Verizon Annual Report Evaluation

A merger in 2000 between Bell Atlantic Corporation and GTE Corporation formed the present corporation known as Verizon Communications Incorporated with July 3, 2000 its first day of trading on the New York Stock Exchange. The logo, VZ, “was selected because it uses the two letters of the Verizon logo that graphically portray speed, while also echoing the genesis of the company name: veritas, the Latin word connoting certainty and reliability, and horizon, signifying forward-looking and visionary”. The reasoning behind the merger was to blend two very successful companies into one which would have “the scale and scope to compete as one of the telecommunications industry’s top-tier companies” (Verizon, nd). Based on the company’s 2006 and 2007 annual reports, they are meeting the initial goal behind the merger decision. With that being said, let us examine a variety of information extracted from the annual report to get a more accurate picture of the company’s financial health. To do so will require a review of the financial statements found in the financial performance section of the annual report: the balance sheet, the income statement, the statement of retained earnings and the statement of cash flows. The different ratios use different criteria so it is important to first determine your objective in order to know which ratio would give the information needed to make a more accurate assessment. For example, liquidity ratios give a picture of the company’s “ability to meet short-term financial obligations” whereas asset management ratios are a picture of the company’s use of their assets “to generate sales” (Moyer, McGuigan, Rao, 2007). In other words, the liquidity ratio gives us a picture of the level of risk if Verizon needed to immediately pay its short-term bills, debts which normally must be paid in one year or less. Current ratio is determined by current liabilities into current assets. In 2006 Verizon reported a total of $32,380 million in current