AT & T Financial Ratios

A ratio is a comparison of two values to gain information about a company’s performance, and provide pertinent information for comparative analysis, and is one of the most common tools of managerial decision making. However, there are four main categories of financial ratios: profitability (ROI), liquidity (current ratio), leverage (debt ratio), and efficiency (annual inventory turnover)—with several specific formulas prescribed within each. Although, some industry leaders caution in the use and interpretation of financial ratios it’s important for leaders to utilize the formulas during their analysis.
The Importance of Ratios:
Ratio analysis is critical for helping leaders understand their financial statements. Ratios are useful for identifying positive and negative trends and measuring the overall financial health of a company.

Yet, using 1.02 as the benchmark we were able to determine that AT&T Inc.'s current ratio deteriorated from 2014 to 2015, but slightly improved from 2015 to 2016. This means that AT&T liabilities are greater than its assets and organizational leaders should reassess its collection/credit processes or its inventory turnover.
Nevertheless, financial ratios meanings differ depending on the financial data used to calculate them. Therefore, the best way to distinguish between “good” or “not so good” measurements is to understand the concept behind each ratio. Let’s apply two separate measurements and dissect its meaning as it reflects AT&T measurements.
To receive AT&T’s current ratio you must divide the company’s current assets by its current liabilities, which in AT&T’s (see current ratio trend above) case we determined that the company has more assets than liabilities. This suggest that AT&T has money left over to service its debt. Therefore, it’s better to have a higher current ratio than a lower current ratio (Chron,