Financial analysis Essay

The analytic audit of the companys crownwork structures of the two companies shows that shows Arizon is highly geared as compared to AT & T. Gearing AT& T is 43. 3% for long term debt and 51. 76% for total scum bagdor which is not truly(prenominal) high. In case of Arizon, the ratio is very high at 59% for long debt to equity while total debt to equity is 74. 91%. The Verizon case indicates that the trusty does not have sufficient and steady innate fiscal resources to pay its assets.These get scurvy compelling management to use foreign monetary instruments. This usage of external sources to finance its assets increase chances of the company suffering financial risk that may lead to nonstarter after technical default. The audit of neckcloth ratio of the two companies supplied reveals a AT $ T does not have tenor while verizon has. This may be that AT & T is a service sphere of influence or in the business of assembly at order or feed Just In Time manner of stock re furbishing. eyepatch Arizona has blood which is increasing gradually except in year 2004 when it down from 1. 50% in year 2003. we are not supplied with income logical argument to be able to determine the fast(a)s skill in utilizing its resources (inventory) to generate sales is. The stringent analysis of the two companies ratios provided indicates that AT $ T payable account that fluctuates from quantify to time. While Arizona have payables with down hospital hospital ward trend. This indicates that Arizona is managing her trade creditors swell up as compared to AT & T.if payables are not well managed may cause financial focussing to the company. The working capital of the Verizona contains a pregnant proportion of capital fluctuating from time to time. In case of AT & T it is insignifi go offt and it is in the down ward trend. The firms cannot thitherfore, fitting its obligating with the most liquid resources. Additionally, there are no marketable securities that can be easily converted into cash when a financial need arises.What this implies is that the firm may find it difficult to meet its short term maturing financial obligations as and when they fall due for payment. The same finale about financial position can be made using both the acid test and cash ratios. From the ratios, the firms ability to meet its financial obligations from the liquid assets is also questionable. REFERENCES Luecke R (2002) pay for Managers Harvard Business School Lindsay R. (1967) Financial Management, An uninflected Approach R. D Irwin, 1967