Interpretation of Financial Statements for Verizon Communication Limited

Finance for Managers

Contents
TASK 2...................................................................................................................................................3
REFERENCES........................................................................................................................................12

TASK 2
2.2 Provide an interpretation of the financial statements for a specific named organization.
Introduction: In this part of report detailed analysis of financial statements of Verizon
communication limited has been done. In order to do so, ratio analysis technique is applied as it
covers each aspect including profitability, liquidity etc.
Profitability Ratios
(a) Return on Capital Employed (R.O.C.E.) -
ROCE: Net profit/ capital employed*100
2018 2019
Net profit 16.04 19.79
capital employed 291.73-37.93: 253.8 264.83-44.87: 219.96
ROCE 6.32% 9.00%
2018 2019
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
6.32%
9.00%
ROCE
ROCE
Interpretation: The above table indicate that company’s performance in year 2019 has been
improved as compared to past year 2018. As ROCE in 2018 was of 6.32% which became of 9%
for year 2019. This is so because of higher amount of net margin in year 2019 as well as due to
less amount of capital employed.

(b) Gross Profit to Sales Ratio-
Gross profit to sales: Gross profit/sales*100
2018 2019
Gross profit 75.36 77.14
sales 130.86 131.86
Gross profit to sales 57.59% 58.50%
2018 2019
57.00%
57.20%
57.40%
57.60%
57.80%
58.00%
58.20%
58.40%
58.60%
57.59%
58.50%
Gross profit to sales
Gross profit to sales
Interpretation: Similar to above ratio, the gross profit to sales also improved in year 2019
compared to year 2018. As in year 2018, company’s gross profit ratio was of 57.59% that
increased till 58.50% for year 2019. The reason behind this is because of more number of sales
revenues and less amount of cost of sales.
(c) Net Profit to Sales Ratio-
Net profit to sales: Net profit/sales*100
2018 2019
Net profit 16.04 19.79
sales 130.86 131.86
Net profit to sales 12.26% 15.01%