At&T Financial Analysis

1502 WordsSep 26, 20107 Pages
AT & T Financial Analysis A company’s past performance is a good indicator of its future outlook. Investors give proper attention to different ratios. In this report I am analyzing the financial position and financial performance of AT & T to conclude whether it is better to invest in the company or not. AT & T Inc. is the United States largest telephone services provider. Its main business involves local, long distance telephone services, DSL internet, digital television and wireless services. In this analysis I have used the balance sheet, the income statement and the statement of cash flows given in the financial statements for the year ended 2006, 2007 and 2008. Initial Review The external auditors in their report say that in…show more content…
No company can satisfy its owners by just sufficing. They need to show an increasing EPS, increasing dividends and generate return on assets and on equity in order to attract new capital. The following ratios are good indicators of how well the company is performing. PROFITABILITY RATIOS (1) Gross Profit Percentage 2008 2007 2006 Gross Profit 61,463.00 60,673.00 27,034.00 ÷ Total Revenue 124,028.00 118,928.00 63,055.00 Gross Profit Percentage 49.6% 51.0% 42.9% (2) Operating Income Percentage 2008 2007 2006 Operating Income 22,596.00 20,404.00 10,288.00 ÷ Total Revenue 124,028.00 118,928.00 63,055.00 Operating Income Percentage 18.2% 17.2% 16.3% (3) Return on Equity 2008 2007 2006 Net Income After Tax 12,867.00 11,951.00 7,356.00 ÷ Average Shareholders ' Equity 105,857.00 115,453.50 85,115.00 Return on Equity 12.2% 10.4% 8.6% (4) Return on Assets 2008 2007 2006 Net Income 12,867.00 11,951.00 7,356.00 ÷ Average Total Assets 270,444.50 273,139.00 208,133.00 Return on Assets 4.8% 4.4% 3.5% (5) Cash Return on Assets 2008 2007 2006 Cash Flow from Operations 33,656.00 34,242.00 15,688.00 ÷ Average Total Assets 270,444.50 273,139.00 208,133.00 Cash Return on Assets 12.4% 12.5% 7.5% (6) Quality of Income 2008 2007 2006 Cash Flow from Operations 33,656.00 34,242.00 15,688.00 ÷ Operating Income 22,596.00 20,404.00 10,288.00 Quality of

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