Following are selected income statement and balance sheet data for two communications companies: Comcast and Verizon, for the year ended December 31, 2012.

a. Express each income statement amount as a percentage of sales. Comment on any differences observed between the two companies.

b. Express each balance sheet amount as a percentage of total assets. Comment on any differences observed between the two companies, especially as they relate to their respective business models.

c. Both Verizon and Comcast have chosen a capital structure with a higher proportion of liabilities than equity. How does this capital structure decision affect our evaluation of the riskiness of these two companies? Take into consideration the large level of capital expenditures that each must make to remain competitive.

Transcribed Image Text:

Income Statement ($ millions) Comcast $62,570 50,391 Sales...... Operating costs Operating profit.... Nonoperating expenses.. Net income... Balance Sheet ($ millions) Current assets.. Long-term assets..... Total assets... Current liabilities... Long-term liabilities Total liabilities... 12,179 5,976 $ 6,203 Comcast $ 19,991 144,980 $164,971 $ 16,714 98,461 115,175 Stockholders' equity. 49,796 Total liabilities and equity...... $164,971 Verizon $115,846 102,686 13,160 2,603 $ 10,557 Verizon $ 21,235 203,987 $225,222 $ 26,956 112,733 139,689 85,533 $225,222