Question

Breakdown	TTM	12/31/2019	12/31/2018	12/31/2017	12/31/2016
Total Revenue	131,868,000	131,868,000	130,863,000	126,034,000	125,980,000
Cost of Revenue	54,726,000	54,726,000	55,508,000	51,556,000	51,424,000
Gross Profit	77,142,000	77,142,000	75,355,000	74,478,000	74,556,000
Operating Expenses
Selling General and Administrative	29,990,000	29,990,000	31,083,000	28,336,000	31,569,000
Total Operating Expenses	46,672,000	46,672,000	48,486,000	45,290,000	47,497,000
Operating Income or Loss	30,470,000	30,470,000	26,869,000	29,188,000	27,059,000
Interest Expense	4,730,000	4,730,000	4,833,000	4,733,000	4,376,000
Total Other Income/Expenses Net	-3,128,000	-3,128,000	-2,507,000	-3,943,000	-1,756,000
Income Before Tax	22,733,000	22,733,000	19,623,000	20,594,000	20,986,000
Income Tax Expense	2,945,000	2,945,000	3,584,000	-9,956,000	7,378,000
Income from Continuing Operations	19,788,000	19,788,000	16,039,000	30,550,000	13,608,000
Net Income	19,265,000	19,265,000	15,528,000	30,101,000	13,127,000
Net Income available to common shareholders	19,265,000	19,265,000	15,528,000	30,101,000	13,127,000
EBITDA		44,145,000	41,859,000	42,281,000	41,290,000

1. Using the relevant financial information, complete calculations for each of the profit ratios, liquidity ratios, activity ratios, leverage ratios, and shareholder return ratios included in the Financial Analysis section of your MindTap reading. PLEASE INCLUDE ANY CALCULATIONS.

2. Alongside (or below) each calculation, you must also explain in everyday non financial language what every ratio calculation indicates about Verizon. Please do not provide generic information about each of the ratios mean. YOUR EXPLANATION MUST INDICATE WHAT THE CALCULATED NUMBERS FOR EACH RATIO INDICATES ABOUT VERIZON AS A COMPANY.

3. Lastly, write a SUMMARY paragraph in everyday non financial language which clearly indicates what each of the calculations you completed TAKEN TOGETHER indicate about Verizon as a company. This summary should also include an analysis of the Verizon's cash flow and what it indicates about them. In other words, this section provides your overall assessment of Verizon based on what the combination of their financial data (each of the ratios you calculated and explained as part of the assignment) suggests.

Answer 1

1) The following ratios have been calculated for Verizon:

Gross profit margin= Gross profit/Revenue

Operating profit margin= Operating income/Revenue

Net profit margin= Net profit/Revenue

Gross profit margin	58.50%	58.50%	57.58%	59.09%	59.18%
Operating profit margin	23.11%	23.11%	20.53%	23.16%	21.48%
Net profit margin	14.61%	14.61%	11.87%	23.88%	10.42%

2)

Gross profit margin: In context of Verizon as the company the gross profit can be the tower expenses that will be expensed against making calls or providing data services and hence included in the direct cost of sales against the revenue. As we see that the gross profit margin is falling broadly but has recovered in the last year.

Operating profit margin: Includes the salaries of employees, branding and marketing expenses and depreciation of tower and infrastructural assets in the context of Verizon, due to better management of expenses, Verizon has been able to improve upon its operating margin considerably.

Net profit margin: The net profit margin has been very volatile for Verizon, due to the losses made on other operating activiites. As it a major component affecting profitability more information would be needed to ascertain the cause of these losses year on year.

3) Verizon as a company operates in an industry with decent profit margins where profitability is majorly effected by the handling of operating expenses by the company. The firm has a stable revenue stream generating confidence amongst shareholders but the volatile profit margin due to consistent investment in upgrading technologies might make investors vary of investments. But, a very stable EBITDA margin ascertains that it operates in a stable industry and though affected by periodic investments, the firm serves as a stable bluechip firm with good profit margins and a good management aimed at improving the profitability of the firm as observed from the increasing operating margin of the firm.