Why this analysis

I picked BCE Inc. as the subject company and benchmarked it against its two main Canadian competitors, Rogers Communications and TELUS Corporation. The goal wasn’t just calculating ratios in isolation, but pulling them together into the kind of evaluation of performance, financial health, and capital structure decisions that a financial analyst or intermediate accountant would actually be asked to produce.

Approach

I consolidated financial and market data for all three companies from public sources, then calculated 11 ratios across six categories: profitability, liquidity, efficiency, leverage, cost of capital, and investment. Cost of Equity came from CAPM, and Cost of Debt and WACC were derived separately for each company, for each year.

What the ratios showed

Return on Assets showed BCE holding steadier than its peers, especially in 2023, when Rogers and TELUS both felt the drag from heavy capital investment and acquisition activity.

Leverage tells a sharper story. Rogers’ Debt-to-Assets ratio climbed from 41.5% to 57.6% over the period, the steepest increase of the three, while BCE’s leverage barely moved.

Industry context: per CSIMarket, the broader Communications Services industry carried an average Debt-to-Equity ratio of about 1.27x (roughly 56% Debt-to-Assets) as of Q1 2025. Against that backdrop, BCE’s ~35% leverage sits well below the sector norm, while Rogers’ ~58% is right in line with it. That’s worth noting: Rogers looks less like an outlier and more like an industry-typical company once you add this context.

Recalculating Weighted Average Cost of Capital consistently across all three peers complicates the cost-of-capital picture. Rogers shows the lowest blended WACC in 2023, but that’s a mechanical result of its heavier debt weighting, not evidence of lower risk. Its Fixed Charge Coverage actually fell to 1.16x in 2023, close to the 1.0x threshold that signals financial distress, while BCE’s coverage held at a healthier 2.07x.

Recommendation

Based on the combined risk and leverage picture, I recommend BCE hold its current, disciplined leverage ratio instead of pursuing more aggressive debt-financed expansion. This rests on financial-risk grounds, specifically BCE’s stronger Fixed Charge Coverage (2.07x versus Rogers’ 1.16x), rather than on cost of capital alone. A consistent recalculation actually puts Rogers’ blended WACC lowest of the three peers in 2023, but that’s because heavier leverage mechanically lowers blended WACC even as it raises distress risk. Cheap blended capital and low risk aren’t the same thing, and this recommendation is built on risk.

Key achievements

• Calculated and compared 11 financial ratios across 3 companies over 3 fiscal years, 9 company-years of data in total
• Applied CAPM and WACC formulas to derive cost-of-capital estimates for all three companies
• Found Rogers’ Debt-to-Assets ratio climbing from 41.49% to 57.65%, the sharpest leverage shift of the three peers
• Found Rogers’ Fixed Charge Coverage falling to 1.16x in 2023, signalling materially higher financial-distress risk than BCE’s 2.07x
• Separated cost of capital from financial risk: recalculated WACC puts Rogers lowest on blended cost of capital, while its weaker coverage ratio shows it carrying the highest risk. That distinction is what the recommendation is built on
• Delivered a specific, risk-grounded capital-structure recommendation for the subject company

Technologies & methods used

Explore the model

Book value vs. market value: does the WACC conclusion hold?

WACC weighting can use either book value of equity or market capitalization, and that’s a real methodological choice, not just a technicality. I re-ran WACC with market-cap equity weighting instead of book equity to check whether the analysis holds up either way.

BCE’s WACC barely moves regardless of which weighting method is used, so the capital-structure conclusion for BCE holds up either way. TELUS shows a much wider split in 2021 and 2022 specifically (not shown above), because TELUS’s book value of equity is unusually small relative to its market capitalization in those years, which makes book-value WACC considerably less reliable for TELUS than for BCE or Rogers. That’s a point in favor of the BCE recommendation specifically: it doesn’t hinge on which standard method you use.

Formula reference

For transparency, the formulas underlying each ratio, as defined in the original working file: