AT&T Corp AT&T Corp

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AT&ampTCorp

AT&ampTCorp

Firstpart

AT&amp T Corp is an American organization that serves in thetelecommunications industry. The industry is quite developing, giventhe huge advancements that have been made in the informationtechnology sector. As a result, more people now use services offeredby firms in the industry, thereby offering a huge opportunity forgrowth for such entities. There are also many entrants in the marketwho aim to capitalize on the huge clientele that exists. As a result,there is bound to be a high level of increase in quality of servicesoffered as the providers do their best to safeguard their marketshare and help to build the existing base that they currently have.There are, however, various barriers to entry by corporate, givenhuge amounts of resources that are needed as well as the hugeregulatory provisions that they are supposed to meet. Given the factthat the services offered as a standard, there is usually a lowerlevel of product differentiation.

Thecompany that majorly involved in the provision of video, voice, andinternet data services, thereby enabling people to communicate withone another using their mobile phones as well as get access to webservices and get to do a number of activities over the internet(Bloomberg markets.com, 2016).

Thecompany has operations worldwide, although much of its base is in theUnited States where it started and headquartered. For instance, inthe financial year 2014/2015, more than 60% of the revenues of AT &ampT came from the United States with other countries around the worldserving the remaining. The firm is, however, in the process ofensuring that it improves its operations in other countries so as toraise its revenue (Hoovers.com, 2016). The primary customers of AT &ampT include both individuals and corporations that are in need oftelecommunications and internet services. The company faces stiffcompetition from other entities that are equally well placed in themarket such as Vodafone and Orange that have greatly spread theirscale of operations to many regions around the world, therebymanaging to get a grip of a large part of these markets.

Currently,the company holds less barely 10% of the market share that exists inthe telecommunications industry, given the fact that many playershave got into the business and managed to get a grip of differentmarkets, thereby pushing the company to rely much on its UnitedStates market to enhance profits (Fortune 500, 2016). The companyhas, however, not participated in any form of merger or acquisitionover the course of the last three years. There are varioustechnological challenges that exist in the way of the operations ofthe company which threatens its sustainability (Hoovers.com, 2016).One of them is the extensive use of the internet by people that hasgreatly led to the reduction of the voice and messaging revenues thatused to bring in lots of profits for the firm. The company alsosuffers in from various regulatory challenges that could hamper itsactivities. For instance, the United States Justice Department brokethe company up into 7 subsidiaries in 1974 so as to deal with acomplaint that the company was engaging in some activities thatsustained an element of monopoly, which was uncalled for (CNNmoney.Co, 2016).

Secondpart

Theindustry report of the AT &amp T Company was obtained and throughit, the income statement was drawn.

Revenuecomparison

Thispart contains an analysis of the income statement of AT &amp T Corpthat was obtained with the aim of establishing the performance of thefirm over a given period so as to ascertain whether it is performingas would be desired (Google finance.com, 2016). It will also be vitalin showing any cases of increase or decrease in the revenues of thecompany with the aim of establishing the measures that would need tobe taken so as to maintain a good performance of the company. Thebreakdown is as shown in table 1.0 below

Table1.0: Revenues and profits for AT&ampT for years 2013, 2014 and 2015

2013

2014

2015

Revenues (in US$ ‘000000)

128,752

132,447

146,801

Profits

18,722

6,736

13,687

Therevenues for the company seemed to increase over the course of thethree years with 2013 having an amount of US$ 128.752 billion and2015 having a revenue of 146.801 billion (AboutAT&ampT.com, 2016).This clearly showed an increase of 2.9% in the year 2014 while in2015, there was an increase of 108% which could be explained to bequite a considerable margin that would indicate that the company wasdoing very well (AT&ampT, 2015). The profits for the company on theother end showed that they decreased by more than 100% from 18.722billion dollars in 2013 to about 6.736 billion dollars in 2014 (Yahoofinance.com, 2016). The situation would, later on, improve in theyear 2015 as they would later on by above 100% back to about 13.687billion dollars. This could show that although the company had goodrevenues over the course of the three years, its expenses could haveincreased considerably, thereby making it necessary to spend much onother inputs, which could have led to the reduction in the profits,especially in the year 2014 when significant losses were made.

Thenet income margin for each of the last three years

Thenet income of a company is given as

Netincome/net sales

Therefore,the net income margin between 2013 and 2014 was as follows

Netincome = 6,736-18722

Netincome = -11,986

Netsales = 132,447-128752

Netsales= 3,695

Netincome margin = Net income/net sales

=-11,986/3,695*100%

=-324.384%

=a margin loss of 324.384%

Thenet income margin between 2014 and 2015 was as follows

Netincome = 13,687-6,736

Netincome = 6,951

Netsales = 146,801-132,447

Netsales= 14,354

Netincome margin = Net income/net sales

=-6,951/14,354*100%

=-324.384%

=a margin profit of 48.43%

Fromthe findings obtained, it is quite clear that the net income marginseems to have increased for the three years as it moved from a marginloss of 324.384%between2013 and 2014 to a margin profit of 48.43 between 2014 and 2015. Thefindings show that the profitability of the company is quiteimproving (Morningstar.com, 2016).

Totaldebt (long term and current liabilities) that the company has

AT&ampTCorp has had considerable total debt over the course of the lastthree years. For instance, in the year 2013, it had a total debt ofUS$110.641 billion, in the year 2014, it had a total debt of US$113.060 billion and in the year 2015, it had a total debt of US$166.331 billion (Dulaney,(2016).This index shows that the value of the total debt that the companyhas, has increased over the last three years.

Theratio of total debt to capitalization for each of the last threeyears

Theratio of debt to capitalization is given by dividing the total debt(current liabilities + longer liabilities) of a firm with the totalshareholder equity and debt.

Ratioof total debt to capitalization =

Forthe year 2013, the ratio will be

Ratioof total debt to capitalization =

==

=*100%

=55.89%

Forthe year 2014, the ratio will be

Ratioof total debt to capitalization =

==

=*100%

=55.6042%

Forthe year 2015, the ratio will be

Ratioof total debt to capitalization =

=

=*100%

=55.63%

Theratio decreased from 55.89% in 2013 to 55.6042% in 2014 thenincreased back to 55.63% in 2015. This shows that the ability of thecompany to pay back loan over the three years has been good, althoughit has been fluctuating, given the fact that the percentages obtainedare above 50%. It also shows that the company is investing inventures that bear lessee risks which it can offset easily.

Cashflow margin, return on investment, return on equity, the currentratio

Withthe available information, one would you be able to calculate thecash flow margin, return on investment, return on equity, as shownbelow. From table 2.0 below, it is clear that the measures have beenfluctuating over the course of the three years (US Securities andExchange Commission, 2016).

Cashflow margin is given as =

2013=

=24.26

2014=

=16.58

2015=

23.22

Returnon equity is given as

2013=

=0.1961

2014=

0.0722

2015=

=0.1066

Currentratio is given as current assets

2013=

=0.889

2014=

=0.9014

2015=

=0.7527

Returnon investment is given as

=

2013=301

2014=4

2015=1

Table2.0 Cash flow margin, return on investment, return on equity, thecurrent ratio

2013

2014

2015

Cash flow margin

24.26

16.58

23.22

Return on investment

301

4

1

Return on equity

0.1961

0.0722

0.1066

Current ratio

0.889

0.9014

0.7527

Thirdpart

Basedupon all the information collected and analyzed about AT&ampT Corp,the business prospects of the company appear to be quite promising.For instance, it is clear that the revenues of the company haveimproved consistently over the course of the three years and thiscould point towards the direction that they could keep on increasingin the future. Although the profits seemed to dwindle in 2013, theyhappened to pick up in 2014 by a huge margin, which could pointtowards the high likelihood of the firm continuing to do wellespecially given the fact that its revenue is improving. The company,however, needs to improve its asset level and reduce the currentliability so as to improve the current ratio to be positive. Such ameasure will ensure that it will be able to offset its liabilities infuture as currently, it cannot

References

AboutAT&ampT.com(2016). AT&ampT Newsroom about.att.com

AT&ampT(2015). Mobilizing your world: AT&ampT Annual report

Bloombergmoney.com (2016) AT&ampT Inc http://www.bloomberg.com/quote/T:US

CNNmoney.com(2016). AT&ampT Inc money.cnn.com

Dulaney,C. (2016). AT&ampT Revenue Growth Falls Short of Expectations.Wallstreet Journal.http://www.wsj.com/articles/at-t-revenue-growth-falls-short-of-expectations-1453844192

Fortune500 (2016). AT&ampT Stock price betafortune.com

Googlefinance.com (2016). Market Summary http://finance.google.com/finance

Hoovers.com(2016). AT&ampTINC. Competitionhttp://www.hoovers.com/companyinformation/cs/competition.att_inc.e8f16960d466d1a0.html

Morningstar.com(2016). Money indexes.http://www.morningstar.com

USSecurities and Exchange Commission (2016) AT &amp T Inc: Rule 14a-8no action letterhttp://www.sec.gov

Yahoofinance.com (2016).Stock Researcher Centerhttp://biz.yahoo.com/r/

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