Comparing Income Statements and Balance Sheets of Competitors

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

Income Statement($ million) comcast verizon

Sales $62,570 $115,846

Operating cost 50,391 102,686

Operating profit 12,179 13,160

Nonoperating expenses 5,976 2,603

Net Income $6,203 $10,557

Balance Sheet ($ million) comcast verizon

Current assets $19,991 $21,235

Long-term assets 144,980 203,987

Total assets $164,971 $225,222

Current liabilities $16,714 $26956

Long-term liabilities 98,461 112,733

Total liabilities 115,175 139,689

Stockholder equity* 49,796 85,533

Total liabilities and equity $164,971 $225,222

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

2. 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.

3. 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.