AT&T Financial Statments

| October 22, 2018

Portfolio Project

COMPANY: AT&T,Inc

This Portfolio Project has two
parts: calculations and a 4- to 6-page essay. While the calculation
requirements of this assignment are important, equally important are your
discussion and analysis of the quantitative results of AT&T financial
statment. You will submit two files: 1) a spreadsheet containing AT&T’s
horizontal and vertical analysis (and perhaps AT&T ratios) and 2) a word
document containing your essay.
Choose a publicly traded company (AT&T,Inc) and perform an expanded analysis on the
financial statements. Please use the most current 10K statements available
on www.sec.gov.sec.gov/”>http://www.sec.gov or annual statements in
finance.yahoo.com.yahoo.com/”>http://finance.yahoo.com.

Part 1: Please complete the following for your chosen firm in an Excel
spreadsheet:
1.
Horizontal and vertical analysis of the Income Statements for the
past three years (all yearly balances set as a percentage of total revenues for
that year).
2.
Horizontal and vertical analysis of the Balance Sheets for the
past three years (all yearly balances set as a percentage of total assets for
that year).
3.
Ratio analysis (eight ratios of your choosing) for the past three
years PLUS a measurement for the creditworthiness of your firm as measured by
Altman’s Z-score. Note that if you used your chosen firm for
our ratio-related discussion posts, then you MUST also present industry-average
ratios or current year competitor ratios for your ratio analysis. Comparing
your firm’s ratios to a close competitor or an industry-average ratio makes
your analysis much more meaningful.

Part 2: The Paper:
·
4-6 pages in length.
·
Include a proper introduction and conclusion.
·
Include a reference page.
·
Your paper should provide your reader with an overall
understanding of the financial health of your chosen firm including the
following:
o
Discussion of the ratio analysis results, including rationale for
the ratios chosen.
o
Discussion of all horizontal and vertical analysis.
o
Discussion of four items from the management discussion of the
firm that support the conclusion formed in your discussion of the financial
results.

Much of this course has
concentrated on learning the financial statements, primarily because there was
not an accounting prerequisite. Because of this concentration, you may find
this assignment challenging. However, if you understand the financial statements,
then the horizontal and vertical analysis should (hopefully) be rather
intuitive. For example, if you see sales rise by 20%, then shouldn’t you also
see net income rise by 20% or more if the managers are effective at controlling
costs? If you see sales rise by 20% and
assets rise by 40%, we have to ask why this is happening. It would appear that
assets have risen too far given the sales that are generated from those
assets—why did this occur? You may have
to research that type of question and discuss it in your analysis.

The link
below demonstrates the completion of vertical and horizontal analysis on Nike
using Excel. Dr. Jill Bale, the course writer, demonstrates the use of
Excel equations and discusses some of the issues you may face when working on
the spreadsheet for your portfolio project. If you would like some
additional guidance on the spreadsheet requirement of the portfolio project,
please watch the video. Note that the video does not discuss adding the 8
required ratios to your spreadsheet; however, you are required to submit your
company ratios on this spreadsheet as well as the vertical/horizontal analysis.
As always, your instructor is available for follow-up questions.

Bale, J. (2013, August 19). Demonstration
of Vertical/Horizontal Analysis using Excel [Video file]. Retrieved from.unl.edu/inbox/jbale2/Nike_Horizontal_and_Vertical_analysis_-_MP4_with_Smart_Player_(Large)_-_20130819_10.10.04AM.html”>http://camrelay1.unl.edu/inbox/jbale2/Nike_Horizontal_and_Vertical_analysis_-_MP4_with_Smart_Player_(Large)_-_20130819_10.10.04AM.html

You’ve had some experience with
financial ratios through Discussion Board.
I’d suggest that you start your ratio analysis with the four ratios
found in the DuPont equation. If you discover a weakness in one component of
the DuPont ratios, then it would make sense to look at ratios that are closely
related to the troublesome ratio. For example, if you discover that the asset
turnover is declining over time, then take a look at some related ratios such
as the inventory turnover rate or the average collection period. If you
discover that the equity multiplier is increasing (indicating greater reliance
on debt), then look at some related ratios such as the debt ratio or Times Interest
Earned. These ratios are discussed in our textbook, even though you may not
have been assigned to thoroughly read the chapters.

Finally, please read through the
rubric that will be used to grade your assignment—you will get a feeling of
expectations by doing so. Your instructor is here to help you through this
project. If you have questions, please let your instructor know. He or she may
be willing to take a quick look at your horizontal and vertical analysis to
give you feedback in advance since you will not have had much experience on
that calculation prior to the project. Always communicate right away with your
instructor when you need assistance!

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