Ministry of Education ‫وزارة التعليم‬

Tabuk University ‫جامعة تبوك‬

Faculty of Business administration ‫كلية إدارة األعمال‬
Finance & Investment Department ‫قسم التمويل واالستثمار‬

:‫اسم الموضوع‬
Comprehensive Financial Ratio Analysis of Etisalat Union )Mobily)
:‫إشراف الدكتور‬
:‫أسماء المجموعة‬
Introduction
Etisalat Union, normally referred to as Mobily, is a main
telecommunications organization in Saudi Arabia. Installed in 2004,
Mobily speedy became a considerable participant within the Saudi
telecom marketplace, presenting revolutionary and patron-centric
services. The organization operates in a rather aggressive enterprise
characterized through rapid technological advancements, evolving
purchaser preferences, and a developing call for digital connectivity.

Mobily gives a wide variety of offerings, which includes

cellular and fixed-line telecommunication, net services, and
company solutions. Over the years, the business enterprise has
performed a pivotal function in riding the digital transformation of
Saudi Arabia, aligning with the dreams of imaginative and prescient
2030 to beautify the nation’s virtual infrastructure and technological
capabilities.

The telecommunications enterprise in which Mobily operates is

a cornerstone of contemporary economies, permitting
communication, connectivity, and technological integration across
all sectors. Mobily's strategic consciousness on innovation,
purchaser pride, and technologies has placed it as a trusted
companion for individuals, agencies, and authorities entities alike.
Statements
Common Size Income statements:
2021 2022
Sales 100% 100%
Cost of Sales 41.54% 40.31%
Gross Profit 58.46% 59.69%
Selling and Distribution Expenses 9.37% 9.31%
General and Administrative Expenses 10.52% 10.36%
Operating Profit 11.24% 14.81%
Profit Before Income Tax 7.75% 11.32%
Income Tax 0.52% 0.96%
Net Profit 7.22% 10.54%

Comment:
- Improved profitability:
 Gross profit ratio increased from 58.46% to 59.69%.
 Net profit increased significantly from 7.22% to 10.54%, indicating better
cost management and increased efficiency.

- Improved operational efficiency:

 Selling and distribution expenses decreased slightly from 9.37% to
9.31%.
 General and administrative expenses decreased from 10.52% to 10.36%.
 As a result, operating profit increased from 11.24% to 14.81%.

- Increase in profitability before and after tax:

 Profit before tax jumped from 7.75% to 11.32%.
 Even with a slight increase in the tax rate (from 0.52% to 0.96%), the
impact on net profit was positive.
The company showed significant improvement in financial performance with
increased operational efficiency and profitability, reflecting effective
management and successful strategies in improving financial performance.
 Net Profit

Income Tax

Profit Before Income Tax

Operating Profit

General and Administrative Expenses

Selling and Distribution Expenses

Gross Profit

Cost of Sales

Sales

0 0.2 0.4 0.6 0.8 1 1.2

Series5 Series4 Series3 Series2 Series1

Ratios Analysis:
 Liquidity Ratios:

Ratios 2021 2022

Current Ratio 57% 82%

Quick Ratio 56% 81%

Working Capital -4822707000 -1792205000

Comment:
- Current Ratio: Increased from 57% in 2021 to 82% in 2022,
indicating an improvement in the company’s ability to cover its short-
term obligations using its current assets.
- Quick Ratio: It also improved from 56% to 81%, reflecting an
improvement in the company’s ability to pay short-term obligations
using its quick assets (excluding inventory).
- Working Capital: Despite the significant improvement (deficit
decreased from -4.82 billion to -1.79 billion), working capital remains
negative, meaning that current liabilities exceed current assets. This
suggests that the company may be relying on short-term funding
sources or tight cash flow management to support its operations.
90%
82% 81%
80%

70%

60% 57% 56%

50%

40%

30%

20%

10%

0%
1 2

Current Ratio Quick Ratio

0
1 2

-1E+09

-2E+09 -1792205000

-3E+09

-4E+09

-5E+09 -4822707000

-6E+09

Working Capital
  Solvency Ratios:
Ratios 2021 2022
Interest coverage ratios 14.78 11.82
Debt-to-asset ratios 61% 57%
Ownership percentage 159% 133%

Comment:
- Interest Coverage Ratio: Decreased from 14.78 in 2021 to 11.82 in
2022. The ratio is still positive and shows the company’s good ability
to cover debt interest from its operating profits. The decrease may
reflect an increase in interest costs or a decrease in operating profits.
- Debt-to-Asset Ratio: Improved from 61% in 2021 to 57% in 2022.
This indicates a lower level of indebtedness and an improved financing
structure, which reduces the company’s financial risks.
- Ownership Percentage: 3. Ownership Percentage: Decreased from
159% to 133%. Despite the decrease, the ratio is still strong and
indicates that equity exceeds total liabilities, which enhances the
company’s financial stability.
 Interest coverage ratios

11.82

14.78

1 2

Debt-to-asset ratios

57%
61%

1 2

Ownership percentage

133%

159%

1 2
  Asset management Ratios:
Ratios 2021 2022
Inventory Turnover Ratio 68.07 58.46
Average Storage Period 5.29 6.16
Accounts Receivable
3.5 3.97
Turnover Ratio
Average Collection Period 102.86 90.7
Working Capital Turnover
-3.08 -8.77
Ratio

Comment:
- Inventory Turnover: Decline from 68.07 in 2021 to 58.46 in
2022. This indicates a relative slowdown in inventory
movement, which could mean increased storage time or lower
sales for inventory.
- Average Storage Period: Increased from 5.29 days in 2021 to
6.16 days in 2022. The change here reflects the increased time
inventory is held in warehouses, which can lead to additional
storage costs or the risk of inventory obsolescence.
- Accounts Receivable Turnover: Increased from 3.5 to 3.97.
The improvement reflects better ability to collect debts from
customers and increased efficiency in managing accounts
receivable.
- Average collection period: Shortened from 102.86 days to
90.7 days. The decrease here is positive, as it indicates that the
company is able to collect its receivables from customers faster.
- Working capital turnover ratio: Deteriorated significantly
from -3.08 in 2021 to -8.77 in 2022, the negative increase here
indicates inefficient use or challenges in generating additional
revenues for the available working capital.
120

100

80

60

40

20

0
Inventory Turnover Ratio Average Storage Period Accounts Receivable Average Collection Period Working Capital Turnover
Turnover Ratio Ratio

-20

Series1 Series2 Series3 Series4 Series5

  Profitability Ratios:
Ratios 2021 2022
Return on Assets 3% 5%
Return on Equity 7% 10%
Cost of sales to net sales
42% 40%
ratio

Comment:
- Return on Assets (ROA): Increased from 3% in 2021 to 5% in 2022.
Indicates a more efficient use of assets to generate profits. This growth
reflects better investments or improvements in operational processes.
- Return on Equity (ROE): Increased from 7% to 10%. The growth
reflects enhanced returns to shareholders as a result of increased
profitability. It could be due to higher net profits or improvements in
the financing structure.
- Cost of Sales to Net Sales Ratio: It improved from 42% in 2021 to
40% in 2022. A lower ratio means an increase in the gross profit
margin, indicating the company’s ability to reduce costs or achieve
higher efficiency in production management.

Return on Assets Return on Equity Cost of sales to

net sales ratio

3% 7%
40%
5% 10% 42%

1 2 1 2 1 2
  Market Value Ratios:
Ratios 2021 2022
Earnings Per Share 1.39 2.15
Dividend Payout Ratio 1.39 2.15
Book Value of Common
19.74 21.24
Share

Comment:
- Earnings per Share: Increased from 1.39 in 2021 to 2.15 in 2022. This growth
reflects an increase in the company’s net profit or good management of the
number of outstanding shares, which leads to an improvement in the return per
share.
- Dividend Payout Ratio: It remained equal to earnings per share (1.39 in 2021
and 2.15 in 2022). This indicates that the company has distributed all of its
profits to shareholders. This may be appropriate if the company does not need
to reinvest profits to achieve growth, but it may limit self-financing for future
projects.
- Book Value of Common Share: It improved from 19.74 to 21.24. This reflects
an increase in shareholders' equity and indicates a sustainable growth in the
underlying value of the company.

25.00

20.00

15.00

10.00

5.00

0.00
1 2

Earnings Per Share Dividend Payout Ratio Book Value of Common Share
Conclusion
Based on the financial analysis of Mobily, it appears that the company
enjoys good financial health with a continuous improvement in its overall
performance. The analysis showed an increase in operating profits and net
profits, reflecting the company’s efficiency in managing its resources and
operational strategies. The low debt-to-assets ratio also enhances financial
sustainability, while interest coverage ratios indicate a strong ability to meet
financing obligations. However, there are still challenges related to
improving working capital and reducing reliance on short-term assets to
increase liquidity.
Recommendations for improvement:
 Strengthen liquidity management:
- Improve working capital through more efficient inventory and accounts
receivable management.
- Strengthen cash reserves to increase financial flexibility.
 Focus on innovation and growth:
- Expand digital services and enhance innovation to meet changing market
needs.
- Explore opportunities for strategic partnerships or expansion into regional
markets.
 Improve operational efficiency:
- Continue to improve operational processes to reduce costs and maintain
strong profit margins.
- Invest more in automation and technology to improve efficiency and
increase productivity.
 Debt monitoring and risk management:
- Continue to reduce reliance on debt to ensure greater long-term financial
stability.
- Strengthen risk management plans to address market volatility and ensure
sustainable growth.
References:
1- Mobily. (2022-2021). Financial Statements.
2- Mobily. (2023). Annual Financial Report 2023.
3- Saudi Vision 2030. (2021). Vision 2030 Kingdom of Saudi
Arabia.
4- Statista. (2024). Saudi Telecom Market Overview.