Without Page Number - 4th Sem Project

“AN ANALYSIS OF ACCOUNTS RECEIVABLES AND PAYMENT DEFAULTS IN ETHIO TELECOM, WITH REFERENCE TO MEKELLE BRANCH, ETHIOPIA”

PROJECT REPORT

Submitted in Partial Fulfillment of the Requirements for the Degree of

MASTER OF BUSINESS ADMINISTRATION

Kannur University

Submitted BY

GEETHIKA MOHAN

IV Semester MBA

(Reg. No. B0GMBA1010)

Under the guidance of

Mrs. Reshma Sreedharan

CHINMAYA INSTITUTE OF

TECHNOLOGY, KANNUR

CHINTECH SCHOOL OF MANAGEMENT STUDIES

2012

DECLARATION

I, Geethika Mohan, do here by declare that all the information contained in this project titled “An

analysis of Accounts Receivables and Payment Defaults in Ethio Telecom” is correct and

truthful as per the knowledge I acquired from the ETHIO TELECOM, Mekelle, Ethiopia, East

Africa, in partial fulfillment of the requirements of Master of Business Administration and I

conducted the study with the full support of Management and staff. The project was done under

the valuable guidance and supervision of Mrs. Reshma Sreedharan, Faculty, Department of

MBA, Chinmaya Institute of Technology, Kannur.

I also declare that this study is the result of my own effort and has not been submitted to earlier

by me or by anybody else for the award of any other degree in any university in India or Abroad.

Place: Kannur Geethika Mohan

Date: 2012

CHINMAYA INSTITUTE OF TECHNOLOGY, KANNUR

CERTIFICATE

This is to certify that the project report entitled


Is a bona fide record of work done by Geethika Mohan and submitted in partial fulfillment of the

requirements of the degree of Master of Business Administration, Kannur University, under my

guidance and supervision

Place: Kannur Mrs. Reshma Sreedharan

Date: July, 2012 (Supervising Guide)

CHINMAYA INSTITUTE OF TECHNOLOGY, KANNUR

CERTIFICATE

This is to certify that the project report entitled


Is a bona fide record of work done by Geethika Mohan and submitted in partial fulfillment of the

requirements of the degree of Master of Business Administration, Kannur University.

Place: Kannur Dr. K.K. Falgunan

Date: July, 2012 Principal

ACKNOWLEDGEMENT

First and most I would like to thank God for enabling me to complete the work successfully.

I would like to express my sincere gratitude to my family for their special support.

I would also like to forward my heartfelt thanks to Ms Alganesh Berhe, Asst. Financial Manager,

Ethio Telecom, Mekelle, Ethiopia, East Africa, for providing me with most valuable information

and excellent guidance in all the stages of my project work and for sparing her valuable time for

proving me with relevant information.

I offer my sincere thanks to Mrs. Reshma Sreedharan, Faculty, Department of MBA, Chinmaya

Institute of Technology, Kannur for her guidance and encouragement throughout the project.

I take the privilege to extend my heart full thanks to all the faculty members of Chinmaya

Institute of Technology, Kannur for their valuable suggestions during the course of project.

I also extend my grateful thanks to all the staff of Ethio Telecom for their co-operation and

support to make this project a reality.

Geethika Mohan

TABLE NO.

LIST OF TABLES PAGE NO:

4.1 AReceivables turnover ratio of Fixed line cash sector of Ethio telecom

4.1 BReceivables turnover ratio of Fixed line credit sector of Ethio telecom

4.1 C Receivables turnover ratio of Mobile sector of Ethio telecom

4.1 D Receivables turnover ratio of Internet sector of Ethio telecom

4.2 A Debt collection period of Fixed line cash sector of Ethio telecom

4.2 B Debt collection period of Fixed line credit sector of Ethio telecom

4.2 C Debt collection period of Mobile sector of Ethio telecom

4.2 D Debt collection period of Internet sector of Ethio telecom

4.3 A Percentage of total collection over total receivables of Fixed line cash sector

4.3 BPercentage of total collection over total receivables of Fixed line credit sector

4.3 C Percentage of total collection over total receivables of Mobile sector

4.3 D Percentage of total collection over total receivables of Internet sector

4.4 Receivables of different sectors of Ethio telecom

4.5 Bad debts of different sectors of Ethio telecom

4.6 Age & Gender

4.7 Quality of speech of fixed telephone service of Ethio telecom

4.8 Call rates of fixed telephone

4.9 Complaint Handling Procedure

4.10 Technical support

4.11 Mobile services provided

4.12 SMS rates of Ethio Telecom

4.13 Current tariff rate

4.14 Present system of bill payment

4.15 New schemes and offers of Ethio telecom

4.16 Quality of Internet connection provided by Ethio telecom

4.17 Security and privacy provided by Ethio telecom on internet and

mobile services

4.18 Call rates of mobile service

4.19 Customers who make payment on due date

4.20Customers who make defaults in payment of dues even after

Remainders

4.21Default due to dissatisfaction of service of

Ethio telecom

4.22 Customers who prefer an improvement in the existing system

4.23Trend analysis of Receivables using Method of Least Square

CHART NO.

LIST OF CHARTS PAGE NO:

3.3 Organization Chart

4.1 AReceivables turnover ratio of Fixed line cash sector of Ethio telecom

4.1 BReceivables turnover ratio of Fixed line credit sector of Ethio telecom

4.1 C Receivables turnover ratio of Mobile sector of Ethio telecom

4.1 DReceivables turnover ratio of Internet sector of Ethio telecom

4.2 A Debt collection period of Fixed line cash sector of Ethio telecom

4.2 B Debt collection period of Fixed line credit sector of Ethio telecom

4.2 C Debt collection period of Mobile sector of Ethio telecom

4.2 D Debt collection period of Internet sector of Ethio telecom

4.3 A Percentage of total collection over total receivables of Fixed line cash sector

4.3 BPercentage of total collection over total receivables of Fixed line credit sector

4.3 C Percentage of total collection over total receivables of Mobile sector

4.3 D Percentage of total collection over total receivables of Internet sector

4.4 Receivables of different sectors of Ethio telecom

4.5 Bad debts of different sectors of Ethio telecom

4.6 Age & Gender

4.7 Quality of speech of fixed telephone service of Ethio telecom

4.8 Call rates of fixed telephone

4.9 Complaint handling Procedure

4.10 Technical support provided by Ethio Telecom

4.11 Mobile services provided by Ethio Telecom

4.12 SMS rates of Ethio Telecom

4.13 Current tariff rate

4.14 Present system of bill payment

4.15 New schemes and offers of Ethio telecom

4.16 Quality of Internet connection provided by Ethio telecom

4.17 Security and privacy provided

4.18 Call rates of mobile service

4.19 Customers who make payment on due date

4.20 Defaults in payment of dues even after remainders

4.21 Default due to dissatisfaction of service of Ethio telecom

4.22 Customers who prefer an improvement in the existing system

4.23 Trend analysis of Receivables using Method of Least Square

TABLE OF CONTENTS

SL NO CHAPTERSPAGE

NUMBER

CHAPTER IINTRODUCTION & DESIGN OF THE STUDY

1.1 Introduction1.2 Scope & Significance of the study1.3 Statement of the problem1.4 Objectives of the study1.5 Research Methodology 1.5.1 Population of the Study 1.5.2 Sample Size and Sample Selection Process

1.5.3 Location of the Sample 1.5.4 Period of the Study

1.5.5 Tools used for Analysis

1.6 Limitations of the study

1.7 Chapterization of the Study

CHAPTER II REVIEW OF LITERATURE

CHAPTER IIIINDUSTRY & COMPANY PROFILE

3.1 Telecom Industry – A profile

3.2 Ethio Telecom – A profile

3.3 Organization chart

CHAPTER IVDATA ANALYSIS & INTERPRETATIONS

CHAPTER V FINDINGS, SUGGESTIONS & CONCLUSION

5.1 Findings

5.2 Suggestions

5.3 Conclusion

BIBLIOGRAPHY

APPENDIX

CHAPTER I

INTRODUCTION

CHAPTER - III

INDUSTRY & COMPANY PROFILE

CHART: 3.3

ORGANISATION CHART

CHAPTER IV

DATA ANALYSIS & INTERPRETATIONS

PART - A

RATIO ANALYSIS

PART B

CUSTOMER SURVEY

TREND ANALYSIS OF RECEIVABLES USING METHOD OF LEAST SQUARE

CHAPTER V

FINDINGS & SUGGESTIONS AND

CONCLUSION

SWOT ANALYSIS

CONCLUSION

BIBLIOGRAPHY

BIBLIOGRAPHY

1) S.P. Jain & K.L. Narang, “Advanced Accountancy – II”

2) M.C.Shukla, T.S.Grewal & S.C.Gupta, “Advanced Accounts”

3) Shashi. K. Gupta & R.K.Sharma, “Management Accounting”

4) Prof. M.C.K. Nambiar, “Analysis of Financial Statements”

5) Z.V.I. Lieber and Yair. E. Orgler, Management Science, 1975, Vol.22, Pg. No. 67 – 71

6) Joseph C. Atkins and Yong W. Kim, "Comment and Correction: Opportunity Cost in the

Evaluation of Investment in Accounts Receivable," Financial Management, Vol. 6

(Winter 1977), pp. 71-74.

7) Kanwal. S & Lawrence. J. Gitman, “Accounts Receivable Decisions in a Capital

Budgeting Framework”, Financial Management, Blackwell Publishing, 1981, Vol.10, Pg

No. 45 – 49

8) Philip Leitch and Dawne Lamminmaki, “Refining measures to improve performance

measurement of the accounts receivable collection function” No. 2009-01

9) Ferdinand. K. Levy, “An Application of Heuristic Problem Solving to Accounts

Receivable Management”, Management Science, 1966, Vol.12, Pg. No. 76 – 79

10) N M Bruch, L L Lewis, “Using control charts to help manage accounts receivable”,

Healthcare financial management journal of the Healthcare Financial Management

Association (1994), Volume: 48, Issue: 7, Pages: 44-48

11) Carlos. A. Molina and Lorenzo. A. Preve, “Trade Receivables Policy of Distressed Firms

and its Effect on the Costs of Financial Distress”, Financial Management, 2006

WEBSITES

www.investopedia.com

www.newbusinessethiopia.com

www.ethionet.et

APPENDIX

QUESTIONNAIRE TO TELECOM

1. When was the company established?

2. Organization Chart of the Firm

3. Is the company completely Government owned?

4. What are the Sources of finance

5. Is there any competitors?

6. What are the methods of promotion?

7. Does the company have any tie up with other firms?

8. What is the working capital requirement on an average per year?

9. Who are the main bankers of the firm?

10. Details regarding support received from the government?

11. Details regarding outsourcing

12. What are the different types of schemes provided?

13. Who are the target customers?

14. What is the total number of subscribers?

15. What is the method of payment by customers

16. What is the procedure adopted to collect the debt which is not paid on due date?

17. What is the accounting treatment for bad debt?

18. What is the bad debt amount from 2007 – 2011

19. What is the accounts receivables amount from 2007 – 2011

QUESTIONNAIRE TO CUSTOMERS

This is a questionnaire that has been prepared to conduct a Research Study on the Satisfaction of

Customers of Ethio Telecom. The purpose of the study is for the partial fulfillment of the

requirements of Master of Business Administration (MBA).

You are kindly requested to fill this questionnaire.

The data collected will be kept confidential. Thank You in Advance.

RESPONDENT DETAILS

1. Sex Male Female

2. Age <20 years 20 – 30 years 30 – 40 years Above 40 years

3. Educational Qualification :

Below 10th Grade Below Under Graduate Graduate Post Graduate

Professional Others:

4. Working Status :

Student Employed House-Wife Not-Working

5. Average Monthly Income in Birr :

< 1000 1000 – 2000 2000 – 3000 Above 3000

MAIN QUESTIONNAIRE

1. How do you rate the quality of speech of Fixed Telephone service of Ethio Telecom?

Highly satisfied Satisfied Medium Dissatisfied Highly dissatisfied

2. Are you satisfied with the call rates of mobile service?

Yes No

3. Rate your satisfaction with call rates of Fixed Telephone


4. Are you satisfied with the customer complaint handling procedure?


5. How do you rate the technical support provided by Ethio Telecom?


6. Rate your satisfaction with the mobile services provided by Ethio Telecom


7. Rate your Satisfaction with the SMS rates of Ethio Telecom


8. Rate your satisfaction with the current Tariff rate


9. Rate your satisfaction with the new schemes and offers of Ethio Telecom?

Excellent Very Good Fairly Good Average Poor

10. How do you rate the quality of Internet Connection provided by Ethio Telecom


11. Rate your satisfaction with the security and privacy provided by Ethio Telecom on Internet and Mobile services


12. Rate your satisfaction with the System of Payment?


13. Do you make payment on due date?

Yes No

14. Do you make defaults in payment of dues even after remainders?

Yes No

15. Have you made any default due to dissatisfaction of service of Ethio Telecom?

Yes No

16. Do you prefer an improvement in the existing system of Ethio Telecom?

Yes No

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Without Page Number - 4th Sem Project