AT&T Financial Statements and Financial Ratios

AT&T: Brief Summary

AT&T, with its headquarters in Dallas, Texas, operates in the communications sector within the telecom services industry. The organization boasts a workforce of around 247,000 employees and offers a range of products and services, including DirecTV services, cable subscriptions, and electronic equipment.

Regarding financials, AT&T's stock price has fluctuated between $26.08 and $39.70 over the past 52 weeks. The company's beta is 0.72, indicating a lower volatility level than the overall market. With a market capitalization of approximately $211 billion, AT&T has a substantial industry presence.

This brief summary overviews AT&T's presence in the communications sector, highlighting its core offerings and significant workforce. Additionally, the summary touches on the company's stock performance, showcasing its price range and providing insights into its market capitalization and risk profile.

AT&T Financial Report Sources

The report titled "AT&T 2019 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years" was authored by Paul Borosky, MBA, and owner of Quality Business Plan. In this comprehensive report, the author extensively researched and analyzed AT&T's financial statements from various years, including 2018, 2017, 2016, and 2015 10k annual reports and AT&T's 2019 10k annual report.

Using these primary sources, the author collected a wealth of information for a detailed examination and analysis of AT&T's financial performance over five years. The selected 10k reports are the foundation for gathering essential data and insights into the company's income statements, balance sheets, and other financial indicators.

By combining rigorous research, industry knowledge, and a deep understanding of financial analysis, the report offers readers a comprehensive overview of AT&T's financial health and performance. It is a valuable resource for investors, analysts, and individuals seeking insights into AT&T's financial position and potential.

Section 1: AT&T Income Statement Analyzed

This section presents a comprehensive overview of the income statement, emphasizing its significance and purpose in financial analysis. The author begins by providing a broad definition of the income statement and highlighting its importance in evaluating a company's financial performance. Subsequently, the author delves into a detailed discussion and definition of various income statement line items, including revenues, gross profits, and more.

Following the definition and discussion of each line item, the author concludes with a summary analysis of AT&T's important income statement line item trends from 2015 to 2019, in most cases. This analysis offers valuable insights into the company's revenue growth and other key financial indicators over the specified period.

By addressing the broad concept of the income statement, defining its line items, and offering a summary analysis of AT&T's trends, this section provides readers with a comprehensive understanding of AT&T's income statement. The information presented enables readers to evaluate the company's financial performance and identify key patterns and changes over time.

Importance of Understanding AT&T's Income Statement for Financial Analysis

Understanding AT&T's income statement is paramount for conducting a thorough financial analysis. The income statement provides a comprehensive overview of the company's revenues, expenses, and net income over a specific period. By analyzing AT&T's income statement, analysts can evaluate the company's profitability, revenue growth, cost structure, and overall financial performance.

Key components such as revenues, gross profits, operating expenses, and net income offer valuable insights into AT&T's operational efficiency and financial health. Examining revenue trends helps assess the company's ability to generate sales and maintain market share. Gross profits indicate the profitability of AT&T's core operations while operating expenses reveal its cost structure and efficiency in managing expenses.

The Significance of Understanding AT&T's Income Statement for Informed Decision-Making and Financial Analysis

Understanding AT&T's income statement allows analysts to make informed decisions, assess its financial strength, and compare its performance to industry peers. It helps identify potential areas of improvement, measure financial sustainability, and predict future earnings. Additionally, analyzing the income statement facilitates forecasting and budgeting, enabling strategic financial planning.

A thorough understanding of AT&T's income statement is vital for financial analysis as it provides insights into the company's revenue generation, profitability, and cost management. It is a foundation for evaluating AT&T's financial performance and making informed decisions regarding investment, financial planning, and business strategies.

Sample:

Revenue Growth:  AT&T ended 2015 with revenues of approximately $146.8 billion.  The company would grow revenues over the next five years at approximately a 5.5% annual growth rate.  However, in 2017, their growth did decline by 2%.  Overall, the growth rate achieved by the organization would be considered above average for mature organizations.

Cost of Goods Sold: AT&T’s cost of goods has been approximately 46% of revenues in the last five years.  This consistent trend indicates that the organization is able to pass on increases in the cost of goods to the consumers.  This is highly unusual for a technology company.

AT&T 2021 Summary Income Statement
Column1	2021	2020	2019	2018	2017
Revenues	168,864	171,760	181,193	170,756	160,546
COGS	79,807	79,920	84,141	79,419	77,810
Gross Profit	89,057	91,840	97,052	91,337	82,736
SG&A	37,944	38,039	39,422	36,765	35,465
Depreciation	22,862	28,516	28,217	28,430	24,387
R & D
Other
Total Operating Expenses	60,806	66,555	67,639	65,195	59,852
EBIT	23,347	6,405	27,955	26,096	19,970
Other Income
Interest Expense	6,884	7,925	8,422	7,957	6,300
EBT	26,947	(2,856)	18,468	24,873	15,139
Taxes	5,468	965	3,493	4,920	(14,708)
Net Income	20,081	(3,821)	14,975	19,953	29,847

 

 

Section 2: AT&T Balance Sheet Analyzed

This section conducts a comprehensive analysis of AT&T's balance sheet. The author meticulously reviews each important line item from the balance sheet from 2015 to 2019. Each line item is defined and discussed, including key elements such as cash, property, plant and equipment, and liabilities.

By defining each balance sheet line item, readers gain a clear understanding of the specific components that contribute to AT&T's financial position. The author then analyzes these important line items, providing valuable insights into AT&T's asset composition, debt levels, and overall financial stability.

Analyzing AT&T's balance sheet line items enables readers to assess the company's liquidity, solvency, and financial health. By examining these important line items, readers can evaluate AT&T's ability to meet its financial obligations, manage its assets, and fund its operations. The analysis also allows for comparisons of AT&T's balance sheet performance over the specified period, identifying trends and potential areas of improvement.

Overall, this section provides readers with a comprehensive breakdown of AT&T's balance sheet, defining its line items and analyzing their significance. The information presented enables readers to evaluate AT&T's financial position, assess its stability, and make informed decisions based on a thorough understanding of its balance sheet.

Importance of Understanding AT&T's Balance Sheet for Financial Analysis

Understanding AT&T's balance sheet is paramount for conducting a comprehensive financial analysis. The balance sheet provides a detailed overview of the company's financial position, revealing its assets, liabilities, and shareholder's equity at a specific time. By analyzing AT&T's balance sheet, analysts can assess the company's liquidity, solvency, and overall financial health. Key elements such as cash reserves, accounts receivable, property, plant and equipment, and long-term debt offer valuable insights into AT&T's financial strength, stability, and investment potential. The balance sheet also allows for a thorough examination of the company's capital structure and leverage.

Furthermore, understanding the balance sheet helps analysts evaluate AT&T's ability to meet its short-term obligations, manage its debt load, and allocate resources efficiently. It provides essential information for assessing the company's financial sustainability, risk profile, and capacity for future growth. Analysts can make informed investment decisions by analyzing AT&T's balance sheet, evaluating its financial performance, and comparing it to industry peers. It is vital for understanding AT&T's financial position and forms the foundation for strategic decision-making and effective financial planning.

Sample:

Cash:  AT&T’s cash position started in 2016 at approximately $5.1 billion.  Their cash would range from $50 billion to $5.1 billion in the next five years.  The fluctuation in the cash position shows that the company may periodically receive funding from debt issuances.  Further, the significant fluctuations may also indicate that the company may be liquidating assets.

Long-Term Debt:  The company’s long-term debt ended in 2015 at approximately $118 billion.  In the next five years, the company would systematically and continuously take on more and more debt until 2018.  In 2019, the company slightly reduced its debt to $151 billion.  Regardless, even though mature companies tend to take on elevated debt, this does increase the risk for the investors.

AT&T 2021 Summary Balance Sheet
Column1	2021	2020	2019	2018	2017
Cash	21,169	9,740	12,130	5,204	50,498
Short Term Investment
Account Receivable	17,571	20,215	22,636	26,472	16,522
Inventory
Other
Current Assets	59,997	52,008	54,761	51,427	79,146
Net PPE	125,904	127,315	130,128	131,473	125,222
Goodwill	133,223	135,259	146,241	146,370	105,449
Other				-	-
Total Assets	551,622	525,761	551,669	531,864	444,097
Accounts Payable	50,661	50,051	45,956	43,184	34,470
Accrued Expense				-	-
Accrued Taxes	-	-	1,212	1,179	1,262
Notes Payable		-		-	-
LT Debt - Current	24,630	3,470	11,838	10,255	38,374
Other	-	-
Total Current Liabilities	85,588	63,438	68,911	64,420	81,389
LT Debt	152,724	153,775	151,309	166,250	125,972
Other
Total Liabilities	367,767	346,521	349,735	337,980	302,090
Common Stock	137,733	137,796	7,621	7,621	6,495
Treasury	17,280	17,910	13,085	12,059	12,714
Retained Earnings	42,350	37,457	57,936	58,753	50,500
Other
Total Equity	183,855	179,240	201,934	193,884	142,007
Total Equity & Liability	551,622	525,761	551,669	531,864	444,097

 

Section 3: AT&T Financial Ratios Analyzed

A comprehensive analysis of AT&T's financial ratios is conducted in this final section. Approximately 16 different financial ratios were chosen, calculated for AT&T from 2015 to 2019. Each financial ratio is defined, and the corresponding formulas for calculating each ratio are provided.

By defining each financial ratio, readers understand its purpose and relevance in financial analysis. The formulas allow readers to replicate the calculations and perform their own analyses.

A brief analysis of the important financial ratios is provided after the presentation of the definitions and formulas. This analysis offers valuable insights into AT&T's financial performance and position. By evaluating key ratios such as liquidity, profitability, and leverage ratios, readers can assess AT&T's operational efficiency, profitability, and financial stability.

This section equips readers with the tools to evaluate AT&T's financial health and make informed decisions by addressing a range of financial ratios, providing formulas, and offering a brief analysis. The information presented lets readers identify strengths, weaknesses, and trends in AT&T's financial performance, facilitating strategic decision-making and financial planning.

AT&T Current Ratio

AT&T's current ratio displayed a notable trend over the years. In 2015, the current ratio stood at 0.75, indicating a relatively lower ability to cover short-term debts. However, this ratio improved in the subsequent years, reaching 0.97 in 2017. A higher current ratio suggests an enhanced capability to meet immediate financial obligations, reflecting increasing solvency for the company.

Yet, in the last two years, there has been a significant reduction in AT&T's current ratio, declining from 0.97 in 2017 to 0.79 in 2019. This downward trend implies that the organization has utilized its cash flows for operational purposes. While this strategy may prove effective for retailers and grocers with consistent daily cash inflows, it might be less suitable for AT&T, considering its different business model and operational dynamics.

It is important to note that this analysis is based on the current ratio alone and should be considered alongside other financial indicators and contextual factors. Nonetheless, the declining trend in AT&T's current ratio suggests a shift in the organization's financial management approach and highlights the need for a comprehensive evaluation of its liquidity and cash flow management strategies.

Importance of AT&T's Current Ratio

The current ratio holds significant importance in financial analysis for AT&T and plays a crucial role in evaluating the company's financial health and short-term liquidity. By understanding AT&T's current ratio, analysts can assess its ability to effectively meet immediate obligations and manage short-term debts. A higher current ratio indicates a stronger liquidity position and provides confidence to investors, creditors, and stakeholders in the company's ability to fulfill its financial commitments promptly.

AT&T's current ratio is essential for evaluating the company's operational efficiency and working capital management. Over time, changes in the current ratio reflect shifts in the company's ability to utilize its current assets and manage its short-term liabilities efficiently. A consistently increasing current ratio indicates improved operational efficiency and better utilization of resources. Conversely, a declining ratio may indicate inefficiencies or increased reliance on short-term financing, warranting further analysis.

Additionally, the current ratio helps assess the risk associated with AT&T's short-term obligations. A low current ratio may suggest difficulties meeting financial obligations during economic downturns or unexpected events, highlighting the need for effective liquidity management strategies.

Comparing AT&T's current ratio with industry benchmarks and competitors provides valuable insights into the company's relative performance. It allows for a comprehensive analysis of AT&T's financial position, identifying areas of strength and potential weaknesses.

Understanding AT&T's current ratio is vital for comprehensive financial analysis, aiding in investment decisions, credit evaluations, and strategic financial planning. It provides a clear picture of the company's short-term liquidity and contributes to a thorough assessment of its financial stability and operational efficiency.

AT&T Total Asset Turnover

AT&T’s total asset turnover has ranged from .36 at the end of 2015 to .41 in 2016.  In the last two years, their total asset turnover has been well below average at approximately .33.  This indicates that the company is not using its assets as efficiently as a did in the previous three years.  Unfortunately, this may be a reflection of possible lax leadership from the executive team.

Importance of AT&T's Total Asset Turnover in Financial Analysis

The total asset turnover ratio is a vital metric in financial analysis for AT&T, providing valuable insights into the company's operational efficiency and asset utilization. This ratio evaluates how effectively AT&T generates revenue from its assets, highlighting its ability to maximize investment returns. A higher total asset turnover ratio indicates efficient asset utilization and operational effectiveness. By comparing AT&T's ratio with industry benchmarks and analyzing its trend over time, analysts can assess the company's performance, identify areas for improvement, and make informed decisions regarding asset allocation and operational strategies. Understanding AT&T's total asset turnover ratio is crucial for evaluating its operational efficiency, assessing the quality of its asset base, and determining its ability to generate revenue and maximize returns for shareholders.

AT&T's Return on Equity

AT&T’s return on equity ended 2015 at 11.07%.  In the next two years, the return on equity would increase dramatically to 21%.  However, in the past two years, the return on equity has fallen from 10.29% in 2018 to 7.4% in 2019.  The continued reduction in return on equity again highlights possible inefficient leadership from the executive team.  The organization may consider taking on more debt and repurchasing stock from the open market to mitigate this issue.

Importance of AT&T's Return on Equity in Financial Analysis

The return on equity (ROE) is a crucial metric in financial analysis for AT&T, as it provides key insights into the company's profitability and efficiency in generating shareholder returns. Understanding the importance of AT&T's ROE is vital for several reasons. Firstly, ROE measures the company's profitability, indicating how effectively it utilizes shareholders' equity to generate profits. A higher ROE suggests more efficient use of capital and better financial performance. Secondly, ROE facilitates performance comparison, allowing analysts to assess AT&T's profitability against industry peers and historical data, providing insights into the company's competitive position. Thirdly, ROE reflects operational efficiency, evaluating how well AT&T manages its assets and liabilities to generate profits. This analysis helps identify areas of operational strength and weakness. Lastly, ROE influences investment decision-making, as investors consider a company's ROE when evaluating its financial health and growth potential. A consistently high ROE attracts investors and indicates a company's ability to generate sustainable returns.