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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
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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
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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

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