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Financial Analysis - Assignment Example

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AT and T is company that deals with telecommunication services with most of its services and products provided to the consumers in the United States of America as well as the outside world. Some of the company’s products includes internet services, broadband/ data, local…
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Financial Analysis
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Financial analysis al affiliation) Financial risks for the company AT and T is company that deals with telecommunication services with most of its services and products provided to the consumers in the United States of America as well as the outside world. Some of the company’s products includes internet services, broadband/ data, local exchange, wireless communication, video services, wholesale services and managed network. The company is headquartered in Texas. Financial risk refers to a number of risks that are associated with financing and may target financial transaction. One of the financial risks that are being experienced by the company is the ten million of the company’s most profitable wireless clients may be free to walk away. The move have been associated with the recent change plan in the company that has forced customers to pay monthly installments of over twenty months other than offering subsidized phones (Zachariadis, 2014).
The installment and the contract plan both present an effect of binding the customers to the carriers. Having a huge number of customers floating without an obligation to the company presents a financial risk since the number of sales will go down. Apart from the customers issues the company is also facing financial risks from competitors such as T-mobile US inc., Sprint corp. and Verizon communication Inc. The three competitors present a financial risk to the company as they compete with AT &T for the available market (Summary for AT&T Inc.- Yahoo! Finance, 2014).
The three year financial trend for company ratio is represented in the table as well as the graph that will follow.
INCOME STATEMENT
2014
2013
2012
REVENUE
$132,447
$ 128, 752
$127,434
GROSS PROFIT
$71,836
77,288
$72,219
OPERATING INCOME
$11,776
$30,479
$12,997
NET INCOME
$6,224
$18, 249
$7,262
DILUTED EPS
$1.19
$3.39
$1.25
The graph below is an income statement of the AT & T Inc. the total revenue of the company has registered improvement as per the information of the last three years. Operating income has also declined with 2013 registering the period when the company utilized a lot of capital as operating capital. Diluted EPS indicate the profit per each share. The company recorded high profit per share in the year 2013 as compared to the two different years (Summary for AT&T Inc.- Yahoo! Finance, 2014).
.
Summary of the financial health for the company
The total revenue of the company increased from $127, 434 to $ 132,447 showing a great improvement that was the highest in the past five years. However, the gross profit recorded a decline from $77,288 to $71,836. The company was able to register the highest gross profit in 2013. However, it is the within the same year that the company utilized the highest amount of money $30,447 as operating income. Additionally, in 2013, the company was able to register a high income amount of around $18,249 with a decrease of up to $ 6,224 in the year 2014. The company also recorded a profit per share of $ 1.19 in 2014 which was lower than $3.39. Moreover, the company recorded cash at the end of the year of around $ 8,603 which was higher than $ 3,339 that was recorded in 2013 (AT&T - 4G LTE, Cell Phones, U-verse, TV, Internet & Phone Service, 2014).
Work cited
AT&T - 4G LTE, Cell Phones, U-verse, TV, Internet & Phone Service. (2014, March 11). Retrieved April 29, 2015, from http://www.att.com/
Summary for AT&T Inc.- Yahoo! Finance (2014). Retrieved April 29, 2015, from http://finance.yahoo.com/q?s=T
Zachariadis, M. (2014).Diffusion and Use of Financial Telecommunication: An Empirical Analysis of SWIFT Adoption. SSRN Journal. doi:10.2139/ssrn.1952843 Read More
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