Verizon Case Summary
1. Calculations for Verizon Wireless a. Market Value Measures i. Market-to-book = market value per share / book value per share 1. 3.83 ii. P/E Ratio = price per share / earnings per share 2. 44.52/.66=144.03 b. Profitability Measures iii. ROE = net income / total equity 3. 2011 2,404,000/35,970,000= 6.68% 4. 2010 2,549,000/38,569,000= 6.60% iv. ROA= net income / total assets 5. 2011 2,404,000/230,461,000= 1.04% 6. 2010 2,549,000/220,005,000 = 1.15% v. Profit Margin = net income / sales 7. 2011 2,404,000/110,875,000= 2.17 % 8. 2010 2,549,000/106,565,000= 2.39% c. Asset
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Management Measures vi.
Receivables Turnover sales / accounts receivable 9. 2011 110,875,000/11,776,000= 9.41 times 10. 2010 106,565,000/11,781,000= 9.0 times vii. Inventory Turnover cost of goods sold / inventory 11. 2011 45,875,000/ 940,000= 49 times 12. 2010 44,149,000/ 1,131,000= 39 times d. Short Term Solvency viii. Quick Ratio (current assets – inventory) / current liabilities 13. 2011 (30,939,000-940,000)/ 30,761,000 = .98 times 14. 2010 (22,348,000-1,131,000)/ 30,597,000= .69 …show more content…
times ix. Current ratio current assets/current liabilities 15. 2011 30,939,000/ 30,761,000 = 1.01 times 16. 2010 22,348,000/ 30,597,000 = .73 times e. Long term solvency x.
Interest Coverage EBIT / interest 17. 2011 5,555,000/ 632,000 = 8.79 times 18. 2010 5,757,000/ 679,000 = 8.47 times xi. Long Term Debt Ratio long-term debt / (long-term debt + total equity) 19. 2011 50,303,000/( 50,303,000+35,970,000)= .583 or 58% 20. 2010 45,252,000/(45,252,000 +38,569,000)= .539 or 54% xii. Total Debt Ratio (total assets – total equity) / total assets 21. 2011 (230,461,000-35,970,000)/230,461,000=.843 or 83% 22. 2010 (220,005,000-38,569,000)/220,005,000=.824 or 82%
The performance of Verizon form year 2010 to year 2011 was a lackluster performance. Their rate of return dropped from 2010 to 2011. In 2011 they were barely able to cover their liabilities as opposed to 2010. They increase both their debt and long-term debt with is troublesome. They had lower profits and rate of return, while saddling on more debt. However when compared to the industry Verizon fares mediocre. The current ratio at 1.01 is lower than the industry at 1.26 so it’s barely covering its
liabilities.
If I were an investor I would invest in the stock since the stock is performing well and outperforming industry standards. The company is valued at a P/E ratio of 144.03 while the industry is 13.47 far outranks the industry. However, if I were a bank I would not be sure to lend since they current ratio is so low and they are already saddled with high debt and increasing their debt.
Management Measures vi.
Receivables Turnover sales / accounts receivable 9. 2011 110,875,000/11,776,000= 9.41 times 10. 2010 106,565,000/11,781,000= 9.0 times vii. Inventory Turnover cost of goods sold / inventory 11. 2011 45,875,000/ 940,000= 49 times 12. 2010 44,149,000/ 1,131,000= 39 times d. Short Term Solvency viii. Quick Ratio (current assets – inventory) / current liabilities 13. 2011 (30,939,000-940,000)/ 30,761,000 = .98 times 14. 2010 (22,348,000-1,131,000)/ 30,597,000= .69 …show more content…
times ix. Current ratio current assets/current liabilities 15. 2011 30,939,000/ 30,761,000 = 1.01 times 16. 2010 22,348,000/ 30,597,000 = .73 times e. Long term solvency x.
Interest Coverage EBIT / interest 17. 2011 5,555,000/ 632,000 = 8.79 times 18. 2010 5,757,000/ 679,000 = 8.47 times xi. Long Term Debt Ratio long-term debt / (long-term debt + total equity) 19. 2011 50,303,000/( 50,303,000+35,970,000)= .583 or 58% 20. 2010 45,252,000/(45,252,000 +38,569,000)= .539 or 54% xii. Total Debt Ratio (total assets – total equity) / total assets 21. 2011 (230,461,000-35,970,000)/230,461,000=.843 or 83% 22. 2010 (220,005,000-38,569,000)/220,005,000=.824 or 82%
The performance of Verizon form year 2010 to year 2011 was a lackluster performance. Their rate of return dropped from 2010 to 2011. In 2011 they were barely able to cover their liabilities as opposed to 2010. They increase both their debt and long-term debt with is troublesome. They had lower profits and rate of return, while saddling on more debt. However when compared to the industry Verizon fares mediocre. The current ratio at 1.01 is lower than the industry at 1.26 so it’s barely covering its
liabilities.
If I were an investor I would invest in the stock since the stock is performing well and outperforming industry standards. The company is valued at a P/E ratio of 144.03 while the industry is 13.47 far outranks the industry. However, if I were a bank I would not be sure to lend since they current ratio is so low and they are already saddled with high debt and increasing their debt.