Why this analysis

I chose 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 to calculate ratios in isolation, but to pull them together into the kind of performance, financial health, and capital structure evaluation a financial analyst or intermediate accountant is actually asked to produce.

Approach

I pulled financial and market data for all three companies from public sources, then used it to calculate 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, each year.

What the ratios showed

Return on Assets shows BCE holding steady while its peers get more volatile, especially in 2023, as Rogers and TELUS absorb the effects of large capital investment and acquisition activity.

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

Industry context: 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, according to CSIMarket. Against that backdrop, BCE’s ~35% leverage sits well below the sector norm, while Rogers’ ~58% sits right at it. That puts Rogers roughly in line with the industry, not uniquely aggressive.

Recalculating Weighted Average Cost of Capital consistently across all three peers tells a more nuanced story than cost of capital alone. Rogers shows the lowest blended WACC in 2023, but that’s a mechanical effect of its much heavier debt weighting, not a sign of lower risk. Its Fixed Charge Coverage fell to 1.16x in 2023, close to the 1.0x threshold that signals financial distress, while BCE’s coverage stayed a healthier 2.07x.

Recommendation

Based on the combined risk and leverage picture, the analysis recommends BCE maintain its current, disciplined leverage ratio rather than pursue more aggressive debt-financed expansion. That conclusion 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 shows Rogers’ blended WACC is actually the lowest of the three peers in 2023, precisely because heavier leverage mechanically lowers blended WACC even as it raises distress risk. Cheaper blended capital and lower risk aren’t the same thing, and this recommendation is built on the latter.

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
• Identified Rogers’ Debt-to-Assets ratio increase from 41.49% to 57.65%, the sharpest leverage shift of the three peers
• Identified that Rogers’ Fixed Charge Coverage fell 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 shows Rogers with the lowest blended cost of capital, while its weaker coverage ratio shows the highest risk, a distinction 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. Re-running WACC with market-cap equity weighting instead of book equity tests whether the analysis holds up regardless of that choice.

BCE’s WACC is essentially unchanged regardless of which weighting method is used, so the capital-structure conclusion for BCE holds up under either approach. TELUS shows a much larger split specifically in 2022 and 2021 (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 strengthens confidence in the BCE recommendation in particular, since it doesn’t hinge on which standard method you use.

Formula reference

Here’s a screenshot of the actual working file with formula view enabled (Google Sheets, Ctrl+`), showing the live formulas behind each ratio, calculated directly from the underlying financial data:

For readability, the same formulas transcribed into a clean reference table: