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Analyze and Compare AT&T and Verizon Communications The following income statement data for AT&T Inc. (T) and Verizon Communications Inc. (VZ) were taken from their recent annual reports (in millions): a. Prepare a vertical analysis of the income statement for AT&T. Round to one decimal place. b. Prepare a vertical analysis of the income statement for Verizon. Round to one decimal place. c. Based on Requirements (a) and (b), how does AT&T compare to Verizon?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 3, Problem 6MAD
Textbook Problem
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Analyze and Compare AT&T and Verizon Communications

The following income statement data for AT&T Inc. (T) and Verizon Communications Inc. (VZ) were taken from their recent annual reports (in millions):

Chapter 3, Problem 6MAD, Analyze and Compare ATT and Verizon Communications The following income statement data for ATT Inc.

a. Prepare a vertical analysis of the income statement for AT&T. Round to one decimal place.

b. Prepare a vertical analysis of the income statement for Verizon. Round to one decimal place.

c. Based on Requirements (a) and (b), how does AT&T compare to Verizon?

a.

To determine

Prepare the vertical analysis of Company AT’s income statement.

Explanation of Solution

Vertical analysis: The comparison of an item of a financial statement against the total amount of the same financial statement, to determine the relation between the two items, is referred to as vertical analysis. This analysis is also known as common size analysis. The vertical analysis percentage is calculated by using the formula:

Vertical analysis=Financial statement itemsBase amount×100

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement

b.

To determine

Prepare the vertical analysis of Company V’s income statement.

c.

To determine

Compare the vertical analysis of two companies’ income statement.

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Chapter 3 Solutions

Financial And Managerial Accounting
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