Financial Statement Analysis

Topics: Balance sheet, Generally Accepted Accounting Principles, Revenue Pages: 10 (2405 words) Published: December 22, 2010
Financial Statement Analysis

MBA 6150

Financial Statement Analysis – Verizon Communications

The process of developing financial statements for a business is to provide supporting documentation to what has been reported as annual or quarterly income. Within the financial statement analysis strengths and weaknesses are identified through the comparison of data from the balance sheet. There are many different ways to interpret the data that is utilized for the analysis; those include but are not limited to comparative statements, schedule of changes in working capital, common size percentages, and ratio analysis. The following paper will be reviewing the financial data from Verizon Communications (VZ). Through the analysis review of the corporations financial and common size statements will be reviewed, as well as financial ratios, a trend analysis and in depth overview of the organization.

Company Background
Verizon Communications Inc., headquartered in New York, is a global leader in delivering broadband and other wireless and wire-line communications services to mass market, business, government and wholesale customers. Verizon Wireless operates America’s most reliable wireless network, serving more than 89 million customers nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world. A Dow 30 company, Verizon employs a diverse workforce of more than 230,000 and last year generated consolidated revenues of more than $97 billion. ( Verizon Communications came to be after multiple mergers. These mergers began as the Bell Atlantic – GTE merger. Prior to the merger GTE was one of the world’s largest telecommunications companies serving approximately 35 million access lines throughout the United States, Canada, and the Dominican Republic. GTE posted revenues in 1999 of more than $25 billion. Pre-merger GTE was the “leading wireless operator in the United States with customers totaling 7.1 million and the potential to have 72.5 million customers. While GTE was significant in size, it was small compared to Bell Atlantic. Bell Atlantic posted earnings in 1999 of $33 billion, and had a total of 43 million access lines that included 22 million households and more than 2 million businesses. Over the course of two years and with the approval of the department of justice and FCC the merger was completed; however, during the time that the merger was underway London based Vodaphone/Airtouch and Bell Atlantic announced their plans to merge as well. With the completion of the merger between Vodaphone and Bell Atlantic, the largest wireless company (Verizon Wireless) began. Operations and Products/Services

Verizon Communication is in the business of providing telecommunications services for wireless and wireline communication needs. In addition to providing the ability for consumers and businesses to carry on telephone conversations around the world, Verizon is also a long distance service provider. The ability to provide long distance service was implemented in 2005 with the acquisition of MCI.

Executive Summary and Overall Assessment

Verizon Communications (VZ) had a strong profit showing in 2008. Their year-end operating revenues were $97,354 million for year-end 2008; this amount was a 4.2% increase over the operating revenues from 2007, which were $93,469 million.

VZ cost per share saw a fairly significant fluctuation in 2008 as well. VZ closed out 2008 trading at $33.90 per share, whereas 2007 closed the year at $43.39 per share. This $10 decrease in stock value had an effect on stockholders equity; however, it did not impact the company’s overall profit standings.

Risks assumed
1.Verizon has been successful in providing a variety of benefits to their employees; as a result...

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