Financial Forecast Analysis of AT&T - Essay Example

The core assumption behind this movement of net income is the increasing expected costs and expenses of the company of the forth-coming periods.

A little variation in the assets of the company is forecasted and the levels of assets are not expected to increase or decrease significantly. The company plans to reduce the levels of its equity in the future periods with minor deductions. AT&T tries to improve the paid dividends by increasing the value slightly every year, these movements show that the organization is planning and persuading an organic growth for the future periods. The cash flow generation is likely to drop down every year due to increased expected expenses.

Due to increased expenses, the profit margins of the company will be affected and expected to fall in the future periods. The retention ratio also signifies the effect of gradual declinations of retained profits over the years and is dropping down following the same trend of Earnings of the company. The asset turnover is expected to increase due to increasing sales and reducing assets, the ratio is expected to improve continuously every year. The financial gearings of the company are assumed to remain stable with a little variation that will make the company more predictable to the investors by consistency in the operational and financial sustainability of the organization. (Helfert, 2001)