Question
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
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.
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