Financial Analysis of AT&T and Verizon. The final project allows you to demonstrate a grasp of the market valuation of bonds and stocks as well as how companies manage their assets and make capital budgeting decisions to generate maximum value.

QUESTION

OVERVIEW AND PURPOSE

The final project allows you to demonstrate a grasp of the market valuation of bonds and stocks as well as how companies manage their assets and make capital budgeting decisions to generate maximum value.

You will utilize the financial reporting packages of two publicly-traded companies: AT&T and Verizon. You will complete a careful financial analysis of each company, including the development of the common size financial statements and financial ratios.

PROJECT GUIDELINES

Complete the following steps:

• Obtain the most recent annual report for AT&T and Verizon.
• Develop common size financial statements for the two companies for the most recent two years available.
• Calculate financial ratios for a two-year comparison. Be sure to select financial ratios that are relevant to the telecommunication industry. A minimum of five financial ratios must be presented. The financial ratios should be calculated; do not rely upon other finance websites to obtain the general financial ratios.

Your entire written analysis should be between 3000 and 4125 words in length (12 to 15 pages). The analysis should include the following sections for each company:

• Company Background: Present an overview of each company’s history, including key products/services and operations. Analyze and discuss the market valuation of the bonds and stocks issued by each company.
• Recent Merger and Acquisition (M&A) Activities: Evaluate the effect of interest rates and time value of money by presenting a summary of recent M&A activities for both companies. Summary should include a brief discussion of the financing tools used and the cost of capital for these M&A activities.
• Financial Statements and Common Size Statements: Evaluate and interpret each company’s basic financial statements by presenting and discussing the common size financial statements including significant trends or variances. Calculate and discuss the two years of financial ratios.
• Overall Analysis: Evaluate each company’s performance in managing its assets to generate the maximum value to shareholders. Using the information gathered, fully discuss the ways that each company’s decision makers have considered ethical and legal concerns as well as the financial data in making policies and choosing a strategic direction.

After assessing each company separately, develop a conclusion that includes a comparison/contrast of the financial analysis results. Evaluate and compare the financial and economic strategic planning models within each organization, indicating how each company uses financial information to support its strategic direction. Be sure you can fully support your conclusion with reference to your analysis. The conclusion itself should be at least 500 words in length (at least 2 pages), and may be longer.

PROJECT SPECIFICATIONS

• Follow accepted research approaches and citation format (APA style).
• Convey your understanding of the readings and concepts and their application to the topic.
• Write in an organized and coherent way.
• Check for and correct spelling, sentence structure, and grammatical errors.
• Demonstrate graduate-level analytical skills.

Course objectives covered in this project include CO1, CO6, CO7, CO8, CO9

ANSWER

 Financial Analysis of AT&T and Verizon: A Comparative Study

Introduction

The purpose of this project is to conduct a comprehensive financial analysis of two major telecommunications companies, AT&T and Verizon. Through the analysis of their financial statements, common size financial statements, and financial ratios, this project aims to evaluate their market valuation, recent merger and acquisition activities, financial performance, and strategic decision-making. By examining these aspects, we can gain insights into how these companies manage their assets, make capital budgeting decisions, and generate maximum value for their shareholders.

Company Background

In this section, we will provide an overview of the history, key products/services, and operations of both AT&T and Verizon. This will enable a deeper understanding of the companies’ backgrounds and their positions within the telecommunications industry. Additionally, we will analyze and discuss the market valuation of the bonds and stocks issued by each company, highlighting their financial standing in the market.

Recent Merger and Acquisition (M&A) Activities

The evaluation of recent M&A activities is essential to assess the companies’ growth strategies and their ability to adapt to market changes. We will examine the effect of interest rates and the time value of money on these activities. The summary will include a discussion of the financing tools utilized and the cost of capital associated with these M&A activities, shedding light on the financial implications and strategic considerations involved.

Financial Statements and Common Size Statements

In this section, we will analyze and interpret the financial statements of AT&T and Verizon. By developing common size financial statements, we will identify significant trends or variances in their financial performance over the past two years. Additionally, we will calculate and discuss relevant financial ratios that are specific to the telecommunications industry. This analysis will provide insights into the companies’ liquidity, profitability, efficiency, solvency, and market performance.

Overall Analysis

The overall analysis will focus on evaluating each company’s performance in managing its assets to generate maximum value for shareholders. We will examine the decision-making processes within each organization, considering ethical and legal concerns alongside financial data. By incorporating ethical and legal considerations, we can gain a comprehensive understanding of how these companies make policies and choose strategic directions. This section will showcase the alignment of financial data with ethical and legal standards.

Conclusion

The conclusion will provide a comparison and contrast of the financial analysis results for AT&T and Verizon. We will evaluate and compare their financial and economic strategic planning models, highlighting how each company utilizes financial information to support its strategic direction. The conclusion will be supported by the findings from the analysis conducted throughout the project, providing a comprehensive overview of the financial performance and strategic decision-making of both companies.

In conclusion, this project aims to provide an in-depth financial analysis of AT&T and Verizon, examining their market valuation, recent M&A activities, financial statements, and overall performance. Through this analysis, we can gain insights into their financial strategies, decision-making processes, and their ability to generate value for shareholders. The project will adhere to accepted research approaches, citation format (APA style), and demonstrate graduate-level analytical skills, ensuring a comprehensive and well-structured analysis.