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A Financial Ratio Quarterly Trend Analysis of

Verizon Communications Inc.


Traded under: VZ
Listed on the New York Stock Exchange / NASDAQ

Prepared for:

Dr. Edward Lawrence


Associate Professor
Department of Finance and Real Estate
Florida International University

In partial fulfillment of the requirements of this course:


FIN 6046

By:
Reyna Olivo
Mohammad Mirzakhani
Charles Schulze

1.0

Introduction

This report provides a quarterly financial trend analysis for Verizon Communications Inc. With
operations in over 150 countries, Verizon formerly known as Bell Atlantic Corporation
This U.S. Based organization is one of the largest telecommunications providers in the world.1 Verizons
main core business is Wireless Communications and entertainment. Trading at the New York Stock
Exchange (NYSE) under the symbol VZ, Verizon is one of Americas innovative organizations.
Our team selected Verizon to analyze for these reasons:

Verizon is currently ranked #16 among Fortune 500 companies and it is the second largest U.S.
telecommunication company. 2
Since one of our team members is working for AT&T, we would like to look deeper in Verizons
financial performance as its competitor in order to learn and explore how well the largest
wireless company is doing.
Additionally, another team member who is a Verizon user read an article where many companies
like Verizon have earned billions of dollars and NOT paid any income tax. This was very eyeopening and we decided to evaluate Verizon financial statements.
Verizon is not just a cell phone company or internet provider. They have partnerships with
competitors such as AT&T and others to provide many services to the consumer.3

Using some of the many financial websites available, our team compiled a table of important ratios from
the financial information provided. Financial information was tabulated from the four most recent
quarters ending September 30, 2013. The financial information retrieved and subsequent key ratios are
designed for the group to form a conclusion of financial responsibility of the company additionally to
provide recommendations of Verizon to investors. In addition, the team formulated a comparative
S.W.O.T. analysis from the financial information and analyzed its main competitor financial ratios to use
as a competitive comparison.

2.0

Financial Analysis and Ratio Computations

1 U.S.S.E.C. Form 10K filed by Verizon for fiscal year 2012 Pg. 2. Retrieved from

http://secfilings.nasdaq.com/edgar_conv_html%2f2013%2f02%2f26%2f0001193125-13075713.html#FIS_BUSINESS

2 CNN-Money.com (2013) List of Fortune 500 Top Companies. Retrieved

fromhttp://money.cnn.com/magazines/fortune/fortune500/2011/snapshots/2773.html

3 U.S.S.E.C. Form 10K filed by Verizon for fiscal year 2012 Pg. 4. http://secfilings.nasdaq.com/edgar_conv_html
%2f2013%2f02%2f26%2f0001193125-13-075713.html#FIS_BUSINESS

2.1
Methodology
Our team reviewed many documents from various financial web-sites. These documents
included financial statements; cash flow reports; stock trading history; income statements and
balance sheets. The main sources for this information were:
Yahoo-finance4
Zachs Investment Research5
CNN-Money6
Verizon7
Nasdaq8
The team found the data relatively close from the various sources. For example, CNN-Money rounded
their numbers to the millions of dollars where Yahoo extracted their total out to the thousands. We
decided to use the Yahoo references with more deliberate amounts.
For the industry/competitor comparison financials, the team continued with the Yahoo material for the
same reasons. Depicted later in this report, the team used AT&T as the comparison company, as they are
number 11 on the Fortune 500 and the largest wireless s provider in the world.9
The financial data obtained was placed in a financial ratio spread sheet formulating many of the
important financial indicating ratios used in the analysis.
2.2
Data Input and Ratio Computations
The following table is a ratio summary of all the data retrieved.

Verizon Communications Ratio Analysis


4 Yahoo - Finance (2013). Retrieved from http://finance.yahoo.com/verizon
5 Zachs Investment Research (2013). Retrieved on November 13th, 2013 from
http://www.zacks.com/stock/quote/VZ/detailed-estimates

6 CNN-Money.com (2013). Retrieved on November 13th, 2013 from http://money.cnn.com/quote/quote.html?


symb=VZ

7 Verizon.com (2013). Investor Portal. Retrieved on November 13th, 2013 from


http://www.verizon.com/investor/investor_home.htm

8 Nasdaq.com (2013). Retrieved on November 13th, 2013 from http://www.nasdaq.com/symbol/vz


9 CNN-Money.com (2013) List of Fortune 500 Top Companies. Retrieved on November 13 th, 2013
fromhttp://money.cnn.com/magazines/fortune/fortune500/2011/snapshots/2773.html

Liquidity Ratios
Current Ratio
Quick Ratio
Net Working Capital Ratio
Current Liabilities to Inventory
Ratio
Cash Ratio
Operating Ratio
Asset
Q1
Ratios
Inventory Turnover Ratio
Fixed Asset Turnover Ratio
Total Assets Ratio
Asset to Equity Ratio
Profitability Ratios
Return on Asset Ratio
Return on Equity Ratio
Profit Margin Ratio
Basic Earnings Power Ratio
Earnings per Share Ratio
Debt Ratios
Total Debt Ratio
Interest Coverage Ratio
Debt/Equity Ratio
Market Ratios
Earning per Share (EPS) Ratio
Price to Earnings Ratio
Price to Cash Flow Ratio
Payout Ratio

31-Dec12
Q1
0.79
0.75
-0.03

Q2
0.8
0.78
-0.03

30-Jun13
Q3
0.75
0.72
-0.03

30-Sep13
Q4
2.43
2.39
0.16

Annual
2.43
2.39
0.16

25.08

39.46

28.07

25.39

25.39

0.11
-10.48

0.17
3.73

0.06
3.54

1.87
3.25

1.87
6.14

Q2
27.95
0.15
0.13
6.79
Q1
-0.02
-0.13
-0.14
-0.02
-1.48
Q1
0.85
-7.24
5.79
Q1
-1.48
-29.2
232.22
1.22

31-Mar-13

Q3
31.41
0.15
0.13
6.79
Q2
0.01
0.06
0.07
0.03
0.68
Q2
0.85
11.65
5.79
Q2
0.68
71.91
57.13
-0.75

Q4
28.17
0.15
0.13
6.56
Q3
0.01
0.07
0.08
0.03
0.79
Q3
0.85
13.04
5.56
Q3
0.79
64.05
34.84
-2.06

Annual
26.7
0.15
0.11
7.91
Q4
0.01
0.07
0.07
0.03
0.78
Q4
0.87
12.91
6.91
Q4
0.78
64.46
25.81
-0.66

26.7
0.59
0.43
7.91
Annual
0.01
0.06
0.02
0.06
0.77
Annual
0.87
7.32
6.91
Annual
0.77
65.36
11.34
-5.79

2.30 Financial Trend Analysis


Using the financial information gathered along with the ratio computations, the team used
created scatter plots to help in deciphering the data in a more clear fashion. Using regression
analysis to further examine the data, linear trend lines were also added to help identify trends.
The graphs depict various ratios and are separated into specific categories of relevance.
2.31

Liquidity Ratios

Liquidity Ratios

Analysis

Current Ratio
3

Current Ratio

Linear (Current
Ratio)

The Current Ratio has been flat or stable over first


three quarters; however, in fourth quarter has an
upward treads. This upward treads may be
attributed in increase in assets. We can safely
conclude that Verizon is well capable of paying its
current debts obligations.

0
1

Quick Ratio
3
2.5
2
1.5
1
0.5
0

Quick Ratio
Linear (Quick
Ratio)

Net Working Capital Ratio


0.2
0.15
0.1
0.05
0
1
3

-0.05

The trend for the Quick Ratio shows as in Current


Ratio sharply improvement in the 4th quarter. The
ratio below 1 in the first three quarters is somewhat
concerning. To Verizons credit they did double that
number to extraordinary levels in the 4th quarter. The
quick ratio is more conservative than the current ratio
because it excludes inventories from current assets.

Net Working
Capital Ratio

Linear (Net
Working
Capital Ratio)

As the Current Ratio showed the upwards trend


starting in third quarter. Net Working Capital Ratio is
increasing sharply from third quarter to the fourth
quarter. A working capital ratio of less than 1.0 is a
strong indicator that there will be liquidity problems in
the future, while a ratio in the vicinity of 2.0 is
considered to represent good short-term liquidity. This
could be equated to a large expense in the early period
such as inventory or expansion.

Current Liabilities
Inventory
Current Liabilities toto
Inventory
Ratio
50
40
30
20
10
0

Linear (Current Liabilities to Inventory Ratio)

Cash Ratio
Cash Ratio

Linear (Cash
Ratio)

1.5
1

The Current Liabilities to Inventory Ratio shows a


Ratio
slightly downward trend due to the increase in
inventory and decrease in current liabilities. This is
not as concerning as it explains the unusually low Net
Working Capital Ratio. The increase in inventory
could explain the liability factor.

0.5

The Cash Ratio is relatively has down ward slop for


first three quarter and then jumps in fourth quarter.
This jump can be attributed to the increase in cash
and cash equivalents, resulting in a general upward
trend. The strong >1 ratio shows Verizons ability to
ride short term economic downturns.

0
1

Operating Ratio
5

Operating
Ratio

0
1 2 3 4
-5
-10

Linear
(Operating
Ratio)

The Operating Ratio shows a general to upward trend


for the first and second quarter of the year then goes
flat for the 3rd and 4th quarter. The smaller the ratio, the
greater the companys ability to generate profit if
revenues decrease so Verizon increased is still
considered a low ratio with ability to continue to
generate profits. The ratio increased could be the result
of network expansions or an acquisition.

-15

2.32 Asset Ratios

Asset Ratios

Analysis

Inventory Turnover Ratio


Inventory
Turnover Ratio

32
30
28

Linear
(Inventory
Turnover Ratio)

26
1
4

24

Verizons considerably high inventory turnover ratio


could dispel inefficiency discussions. That said, total
sales is the only number in this formula, the good
Inventory Turnover Ratio does not completely eliminate
high COGS concerns or other exorbitant operating
numbers. However, there is downward trend for this
ratio for the past quarter for it is still considered a high
turnover ratio for the industry which is positive for the
company.

Fixed Asset Turnover RatioThis ratio is a good indicator that Verizon did not
0.2

Fixed Asset
Turnover Ratio

0.15
0.1

Linear (Fixed
Asset Turnover
Ratio)

experience a tumultuous ride in the period being


able to generate consistent sales from its fixed
assets.

0.05

1
4

Total Assets Ratio


Total Assets
Ratio

0.14
0.13

Linear (Total
Assets Ratio)

0.12
0.11

The ratio is considerably low to market standards.


This low ratio also indicates that might some
struggles with a total asset category. Perhaps more
review should be completed say to their capital
investments. There is a possibility that Verizon
spent a considerable amount of capital on
infrastructure which made asset increase.

0.1
1

On the scale this is a very good ratio with an


upward trend. It indicates that Verizon has a
strong equity position. The asset/equity ratio
indicates the relationship of the total assets of the
firm to the part owned by shareholders or equity.
This ratio is an indicator of the companys
leverage (debt) used to finance the firm.

Asset to Equity Ratio


Asset to Equity
Ratio

10
8
6
4
2
0

Linear (Asset
to Equity Ratio)

2.33

Profitability Ratios

Profitability Ratios

Return on Asset Ratio


0.02
0.01

Return on
Asset Ratio

Linear (Return
on Asset
Ratio)

1
4

-0.01
-0.02

Analysis
A 1.0% ROA is moderately low. For a
company with a strong financial position, the
higher the ratio better profits are being
generated without the need of more
investment. However, there is a slight upward
trend from previous quarter which is a good
indicator.

-0.03

Return on Equity Ratio


0.1
0.05
0
1
4

-0.05
-0.1
-0.15

Return on
Equity Ratio

Linear (Return
on Equity
Ratio)

Return on equity is particularly important because


it shows investors how much money the company
has generated from the investment. Verizons is
somewhat low with a slight upward trend. A
number that many would like to see is something
in the 15% area or higher. The 7% number
indicates work needs to be done.

Profit Margin Ratio


Profit Margin
Ratio

0.1
0.05
0
-0.05 1
-0.1
-0.15
-0.2

Basic
0.04
0.02

Linear (Profit
Margin Ratio)

While this ratio is above zero, it shows a low


flexibility for error. The higher the ratio, the
better profit margin for the company and
investors. This margin at around 7% indicates
the company has a high COGS or perhaps they
are top heavy in the executive compensations.

With a strong ratio here and an upward trend


Earnings Power Ratiowe can see that Verizon has a strong Operating
Earning Power. In comparison with the ROA
Basic Earnings
Linear (Basic
of around 10% we can decipher that Verizon
Power Ratio
Earnings
does not pay much taxes on earnings.
Power Ratio)

1
4

0
-0.02
-0.04

Earning per Share Ratio


Earning per
Share Ratio

1
3

1
0.5
0
-0.5
-1
-1.5
-2

Linear
(Earning per
Share Ratio)

Verizon down very well to bring its earning


per share form $-1.48 per share in first quarter
to $ 0.78 per share in fourth quarter, and
ending its EPS for year at $0.77. Even
though, Verizon shows improvement for this
year, but still needs stronger EPS to attract
more investors.

2.34 Debt Ratios

Debt Ratios

Analysis

Total Debt Ratio


Total Debt
Ratio

0.88
0.87

Linear (Total
Debt Ratio)

0.86
0.85

Acceptable levels of the total debt ratio, in


percentage terms, range from the mid-30s to
the low-40s. With Verizon at 87% this is the
highest red flag of all other listed ratios.
Verizon debts clearly outweigh the companys
assets and it has an upward trend which is
looked negatively.

0.84
1

Interest Coverage Ratio


15

Interest
Coverage
Ratio

10
5
0

Linear
(Interest
Coverage
Ratio)

Verizons Interest Coverage Ratio indicates a


modest debt expense. Therefore, Verizon has
the ability to pay the interest on its debt. In
fact, Verizon large interest coverage ratio
indicates that they will be able to pay the
interest on its debt even if its earnings were to
decrease.

1
4

-5
-10

Debt/Equity Ratio
8

Debt/Equity
Ratio

6
4

Linear
(Debt/Equity
Ratio)

2
0
12 34

2.35 Market Ratios

Market Ratios

This ratio of just over 6 is somewhat high.


Typically if this ratio is over 2 it is in
dangerous area. The ratio indicates that
the Verizon being financed by borrowing
money rather than from its own financial
sources which may be a dangerous trend.
Particularly, this ratio is important to the
financial health and financial strengths of
the Verizon.

Verizon with their .77 EPS has shown an


upward trend from previous quarters which
are a good indicator for investors. The overall
profitability expressed by this ratio indicates
that Verizon need to improve its earning per
share by increase its net income. Verizon
should have better control on its inventory
and operating expenses in order to improve its
income.

Earning per Share (EPS) Ratio


1
0.5
0
-0.5 1
-1
-1.5
-2

Earning per
Share (EPS)
Ratio

Linear
(Earning per
Share (EPS)
Ratio)

Price to Earning Ratio


Price to
Earning Ratio

Linear (Price
to Earning
Ratio)

1
4

80
60
40
20
0
-20
-40

Verizons average of $65.00 P/E ratio is


highly acceptable and it shows an upward
trend which is even more attractive. Price to
Earnings Ratio is the most single most widely
used for comparing stock. Therefore, most
CEO tries to improve price per earning in
order to attract more investor.

Price to Cash Flow Ratio


250
200
150
100
50

1
4

Price to Cash
Flow Ratio

Linear (Price
to Cash Flow
Ratio)

There is downward trend on this ratio which


is not good since a higher ratio is a good
indication of its market value compared to
cash flow. Verizon needs to turn around this
ratio by increasing the market price per share
and analyzing their cash flow performance.

Dividend Payout Ratio


2

Payout Ratio

Linear (Payout
Ratio)

0
-1 1

-2

This ratio is indicative of Verizon paying out


very little in dividends. Instead of paying
dividend to shareholders, Verizon reinvest the
money back into growth the company.
Indirectly raise the share value for the
investors. In fact, since Verizon reinvest its
money and enjoys the tax benefits.

-3

Industry Performance Comparative Financial Analysis


2.4

Industry Performance Analysis

While there are five to ten nationwide Cellular service companies, the team felt that
AT&T would be the more prudent company to compare performances with Verizon.
Other companies such as T- Mobile and Sprint lease some of their tower space from
Verizon and AT&T. Therefore, including these much smaller companies would be simply
skewing the data.
The team has gathered data from Yahoo-Money and a few other sources, on AT&T,
(stock symbol: T) to compare this data to the Verizon data obtained.10 11 12The ratios of
each firm are tabulated in the chart below.

10 CNN-Money.com (2013). Retrieved November 20, 2013 from http://money.cnn.com/quote/quote.html?


symb=T

11 Yahoo Finance AT&T. Retrieved November 20, 2013 from http://finance.yahoo.com/q?s=T


12 Nasdaq.com (2013). Retrieved November 20, 2013 from http://www.nasdaq.com/symbol/T

In the Superior Performer column in the above chart, signifies which company had the better
ratio vs. each other. Verizon performed better in 13 categories to AT&Ts (5) out of 22 ratios.
While the differences were slight, AT&T did perform slightly ahead of Verizon in 3 of the 5
Profitability categories. AT&T did excel immensely in the area of Liabilities to Inventory Ratio.

However, Verizon was far superior on Inventory Turnover Ratio. Some of the findings are
explained as follows:

With AT&T having a lower Current Liabilities to Inventory Ratio than Verizon but
Verizon smashing AT&T in Inventory Turnover Ratio, we believe that Verizon does an
exceptional job in turning over current inventories while having higher spending in
creating these inventories. Hence, we could imply that the difference between both
companies in the Current Liabilities to Inventory Ratio is that AT&T has older inventory
with less production costs.
The extremely high Current Liabilities to Inventory Ratio for Verizon is concerning.
This conceivably could be that Verizon is spending astronomical amounts of money in
COGS. Furthermore, it also could be attributed to Verizon selling their products at a
severe discounted price, perhaps at a loss to achieve higher market share in places where
AT&T is dominant.
The other two conflicting ratios with these two organizations are Price to Earnings Ratio
and Price to Cash Flow Ratio. Verizon has a two and a half times Price to Earnings
Ratio over AT&T, while AT&T has a three times the Price to Cash Flow Ratio. After
further investigation this issue does explain itself out with further study of the numbers.
The low Price to Cash Flow Ratio for Verizon indicates high Capital expenditures for the
period. A review of their Annual 10k filed with the SEC in 2013 for the period 2012
indicates Verizon had a dramatic increase in retirement benefits and healthcare costs. 13
Additionally, infrastructure and corporate acquisitions in the same period diminished
their per share earnings.
Consequently, with P/E Ratio dropping, net cash also to lowered, thus AT&T had a
better short cash flow ratio.
Debt to Equity Ratio and Payout Ratio are both relative to the companys operations and
business model. Both appear to be inline. Both companies reflect positive strengths
depending if you are looking from the shareholder or lender stand point. If you are a
shareholder, then you will invest in Verizon because the company might be financing
new project through debt resulting in higher dividend payout. If you are a lender, then
you would prefer to invest in AT&T since the lower debt to equity ratio is a good
indicator that the company has the capacity to repay its loans.

13 Verizon form 10k for 2012. Retrieved on November 20, 2013 from
http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=13600011931251307571326UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10K#D441535D10K_HTM_TX441535- page 17

3.0

Comparative SWOT Analysis


Verizon is a large Telecommunication Entertainment Company. Just like every
company in the world, Verizon faces many obstacles. However, research has shown that
Verizon has a lot of opportunity to grow and continue to be a dominant force in their
industry. As we evaluate their S.W.O.T. analysis one can see their possibilities.
3.1

Strengths

The analysis indicates Verizon is a company that is spending billions on growth


and infrastructure. This business model indicates that Verizon will be a long-term
growth company indicative of long term investor happiness.
Infrastructure is and has been a priority for Verizon. Investing billions of dollars
to stay ahead of the fast growing competition. 14151617
Award winning customer service. Verizon was awarded J.D. Powers 2013
Residential Telephone Provider of the year. (Poll Shown in Exhibit A)
With a higher than industry standard by 3 to 1, Verizons inventory turnover bodes
well for their vendors, hence creating long term and prosper vendor relations.
Verizons P/E Ratio makes this company highly attractive to any investor.
Verizon is currently the largest mobile network carrier in the United States with
the highest subscriber base close to 120 million customers.
The company stock has been very consistent and dependable which is good for
long term investors.

3.2

Weaknesses

14 Arney, J. (February 26, 2013) Verizon invested $627M in N.J. infrastructure in 2012. Retrieved November
20, 2013 from http://www.njbiz.com/article/20130226/NJBIZ01/130229850/Verizon-invested-$627M-in-NJinfrastructure-in-2012

15 Yahoo- News (February 19, 2013) Verizon spends $752M on Va telecom upgrades in '12. Retrieved
November 20, 2013 from http://news.yahoo.com/verizon-spends-752m-va-telecom-173322934.html
16 Verizon Corp. (March 12, 2013) Verizon Invested More Than $300 Million in Texas Wireline Communications,
IT Infrastructure in 2012 Retrieved November 20, 2013 from
http://newscenter.verizon.com/corporate/news-articles/2013/03-12-tx-infrastructure-investment/

17 Jackson, J. (Oct. 3, 2013) Verizon's next cloud services emphasize performance, granular billing. Retrieved
November 20, 2013 from http://www.solutionit.com/content/verizons-next-cloud-services-emphasizeperformance-granular-billing

Verizon is in a highly competitive industry. That said to continually invest


billions on an annual basis for infrastructure improvements and acquisitions;
Verizon could be playing a dangerous capital game.
Aging workforce will be cutting into profits via pensions and health care plans.
With 205,600 retirees, Verizon will be paying a considerable amount of benefits.
18

3.3

Rapidly changing technology could enhance upgrade expenditures.


Cyber intrusions and security breaches are a very costly venture to attempt to stay
ahead of. Along with this security protection is the personal information of all
customers.19
Possible FCC and other governmental regulatory mechanisms could affect growth
and profits. These issues could be vast and costly. Areas of concern are licensing,
tower issues with local municipalities, and others.
Adversity in credits markets could increase the cost of borrowing.
Approximately 29%20 of Verizons workforce is under union protection. Any
conflict in contract negotiations could spell trouble in the form of work stoppages
Opportunities

In a rapidly developing technological world, where everyone around the globe


needs what Verizon has, the growth potential for Verizon is unlimited.
Economic growth in third world nations is one main sector for growth.
Verizon continues to purchase companies that aid them in sector growth. From
Entertainment subsidiaries like Red-box21and Hughes22 as well as media
partnerships with Comcast; Time Warner; and Cox Cable23 Verizon is entering
homes that they did not go before. These continuing relations with spawn
increased revenue streams.

18 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K page 17

19 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K- Page 16

20 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K Page 17

21 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K - Page 52

3.4

Threats

4.0

Growing competition from smaller companies such as Sprint could affect profits.
Smaller companies like T-Mobile are trying to change the way the
telecommunication industry plays in the United States which has posed different
threats on Verizon traditional way of doing business.
Customers demands could pose a threat to Verizon if it does not stay up to speed
with investing in the new technology and the competition.
Government regulations could also pose a threat for future mergers and
acquisitions.
Network spectrum is vital for the growth of the wireless industry but this is a
limited resource which could pose a threat in the future when new technology
demands for more spectrums.

Corporate Ethics
Corporate ethical behavior spans many realms of activity. From the financial sector
where perhaps corporate officers profit from insider trading or destroying the
environment and covering the mess up, never more than toady with the very technology
that Verizon provides does a company live under the spotlight as they do now. Positive ethical behavior is critical to a corporations success. To date there has been no unethical
behavior reported pertaining to Verizon or any of its partnerships or subsidiaries.
Also, Verizon ethic code of business is based on the Verizon Credo which provides
guidelines and levels of integrity and accountability of actions taken every day. Verizon is
committed to do the right thing for their customers, suppliers, owners, and competitors. 24
Reviewing the leadership structure, Verizon has a Shared Success Council and
Committee and they are in charge of overseeing corporate ethics. This group reports
directly to the Chairman and CEO which demonstrate the strong commitment the
company has towards corporate responsibility. Verizon has different processes for
employees and external parties where ethical concerns could be raised. They have

22 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K - Page 52

23 Verizon form 10k for 2012. Retrieved from


http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136000119312513075713-26UVPMVIICUHH1KDG94PT1DRLN&docFormat=HTM&formType=10-K - Page 52

24 Verizon.com 2013. Ethics and Governance. Retrieve on November 23, 2013 from
http://responsibility.verizon.com/verizon-credo/

different resources such as the Verizon Ethic EEO line for employees or the
Environmental and Safety Hotlines to report emergencies among other resources
available.25

5.0

Concluding Recommendations for Investors and Lenders


Question 1: Would you place a personal deposit of $1 million or more in the
publicly traded stock of this company?
Our group has a positive outlook of Verizon. Verizon has shown consistent growth for 30
years. In 1983, starting as Bell Atlantic, Verizon has shown a 550.92% growth. (Shown in
Exhibit B). Of course the last thirty years is a small indication of the next thirty. Verizon
has shown its staying power, its innovative competence and finally its corporate savvy to
ride alongside its big brother AT&T. Verizons Asset to Equity Ratio shows endurance
and a very secure endeavor for the investor. Its massive marketing structure affords this
organization to smash competitors Inventory Turnover. We would with no-doubt invest
our million dollars in Verizon.

Question 2: Would you invest $500,000 in the debt (bonds) of this company?
While it is concerning that Verizon has 35.83% Debt to Assets, it is even more alarming
when their long term debt percentage has climbed to 79%, but the companies leadership
and BBB Morningstar Bond rating is enough for our team to answer an emphatically
yes to this question. These numbers may be even more concerning without the billions in
infrastructure investments and corporate acquisitions, however with all of the
improvements in technology and branding the company, we feel confident that our
investment is secure with Verizon.

Question 3: Would you grant a $1 million line of credit for overnight or term
federal funds to this company?
Absolutely! Verizons liquidity ratios are considerably above its toughest competitor,
AT&T. Verizons Current, Quick and Net Working Capital ratios are unequivocally
industry standard, with its competitor not even in the same cloud as Verizon. This

25 Verizon.com 2013. Ethics and Governance Leadership. Retrieve on November 23, 2013 from
http://responsibility.verizon.com/ethics-and-governance/2012#leadership

business model is positive for short term debt coverage and the team sees a very good
consistency to this momentum.

Exhibit A

https://pictures.dealer.com/j/jdpower/0887/57466c640cafbfa8ccf34f739cfcbb8ax.jpg

Exhibit B

http://finance.yahoo.com/echarts?
s=VZ+Interactive#symbol=vz;range=my;compare=;indicator=volume;charttype=area;cr
osshair=on;ohlcvalues=0;logscale=off;source=undefined;

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