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John Emmanuel V. Gonzalez: Verizon: A Financial Analysis

This document analyzes Verizon through a financial analysis of its income statement, balance sheet, ratios, and DuPont analysis over three years. Key findings include steadily growing revenue and net income. Cash decreased but receivables increased, indicating higher sales. Assets and equity increased overall. Current liabilities also increased while long-term liabilities decreased. Ratios show lower current ratio but higher debt ratios than averages. Profitability ratios are the same or higher than competitors. The DuPont analysis finds room to improve asset turnover and maintain a trend of lower leverage as revenue grows. Continued revenue growth and higher net income margins can further increase profitability.

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98 views20 pages

John Emmanuel V. Gonzalez: Verizon: A Financial Analysis

This document analyzes Verizon through a financial analysis of its income statement, balance sheet, ratios, and DuPont analysis over three years. Key findings include steadily growing revenue and net income. Cash decreased but receivables increased, indicating higher sales. Assets and equity increased overall. Current liabilities also increased while long-term liabilities decreased. Ratios show lower current ratio but higher debt ratios than averages. Profitability ratios are the same or higher than competitors. The DuPont analysis finds room to improve asset turnover and maintain a trend of lower leverage as revenue grows. Continued revenue growth and higher net income margins can further increase profitability.

Uploaded by

jm gonzalez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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John Emmanuel V.

Gonzalez
Verizon: A Financial
Analysis
Background of Company
Telecommunications
First to build company based in New
York City, USA
the 5G
technology

Provides wireless
Bridges people into fiber internet,
the digital world considered to be
through their the best in the USA
technology
Methodology
Competitors

T-Mobile AT&T

Sprint
Analysis
● Created a Vertical and Horizontal Analysis
- Income Statement and Balance Sheet

● Three Years (with 2016 being the base year)


● Acquired through NASDAQ and Annual Reports of all four companies
● Created a Ratio Analysis based on data
Horizontal Analysis
Income Statement
Sales, Net Income
General and Growth
Admin.
Expense

Key Figures

Revenue
Additional
Income
Expense
Analysis
● Revenue has been steadily growing, indicating that the company has had an increased
presence in the industry
● Selling, General, and Administrative Expense has also increased, possibly due to
increased sales
● Additional Income also decreased over the three years, shouldered by the initial
revenue
● Net income has increased overall because of the increased sales coupled with the
Cost of Goods and Services sold not having a significant impact
Horizontal Analysis
Balance Sheet
Total Assets Cash and
Cash
Equivalents

Key Figures

Current
Inventories
Liabilities
Analysis
● Cash decreased, but Net Receivables increased dramatically, further
explaining the increased revenue
● Inventories also increased to further cover the increase in sales
● Total Assets increased overall
● Current Liabilities increased but Long-Term Liabilities decreased, which
may indicate that there was a payment for these
Analysis
● Total Equity had a steady increase over three years as a result of the
increased revenue
● Comparing to the competitors, they are only lagging behind AT&T in
terms of Equity
Vertical Analysis
Income Statement
Analysis
● Net Income makes up for almost 29% of total revenue, an
increase of 9% from 2016
● COGS takes up for 42% of total revenue, a significant
percentage
Vertical Analysis
Balance Sheet
Analysis
● Net Fixed Assets (PPE) contributes the most to Total Assets,
with almost 11%.
● Liabilities take up almost 65% of Total Liabilities and Equity
● Retained Earnings make almost 80% of Total Equity
Ratio Analysis
Analysis
● Current Ratio of Verizon is lower than industry averages, indicating that they
are slower to pay off their liabilities.
● Inventory Turnover is high, showing that it takes them longer to replace their
inventory
● Debt Ratios are higher than the industry averages, meaning that they are able
to make use of the money they borrow
● Profitability ratios are either the same or higher than industry averages,
meaning that the company profits a lot more than their competitors
DuPont Analysis
Analysis
• Total Asset Turnover can be improved by increasing revenue
• If the company wants to be conservative, following its trend of lower
financial leverage as revenue is already increasing
• The company must continue increasing revenue and having its net income
take up more of it to also increase its profit margin

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