ATT Write Up

Topics: Financial ratios, Financial ratio, Inventory Pages: 2 (670 words) Published: December 14, 2014
Higher profitability margins, consistent efficiency ratios and sound debt position make AT&T a good stock to invest in; however, liquidity needs to improve further AT&T has been doing very well from profitability perspective. The company's EBITDA and net margins have increased to 37.96% in 2013 and 14.41% in 2013 from 21.78% and 3.30% respectively in 2011. Moreover, the company's return on assets also increased to 6.68% in 2013 from 1.55% in 2011. Focus on growth prospects and accretive acquisitions led to improved operating conditions thereby resulting in higher margins and returns. On one hand, the company focuses on adding new customers and providing them services at faster speed. On the other hand, AT&T also focuses on improving operating efficiencies by launching Project Agile. The company also targets growth through acquisitions by recently acquiring Leap Wireless that added $2.8 billion towards overall revenues. The management has also been very successful in managing working capital efficiently. In a highly competitive market, it is difficult to keep altering its receivables and inventory management tactics. Doing so might result in customers seeking other service providers and thereby putting pressure on inventory. Continued focus on increasing revenues and stable working capital management terms led to marginally improved efficiency ratios year on year. Receivables turnover increased to 9.97 in 2013 from 9.58 in 2011, inventory turnover increased to 112.15 from 106.67 in 2011 and asset turnover remained more or less same throughout the review period. AT&T also took benefits of lower interest rates in 2013 and as a result managed to reduce the weighted average debt cost to 4.5% in 2013 from 4.9% in 2012. The result of this benefit is reflected in a better interest coverage ratio. Lower interest rated debts allowed the company to utilize the money towards higher returns generating projects. As a result, the net impact resulted in substantially improved...
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