AT&T Financial Statements and Financial Ratios

AT&T: Brief Summary

AT&T’s headquarters is located in Dallas, Texas.  The company competes in the communications sector of the telecom services industry.  The organization currently has approximately 247,000 individuals working for the firm.  Their main products and services offered would include DirecTV services, cable subscriptions, and electronic equipment.

From a financial perspective, the company’s stock price has ranged between $26.08 to $39.70 in the last 52 weeks.  Their current beta is .72, and their market capitalization is approximately $211 billion.

AT&T Financial Report Sources

 “AT&T 2019 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., and owner of Quality Business Plan.  In this report, the author selected AT&T's 2018 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and AT&T's 2019 10k annual report as the basis for information gathering. 

Section 1: AT&T Income Statement Analyzed

In this section, I walk through a broad definition of what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of AT&T's important income statement line item trends from 2015 to 2019, in most cases.

Revenue Growth:  AT&T ended 2015 with revenues of approximately $146.8 billion.  Over the next five years, the company would grow revenues 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:  In the last five years, AT&T’s cost of goods has been approximately 46% of revenues.  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

For AT&T's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define AT&T’s balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer an analysis of AT&T’s balance sheet's important line items.

Cash:  AT&T’s cash position started 2016 at approximately $5.1 billion.  In the next five years, their cash position would range from $50 billion to $5.1 billion.  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 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 did slightly reduce its debt position 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

For this final section, I have chosen about 16 different financial ratios to calculate for AT&T from 2015 to 2019.  I also review some important AT&T financial ratios. I first start with defining the financial ratio.  Next, I supply the financial formulas for calculating the specific ratio.  Finally, I offer a brief analysis of important financial ratios.

AT&T Current Ratio

AT&T’s current ratio ended 2015 at .75.  In the next three years, the current ratio would increase to .97 in 2017.  As a company increases its current ratio, this also increases the company’s ability to pay its short-term debt.  As a result, the firm became more and more solvent.  However, in the last two years, the organization had significantly reduced its current ratio from .97 in 2017 to .79 in 2019.  This shows that the organization is attempting to exploit cash flows for operational purposes.  The strategy is excellent for retailers and grocers who continuously receive an influx of cash on a daily basis.  Unfortunately, AT&T does not have this business model in my most humble of opinions.

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.

AT&T 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.  To mitigate this issue, the organization may want to consider taking on more debt and repurchasing stock from the open market.

AT&T's Debt Ratio

AT&T’s debt ratio increased from 29.4% in 2015 to 31.3% in 2018.  However, the organization did reduce its debt load in 2019 to 27.4%.  This reduction may have directly impacted their return on equity.  Because the organization would be considered mature, the company should maintain a slightly higher than average debt ratio.  As a result, I would definitely recommend taking on more debt and repurchasing, again, stock from the open market to drive up stock prices.