The two stocks that I chose from the same industry are Verizon Communication and AT&T, Inc. These two companies are from the Telecom Service Industry. On July 12, 2012 I took the closing price for each stock. Verizon’s closing price was $44.67 and AT&T’s closing price was $34.87. So on July 12 buying Verizon I would have made more money compared to if I bought AT&T. I found all of my information on the New York Stock Exchange (NYSE). Some financial information that I found about Verizon is that their overall revenue for 2011 was 112.13 billion but they did have a total debt of 51.60 billion. Some financial information that I found about AT&T is that their overall revenue for 2011 was 127.30 but they did have a total debt of 65.71 billion.
I found Verizon Communications and AT&T, Inc. 2011 Annual Reports and that is where I am going to be getting all of my information from. When talking about ratios there are many different types we can compute.
First I am going to compute Liquidity Ratios. Current ratio is the measure of liquidity. For AT&T their current ratio would be $7.48 and for Verizon their current ratio would be $1.01. A quick ratio is also the measure of liquidity (Mayo, 2012). For AT&T their quick ratio is 0.55 and for Verizon their quick ratio is 0.82.
Secondly I am going to compute Activity Ratios for both AT&T and Verizon. Inventory turnover is defined as the speed with which inventory is sold. For AT&T their inventory turnover is at 46.1 and Verizon’s is at 43.0. Receivables turnover is defined as the speed with which account receivable are collected (Mayo, 2012). For AT&T their receivables turnover is 9.6 and Verizon’s is 9.8. Total asset turnover is the measure of total assets required to generate sales (Mayo, 2012). AT&T and Verizon’s total asset turnover is 0.5.
Third I am going to compute Profitability...