Financial Analysis

Financial Analysis

Introduction

The financial analysis is basically to study a company financially by relying on its books and on economic and financial information about the company or its industry. The analysis which is carried out is very useful in accessing the overall financial health of the company, to check that whether it is sound or not, or to analyze the capital structure of the company. It can also be used to analyze the management and profitability of the company, along with its development Prospects.

The financial study is based on recent financial information that is in the business accounting. This is to "speak" the numbers and understand the reality that lurks around them. These reflect the situation of the company at some point. After conducting a rigorous analysis of accounting records and information obtained from various sources, it becomes possible to make an overall judgment on the company's performance. In this report, we will be conducting a ratios analysis for AT&T Inc. along with its overall review in regards with recent performance and risk involved. We will also be analyzing the cash flows of the company as well

Recent Performance

AT&T T has presented plans to accelerate investment in its networks over the next three years with the intention of extending its advantages in the wireless industry and shoring up its competitive position in many fixed-line markets. While the plans still face some uncertainty, we believe the firm is taking the correct strategic approach to its businesses. Increased capital spending over the next three years will weigh on cash flow, but AT&T should emerge in a better position, especially if it can successfully alter the cost structure of the fixed-line business. While our near-term expectations for AT&T's financial performance will change, we don't plan to alter our fair value estimate.

AT&T's strategic plans encompass several interrelated elements. The firm plans to extend LTE wireless coverage to 300 million people by the end of 2014 while adding tower sites across its footprint. In the fixed-line business, the firm plans to bring the U-verse network upgrade to an additional 8.5 million customer locations, taking coverage to 75% of its service territory. This effort also includes plans to connect an addition 1 million business locations with its fiber-optic network, a number equal to about half of the locations it currently reaches. AT&T then plans to use the LTE network to serve the remaining 25% of its fixed-line territory, a move that will allow it to decommission legacy phone equipment, generating substantial cost savings in the future. This last element of the plan is the most controversial, as it will require regulatory approval. AT&T believes that the wireless services it can provide will be superior to existing services and that customers will embrace this change as a result.

The key financial element of the plan is that capital spending will increase over the next three years to about $22 billion annually. Spending in 2012 is likely to come in at around $19 billion; we had expected spending to remain flat or decrease ...