Most would say no. However, the recent increase in consumer spending on reliable mobile and the domestic internet has led the development of new infrastructure, innovation, and government subsidy. The increased value of fast and affordable internet is no doubt due to the increase in cord-cutting and streaming options available to the consumer.
However, there are still issues in rural broadband areas where internet connections are limited, spotty or oversubscribed and need infrastructure investment in order to improve. The biggest issue could be the degradation and limited ability of domestic subscribers to ensure a reliable connection, many using dated routers, cables and positioning WiFi access points where there are many obstacles such as walls, corners, and doors making the signal weaker and less effective and often situated at one side of their home, rather than in the centre or where the WiFi is being used. Many new routers are combating this problem by using more antennas and user-friendly configuration wizards or combating the problem entirely by using pre-configured settings from the supplier or ISP.
Another problem may be the proximity to the exchange, as most subscribers in rural areas find their connection vastly slower compared to that of locations nearby, once again showing a performance drop that could be improved by moving away from copper to more effective methods of transmission, such as fiber.
It is however clear that the infrastructure as a whole has vastly improved and is much more capable as it was, mobile network connectivity has also improved to handle the data needs of modern apps and streaming websites as per the March report.
The issue as the report outlines is, however, meeting the demand of mobile business subscribers and providing affordable internet options to consumers. In my opinion, the use of ADSL2+ and DOCSIS 3.1 is not as much of a step in the right direction as fiber, even if it means limiting the speed available to the subscriber to segment their pricing structure.
When individuals are interested in purchasing, investing or working with a company it may also be a good idea to assess it’s financial status, using public information available through government sources, two documents can allow proper assessment. A statement of comprehensive income and a statement of financial position.
Statement of comprehensive income
A statement of comprehensive income is a usually detailed report listing the inflows and outflows of capital of a business. They often include exceptional expenses and net profit for a business and subsequently can be difficult to follow but should provide a good understanding on how a business functions through the financial year.
Statement of financial position
A statement of financial position outlines the inventories, assets and equity a business has at the end of a year or season. It may also help to identify where most of a businesses cash is being spent or held in assets.
What are the benefits of these documents?
A statement of comprehensive income will help to identify the basic operations of a business, for example the yearly turnover. A company that makes more turnover than another, however may not be financially better or worse however as it can depend on how the money is used, fortunately there are many equations that can help us to define a standard for these figures that we can use to compare between businesses or yearly statistics.
Gross profits allow us to determine how much profit a company makes after selling it’s products, this is already better than revenue as it shows that a company may be making a lot of revenue, but may be spending it all on sales. It is usually defined in the statement of comprehensive income.
Gross profit is Sales Revenue – Cost of Sales.
This figure is useful, but can be more effective when coupled with a percentage, as it is would allow us to compare for example previous years income, as below, it is for this reason we use the Gross Profit Margin to calculate a percentage.
Gross Profit Margin is (Sales Revenue – Cost of Sales) ÷ Sales Revenue. Higher is better.
Gross Profit Margin
As you can see from above the company XYZ Telecoms makes more money than AB Telecom however it is much more inefficient in it’s spending and therefore could reduce the cost of it’s sales to get higher returns. Note that although AB Telecom makes a higher Gross Profit Margin it does not make more money. Here is a breakdown of another Telecom company Telecomatic and they spend roughly 40% of their Revenue on sales, and therefore have a gross profit margin of 60%. In other words, if 40% is spent on sales, the company keeps the other 60% barring any other costs, like fixed costs.
Cost of Sales
Gross Profit Margin
Using gross profit and the gross profit margin is advantageous because it;
Enables you to calculate if spending on sales is too great.
Identify which company is better at sales spending.
Enables to identify if year on year a businesses spending on sales has been successful or not.
If there are two company chains, in two different locations with similar sales revenue, if they were to use different methods of advertising the sales profit margin would allow you to determine the best method based on the higher percentage.
However it does not;
Account for exceptional items or income.
Account for Fixed costs, such as machinery rent or leasing.
Operating Profits are the next step of a businesses true income, operating profit accounts for overheads (expenses) that a business has to pay in order to function, expenses like factory ownership or employee pay and should easily be very close to a businesses true profit for the year if the business is new or homogeneous in nature. Operating profits however do not account for or should not account for;
Exceptional expenses, like purchasing new facilities or machinery.
Assets a business may hold of value.
Financial income or company dividend.
Operating Profit is calculated by Gross Profit – Overheads. Operating Profit Margin is calculated by (Operating Profit) ÷ Sales Revenue.
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Lastly, for the comprehensive income sheet, the Net Profit Margin will show the overall effectiveness of the businesses expenditure. And represents how much raw profit a company makes based off its revenue, to put this into perspective its how much money is profit when multiplied by the turnover, so if a company’s net profit margin is 17%, and they turnover $1m a year, the company will have $170,000 unconditional capital left over at the end of the year barring complications.
The Net Profit Margin is calculated by Profit for the year ÷ Sales Revenue.