Question

Vertical analysis

Answer 1

a) A vertical analysis of the income statement for AT&T is as follows:

                                                      AT&T        Percent

Revenue                                     $132,447        100%

Cost of Services (Expenses)         60,611        45.8%

Selling & Marketing Expense      39,697       30.0%  

Depreciation & other expenses 20,393        15.4%

Operating Income                       $11,746         8.9%

b) A vertical analysis of the income statement for Verizon is as follows:

                                                    Verizon      Percent

Revenue                                     $127,079       100%

Cost of Services (Expenses)         49,931        39.3%

Selling & Marketing Expense        41,016       32.3%

Depreciation & other expenses   16,533       13.0%

Operating Income                      $19,599       15.4%

What is a vertical analysis?

A financial statement vertical analysis is a comparison of each line item on the financial statement as a percentage of the base figure.

For the income statement, the base figure is the revenue, which is set to 100%.  For the balance sheet, the base figure is the total assets or total liabilities and equity, which are set to 100%.

The vertical analysis uses the following formula = Financial statement line item divided by the total base figure X 100.

                                                      AT&T     Percent

Revenue                                     $132,447  100% ($132,447/$132,447 x 100)

Cost of Services (Expenses)         60,611  45.8% ($60,611/$132,447 x 100)

Selling & Marketing Expense      39,697  30.0% ($39,697/$132,447 x 100)

Depreciation & other expenses 20,393   15.4% ($20,393/$132,447 x 100)

Operating Income                       $11,746    8.9% ($11,746/$132,447 x 100)

                                                    Verizon    Percent

Revenue                                     $127,079  100% ($127,079/$127,079 x 100)

Cost of Services (Expenses)         49,931   39.3% ($49,931/$127,079 x 100)

Selling & Marketing Expense        41,016  32.3% ($41,016/$127,079 x 100)

Depreciation & other expenses   16,533  13.0% ($16,533/$127,079 x 100)

Operating Income                      $19,599  15.4% ($19,599/$127,079 x 100)

Learn more about the vertical analysis at brainly.com/question/14115729

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