Verizon Financial Ratio Summary

This report details the annual financial ratios for Verizon Communicating Inc. and some of its major competitors NTT System SA and AT&T Inc. Verizon is a global communication technology company that is traded on the New York Stock Exchange and will serve as the benchmark company for the purposes of this report.
First things first, it is important to evaluate the ability of a company to pay its current liabilities. The current ratio measures a company’s ability to pay off its liabilities with its current assets. More specifically the ratio focuses on paying off the short term liabilities that are due within the year. Verizon’s current ratio at the end of the fiscal year was approximately 1.055. This indicates that the company has just slightly

more assets than liabilities. NTT System has a current ratio of 1.611 and AT&T ended with a ratio of 0.859. Both Verizon and NTT both maintained higher ratios which shows investors that the companies can more easily pay their debts, whereas AT&Ts ratio demonstrates that the company is not making enough to support its activities.
In analyzing a company’s finances it is also important to evaluate its ability to sell inventory and collect receivables. Inventory turnover demonstrates how well a company can take its merchandise inventory and turn it into money. It is a measure of efficiency. According to the numbers, none of which were documented for AT&T, Verizon had the best inventory turnover at 45.9 compared to NTTs ratio at only13.5. Along with the inventory turnover ratio, the gross profit percent ratio is also a ratio that can illustrate a company’s ability to create sales and turn a profit. This ratio shows what percentage of sales remains after all costs to the business have been paid. Verizon’s gross profit percent ratio was 60.35. NTT Systems came out to be 5.20 and AT&T’s ratio was 53.32. The ratio shows investors and creditors how well a company is able to turn sales into income. In this case Verizon would be the smartest choice to partner with because the higher the ratio the more profitable the company.
A company’s debt ratio determines its financial control.

It is essentially the company’s ability to pay off its liabilities with its assets. The debt to equity ratio compares liabilities to assets and shows creditors and investors what companies are considered risky to work with. The financial ratio reports for the fiscal year showed that Verizon’s debt to equity ratio was 898.8 compared to AT&Ts ratio of 88.0. Looking at these ratios AT&T would be the more safe company to work with, whereas Verizon’s ratio can be viewed by investors and creditors as more risky. A higher debt to equity ratio illustrates that a company might not be preforming as well as it should as is the reason it would be seeking extra financing for its debts.
Similar to evaluating a company’s ability to pay its debts it is also key to evaluate the profitability of a company. On method is calculating the company’s profit margin ratio. Verizon had a net profit margin of 11.44. NTT Systems had a profit ratio of 0.04 and AT&T had a profit ratio of 8.78. Net profit margins ratio specifically measures the amount of profits produced for certain levels of sales. The higher the ratio the more profitable the company. Verizon therefore has the highest profit per sale while its competitors have

less.
The rate of return on assets is another ratio that measures a company’s profitability at the end of the fiscal year.

The return on assets shows investors how well a company can convert its invested assets into net income. Verizon has the highest ROA at 4.5, followed by AT&T at 2.0 and lastly NTT at 1.3. All three company’s maintain positive ratios which is good for investors as it shows at least some profitability; however, Verizon’s ratio displays that the company can effectively manage its assets and turn more of a profit than its competitors. The financial reports also calculate asset turnover ratio. The asset turnover ratio measures a company’s ability to get sales from its assets. The higher the ratio, the more favorable the company to investors and creditors. In this case NTT Systems has a better ratio than our benchmark company, Verizon. NTT Systems was the only company to have a positive asset turnover ratio at 2.8, while Verizon and AT&T were both negative at roughly .5 each. A higher ratio shows that a company better uses its assets to turn a profit.
The price earnings ratio shows what a company’s stock is worth on the market based off of current earnings. This is important in finances and the stock market because the pe ratio can help determine future earnings per share. Verizon has a pe ratio of 19.9. NTT has a ratio of 9.5. AT&T has a ratio of 31.4. From an investors perspective AT&T has the best indication of a better future performance. The higher the ratio the

more likely others are to invest and how much will be invested per share. Verizon is mid-range of the three companies.
The last important ratio featured on the financial reports for the communication tech companies is the dividend yield. The dividend yield ratio helps investors to calculate what they are getting from their investments to the stocks of the company. According to the financial ratio reports Verizon holds a ratio of 4.6 where as its competitors both have ratios over 5.0. All this means is that Verizon is paying its investors less dividend in comparison to the market value of the stock. Investors for NTT and AT&T are essentially being rewarded for their help better.
Overall Verizon’s financial performance for the fiscal year was generally successful. While not all ratios were considered optimal, the company fared well. The financial report and comparisons will help Verizon Communications Inc. to adjust for the next fiscal year.