framework for analysis is to determine the present level of profitability is realistic given the other financial ratios of the company, then choosing the correct strategy that has to be employed for the next five years and beyond as the one which is most likely to succeed best--- whether to raise capital via debentures or by shares of stock.

1.1 Brief Company Background and Industry Analysis

1.1.1 Brief Company background

        BT Group plc (or “BT”), incorporated March 30, 2001, is relatively a young company engaged in the provision of communications services to companies under a relatively new industry called the integrated communication services industry. It presently serves the needs of customers in the United Kingdom and in not less than 170 countries around the world. It provides a wide range of activities in communication services including broadband, fixed-line services, networked information technology (IT) services, and mobile and television products and services. It caters by providing services, selling products to both public and private sectors as clients including small and medium-sized enterprises.

It is also into wholesale products and services to communications providers both locally and internationally. It sells and delivers managed networked IT services to its many clients which include domestic businesses and national and local government organizations and multinational corporations. Its four lines of business include the following: BT Retail, BT Global Services, BT Wholesale, and Openreach.