1.

Background of the Study

Investors review important factors in a company's economic status by analyzing

financial statements. These elements include solvency, liquidity, risk management and
profitability. A financial statement is an accounting document summarizing an
organization's economic events and their impacts on the firm's competitive position.
There are four types of economic data summaries: balance sheets or statements of
financial position, statements of profit and loss, statements of cash flows and reports
on shareholders' equity, also known as statements of retained earnings.

The objective of financial statements is to provide information about the financial

position, performance and changes in financial position of an enterprise that is useful
to a wide range of users in making economic decisions (IASB Framework).

a. Customers use Financial Statements to assess whether a supplier has the

resources to ensure the steady supply of goods in the future. This is especially
vital where a customer is dependent on a supplier for a specialized component.

b. Employees use Financial Statements for assessing the company's profitability

and its consequence on their future remuneration and job security.

c. Competitors compare their performance with rival companies to learn and

develop strategies to improve their competitiveness.

d. General Public may be interested in the effects of a company on the economy,

Environment and the local community.

e. Governments require Financial Statements to determine the correctness of tax

declared in the tax returns. Government also keeps track of economic progress
through analysis of Financial Statements of businesses from different sectors of
the economy.

To this report the researcher tried to analyze the financial condition with the
comparative ratio analysis of Nepal Telecom Corporation (NTC) regarding with
different fiscal years on yearly and quarterly basis of data presentation. This report
revealed a significant base of evaluating the financially health circumstances of NTC
since last 6 fiscal years.

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2. Profile of Origination

Nepal Telecom Limited, officially known as Nepal Doorsanchar Company Limited

(NDCL), is a state-owned telecommunications service provider in Nepal. Established
in B.S. 2032 (1975 A.D.) under the Communications Corporation Act 2028, it was
initially named Nepal Telecommunications Corporation. On Baisakh 1, 2061 (April
13, 2004), it was transformed into Nepal Doorsanchar Company Limited and operates
under the brand name Nepal Telecom (NTC).

3. Statement of Problem

Nepal Telecom Limited, being a major state-owned telecommunication service

provider in Nepal, plays a vital role in the national economy and digital infrastructure
development. Despite its dominant market position and extensive service network, the
company operates in an increasingly competitive and rapidly changing technological
environment.

This study try to explore answer of the following questions:

a. What is the financial position of NTC?

b. What is the liquidity & properties position of NTC?

4. Objectives of the Study

The main objective of this study is to assess the overall financial performance of
Nepal Telecom Limited by analyzing its financial health through various financial
indicators. This includes evaluating key financial ratios such as profitability, liquidity,
solvency, and efficiency ratios. The study aims to examine revenue and profit trends
over recent fiscal years, understand the company’s cost structure, and assess the
effectiveness of its capital utilization. Furthermore, the study seeks to identify
financial strengths and weaknesses, compare performance with industry standards or
competitors, and provide constructive recommendations for improving the financial
management and long-term sustainability of the company.

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5. Rationale of the Study

The report was prepared for in a specific format under the requirement of course of
degree of BBS for Tribhuwan University. It has a parcel importance for improving the
proficiency of making the research reports, field trip reports, Annual reports, daily
sales reports, etc. to the practical field whenever the people are self- employed to the
business organization as a manager. Most of the applying for job vacancy required to
show the self-prepared reports to show the practical capabilities of the candidate.
Besides, personal life of people for studying in general to the particular field of study
has greater significance. To sum up, this report covered these all essentials reasons
for studying on the title 'Ratio Analysis of Nepal Telecom Corporation (NTC)'.

6. Literature Review

Ratio Analysis is one of the most powerful tools of Financial Analysis. It is used as a
device to analyze and interpret the financial health of the enterprise. Ratios are
considered as one of the useful aids available to the Management in assessing the
position and drawing conclusions regarding efficiency and financial status of a
Business Concern.

7. Methods

Research methodology implies the basic research method to be carried out through the
entire study. Methodology is the most important part for the study. It describes the site
selection, research design, population and sample, sources of data, method of data
collection, data analysis tools, analysis model and limitation of the methodology.

7.1. Research Design

The research design for this study is descriptive and analytical, aimed at
systematically evaluating and interpreting the financial performance of Nepal
Telecom Limited over a defined period. The approach is designed to provide insights
into the company's financial health, operational efficiency, and strategic positioning in
the competitive telecom market.

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7.2 Population of the study

In this study, the population refers to the financial data and reports from Nepal
Telecom Limited and, if applicable, its competitors.

Financial Reports of Nepal Telecom Limited The population for analysis would
include all of the available financial reports from Nepal Telecom Limited. If you are
examining financial performance over a 5-year period, your population would consist
of the financial data for those 5 years (e.g., income statements, balance sheets, cash
flow statements, etc.). Competitor Financial Data (Optional) If the study includes a
comparative analysis, the population of the sample may also include financial data
from competitors like Ncell and Smart Telecom over the same period.

7.3 Method of Data collection

Official Reports: Financial reports published by Nepal Telecom Limited will be

accessed directly from its official website (Nepal Telecom) or from the company's
annual report publications. Telecom Authority and Regulatory Body Reports: Data
related to the telecom sector, industry standards, and regulatory guidelines will be
collected from Nepal Telecommunication Authority (NTA) and Nepal
Telecommunications Association (NTA). Publicly Available Data: Financial
information available in articles, journals, or media reports about Nepal Telecom's
performance will be gathered for additional insights.

This is the core method used in the study. Key financial ratios will be calculated to
assess different aspects of Nepal Telecom’s financial health. The analysis will focus
on the following categories:

 Liquidity Ratios (e.g., Current Ratio, Quick Ratio): To assess the company’s
short-term ability to pay off its obligations.
 Profitability Ratios (e.g., Net Profit Margin, Return on Assets, Return on
Equity): To evaluate how efficiently the company generates profit from its
operations and assets.

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  Solvency Ratios (e.g., Debt-to-Equity Ratio, Interest Coverage Ratio): To
determine the company’s long-term financial stability and ability to manage
debt.
 Efficiency Ratios (e.g., Asset Turnover Ratio, Inventory Turnover): To
examine how effectively the company uses its resources to generate revenue.

8. Limitations of the Study

Although this study aims to provide a comprehensive analysis of the financial

performance of Nepal Telecom Limited, it is subject to certain limitations. Firstly, the
study is based solely on secondary data collected from published financial reports,
which may not capture all internal financial dynamics or informal practices within the
organization. Secondly, the analysis is limited to historical data, primarily over the
past 5 to 10 years, and may not fully reflect the company’s present or future strategic
changes. Thirdly, external factors such as market competition, regulatory changes, or
economic instability are not deeply analyzed, though they can significantly impact
financial performance. Additionally, limited access to competitor data (especially
private companies like Ncell) restricts the depth of comparative analysis. Finally, the
use of ratio and trend analysis provides useful insights but may oversimplify complex
financial situations and omit qualitative aspects such as customer satisfaction,
employee efficiency, and innovation capacity.

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