verizon

Financial Statement Analysis

India Smith

The University of Arizona Global Campus

BUS 401: Principles of Finance

Professor Kristine Beaird

22 November 2021

VERIZON COMPANY

Overview of the Company

Verizon Company, headquartered in New York City, is one of the world's most influential communication innovation organizations. The company provides phone, information, and video support and explanations for its award-winning organizations and stages, meeting clients' needs for portability, a stable network, security, and control(Study et al., 2002). Besides, the organization is dedicated to making the globe a better and more superior environment. The current market price per share for the company is 50.86 USD.

Company's Income Statement

Verizon's operating revenues grew from 2018 to 2019 but then declined dramatically from 2019 to 2020. From the consolidated income statement provided by the company, we find that the company's operating income grew from 2018 to 2019 but then declined somewhat from 2019 to 2020. Verizon Communications Inc.'s income before (provision) advantage for income taxes increased from 2018 to 2019 and from 2019 to 2020, according to the income before benefit for income taxes.

Checking out the Net income owing to Verizon company, from the combined pay articulation given by the organization, it is clear that Verizon's overall gain owing to Verizon significantly increased from 2018 to 2019; however, it somewhat diminished from 2019 to 2020.

Common Size Income Statements

From the data given, for the past three years, it is clear that there is a gradual increase in gross profit margin from 2018 to 2020 in Verizon Company. From 2018-2019, there was an increase in the operating profit margin of Verizon Company. Additionally, during the same period, there was a significant increase in the net profit margin ratio which declined in 2019-2020.

Balance Sheets

The balance sheet informs creditors, investors, and analysts about its assets (resources) and capital sources (its equity and liabilities). Liabilities are a company's commitments stemming from previous events projected to result in an outflow of economic advantages from the firm when they are settled.

 For total assets, from the data given by the Verizon Company, we find that there was an increase in total assets from 2018 to 2020. There was also an increase in total current assets from 2018-2019 and 2019-2020. Total current liabilities increased from 2018-2019, but afterward, there was a slight fall from 2019 to 2020. The company's long-term debt slightly increased from 2018 to 2020. Finally, there was an increase in total shareholder's equity from 2018 to 2019 as well as from the year 2019 to 2020.

 Common Size Balance Sheet

From the information provided, the current assets as a percentage of the total assets of Verizon Company declined from 2018 to 2019 but then rose from 2019 to 2020, surpassing the 2018 level. From 2018 to 2019, Verizon Company's current liabilities as a percentage of total liabilities and equity grew but then fell dramatically between 2019 and 2020. For the part of long-term liabilities as a percentage of total liabilities and equity at this company, we find a drop from 2018 to 2019, but then grew from 2019 to 2020, surpassing the 2018 level. From 2018 to 2019, and from 2019 to 2020, the company's equity attributable to Verizon rose as a percentage of total liabilities and equity.

Cash Flow

Simple Cash Flow = Net income + Depreciation/Amortization – Change in Working Capital – Capital Expenditure

Net income (for the past 3 years)= $18,350,000,000

Depreciation/Amortization = $0

Change in Working Capital (for the year ended 2020) = – $56,000,000

Capital Expenditure = $2,000,000,000 (Randi bought a new iMac last year)

Therefore, Cash flow = ($18,350,000,000+$0) - $56,000,000-$2,000,000,000

=$16,294,000,000

From 2018 to 2019, and from 2019 to 2020, the company's net cash supplied by operational activities grew. From 2018 to 2019, the company's net cash utilized in investing operations grew but fell dramatically from 2019 to 2020. The net cash provided by financing activities of Verizon company dropped from 2018 to 2019 but then climbed from 2019 to 2020.

Financial Analysis

Conclusion

Based on the financial facts above, the company's overall financial strength is strong financial and operational performance, as seen in the balance sheet and income statement. The overall financial performance of Verizon Company can be categorized as Neutral performance. From the table above, looking at the trends discussed, we find more strengths than weaknesses in Verizon Company. 

References

Study, A. C., Stores, W., Hayden, P., Lee, S., Mcmahon, K., & Pereira, M. (2002). Wal-Mart : Staying on Top of the Fortune 500. April.