Analyze and compare AT&T and Facebook AT&T Inc. (T) is a leading global provider of telecommunication services. Facebook, Inc. (FB) is a major worldwide social media company. AT&T has a lengthy history and was founded by Alexander Graham Bell. Facebook has a short history and was founded by Mark Zuckerberg. Facebook uses telecommunication networks, like those of AT&T, to deliver social content to its users. Free cash flow and revenue information for both companies for three recent years is as follows (in millions): AT&T Information from the statement of cash flows: Information from the income statement: Facebook Information from the statement of cash flows: Information from the income statement: a. Using total revenue, which company appears to be the larger at the end of Year 3? b. Using total revenue, which company appears to be growing faster across the three years? c. Compute the cash used to purchase property, plant, and equipment (PP&E) as a percent of the cash flows from operating activities for all three years for each company. Round to the nearest whole percent. d. Using the computations in (c), which company appears to require more cash to purchase PP&E, and what impact does this have on free cash flow? e. Compute the ratio of free cash flow to revenue for all three years for each company, and plot the data on a line chart with the years on the horizontal axis. f. Interpret the chart.

BuyFind

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
BuyFind

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

Solutions

Chapter
Section
Chapter 15, Problem 4MAD
Textbook Problem

Analyze and compare AT&T and Facebook

AT&T Inc. (T) is a leading global provider of telecommunication services. Facebook, Inc. (FB) is a major worldwide social media company. AT&T has a lengthy history and was founded by Alexander Graham Bell. Facebook has a short history and was founded by Mark Zuckerberg. Facebook uses telecommunication networks, like those of AT&T, to deliver social content to its users. Free cash flow and revenue information for both companies for three recent years is as follows (in millions):

AT&T

Information from the statement of cash flows:

Chapter 15, Problem 4MAD, Analyze and compare ATT and Facebook ATT Inc. (T) is a leading global provider of telecommunication , example  1

Information from the income statement:

Chapter 15, Problem 4MAD, Analyze and compare ATT and Facebook ATT Inc. (T) is a leading global provider of telecommunication , example  2

Facebook

Information from the statement of cash flows:

Chapter 15, Problem 4MAD, Analyze and compare ATT and Facebook ATT Inc. (T) is a leading global provider of telecommunication , example  3

Information from the income statement:

Chapter 15, Problem 4MAD, Analyze and compare ATT and Facebook ATT Inc. (T) is a leading global provider of telecommunication , example  4

  1. a. Using total revenue, which company appears to be the larger at the end of Year 3?
  2. b. Using total revenue, which company appears to be growing faster across the three years?
  3. c. Compute the cash used to purchase property, plant, and equipment (PP&E) as a percent of the cash flows from operating activities for all three years for each company. Round to the nearest whole percent.
  4. d. Using the computations in (c), which company appears to require more cash to purchase PP&E, and what impact does this have on free cash flow?
  5. e. Compute the ratio of free cash flow to revenue for all three years for each company, and plot the data on a line chart with the years on the horizontal axis.
  6. f. Interpret the chart.

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Chapter 15 Solutions

Managerial Accounting
Ch. 15 - Classifying cash flows Identify whether each of...Ch. 15 - Adjustments to net incomeindirect method Ripley...Ch. 15 - Changes in current operating assets and...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Land transactions on the statement of cash flows...Ch. 15 - Common stock transactions on the statement of cash...Ch. 15 - Free cash flow Dillin Inc. reported the following...Ch. 15 - Appendix 2 Cash received from customersdirect...Ch. 15 - Appendix 2 Cash payments for merchandisedirect...Ch. 15 - Cash flows from operating activitiesnet loss In a...Ch. 15 - Effect of transactions on cash flows State the...Ch. 15 - Classifying cash flows Identify the type of cash...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Reporting changes in equipment on statement of...Ch. 15 - Reporting changes in equipment on statement of...Ch. 15 - Reporting land transactions on statement of cash...Ch. 15 - Determining cash payments to stockholders The...Ch. 15 - Reporting stockholders equity items on statement...Ch. 15 - Reporting land acquisition for cash and mortgage...Ch. 15 - Reporting issuance and retirement of long-term...Ch. 15 - Determining net income from net cash flow from...Ch. 15 - Cash flows from operating activitiesindirect...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsindirect method List the...Ch. 15 - Cash flows from operating activitiesdirect method...Ch. 15 - Determining selected amounts for cash flows from...Ch. 15 - Cash flows from operating activitiesdirect method...Ch. 15 - Cash flows from operating activitiesdirect method...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsdirect method The...Ch. 15 - Statement of cash flowsdirect method applied to PR...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsindirect method The...Ch. 15 - Statement of cash flowsdirect method The...Ch. 15 - Statement of cash flowsdirect method applied to PR...Ch. 15 - Analyze and compare Amazon.com, Best Buy, and...Ch. 15 - Analyze and compare Apple, Coca-Cola, and Verizon...Ch. 15 - Analyze Aeropostale Aeropostale, Inc. (AROPQ) is a...Ch. 15 - Analyze and compare ATT and Facebook ATT Inc. (T)...Ch. 15 - Analyze Priceline The Priceline Group Inc. (PCLN)...Ch. 15 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 15 - Financial condition Tidewater Inc., a retailer,...Ch. 15 - Using the statement of cash flows You are...

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