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Gross profit has likewise fluctuated. The company's operating expenses peaked in FY2014, but management evidently felt that the cost structure was too high for where the market was headed, and Verizon has been able to reduce its costs over the past couple of years. This resulted in very high net income in FY2015, but the decline in revenue in 2016 resulted in a decrease in net income over the previous year. Whether the decline was a temporary one-year phenomenon or not remains to be seen.
One of the most important elements in the cash flow statement is whether the operating cash flows are aligned with the revenue numbers, and in the case of Verizon they are. FY2016 was the weakest year, and FY2015 the strongest year, in terms of operating cash flows. Thus, the revenue numbers are not unduly skewed by non-cash items. The company remains cash flow positive, despite the downturn in its top line revenue number.
The big number that jumps out in the investing section is that the company spent money in 2015 to acquire more wireless licenses. This was a major investment in its future, one made in a year of strong cash flows. Verizon has otherwise allocated a steady $17 billion per year for capital expenditures.
The major item of note under financing activities…
AT&T and Verizon Background Both AT&T and Verizon have their roots as Baby Bells, large telecom companies that arose after the breakup of Bell. These are two of the largest telecom companies in the United States. At the time of the breakup, telecom was a highly stable business based on landline telecommunications, but the industry has transformed and is now strongly driven by wireless. As wireless technology continues to improve, being a
Accounting 201 and Finance301: Accounting 201 Discussion Question: Discuss FASB and IASB. Comment on at least two specific aspects of the two standard setting boards and their role in setting accounting standards. Also, watch 2 provided YouTube videos and post comments. FASB and IASB The Financial Accounting Standards Board (FASB) was established in 1973 to set and improve accounting and reporting standards for private sector U.S. entities (Financial Accounting Standards Board, n.d.). Though the
The latter is typically used for network equipment for local telephone operations. Depreciation policies include the recording of plant, property and equipment at cost. Local telephone operations again are subject to different depreciation methods, and use the straight line method and the group remaining life method, depending on the asset. The company also chooses to capitalize all software that has a useful life of over one year. The straight
IV: Success Factors and Risks A: Verizon, like any other business seeking to thrive in an increasingly competitive marketplace has in place financial and strategic priorities which, in essence, guide the company’s operational and strategic decisions. To ensure competitive advantage, Verizon makes use of a differentiation strategy. It is important to note that this strategy comes in handy as the business seeks to keep the various external forces that may in some
Overall, at&T is the more profitable of the two companies. That Verizon has the stronger gross margins and at&T the stronger net margins indicates that at&T does a better job of controlling its cost structure than does Verizon. The Industry The telecommunications industry is highly competitive in both the landline and wireless segments. By 2006, wireless spending had match wireline spending. While this presents significant opportunities for telecommunications, much of that spending
This could bring a flood of new competitors to the market. Verizon is working with other wireless providers to gain preferential access to new wavelengths. Previous auctions, including the 2007 auction of the 700 MHz spectrum that Verizon won, came with open-access rules. Verizon is battling the FCC with regards to the regulator's desire for openness rules on all bandwidth, something Verizon considers a threat to be actively combated