Verizon Communications Inc. is considered one of the leading providers of information, entertainment and communication services and products to governmental agencies, businesses and other consumers. Various factors have played a role in the company’s performance over the past. With its role in service and product provision, the performance of the company over the past financial year will be evaluated.
Inventory
As evident from the financial statements, there was an increase in the inventory for the 2015 fiscal year. The inventory (closing stock) makes up an important part of the assets that count towards the value of the organization. Despite having an inventory valued higher than that of the previous fiscal year, the total value of the company’s assets, as apparent from the financial reports, are lower.
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Accounts receivable.
A comparison of the accounts receivable recorded for the 2014 fiscal year was slightly higher than that of the year 2015. This may be interpreted as an indication of a downturn in the company’s business operations. In fact, it should be considered that the decline in the amounts receivable for the 2015 fiscal year means that there is a decline in the amounts that the business generates in revenue.
Non-current assets
A decrease in this item demonstrates that less cash is tied up to the assets, which translates to efficiency in its operations and an ultimate improvement of the company’s net income. The fact that the company did not have the non-current assets for the 2014 fiscal year, evidences an increase in the value of the business through higher net income.
Liabilities
While other indicators such as higher turnover may suggest that that the business is performing better, it is worth considering the cumulative liability value as this affects the overall company finances. An increase in the payables and other liabilities, as apparent from the featured financial statements, leads to higher operating expenses. Issues such as increase in the short term debts and other accrued liabilities have a significant impact on the company’s general turnover for the fiscal year 2015. The evident fact that the current liabilities for the fiscal year 2015 are higher than those for the 2014 financial year may also imply poor business performance.
Operating Expenses
This section of the financial statement may be regarded as the most important as it helps in determining whether the business is generating profits. A control over the operational expenses would imply better prospects of realizing higher revenues from the business processes by the company. From the report, it is evident that the cost of operation has increased for the last two years, with reports indicating that the figures for the year 2014 were higher than 2013, while those of 2015 were higher than for 2014. It, therefore, business downturn registered in the 2015 fiscal year may be attributed to the growing operational expenses and the fact that liabilities continue to increase for the company.
Many elements in the financial report contribute to the understanding of the company’s business processes. From the reports, it is evident that there is a decline in the amounts generated in revenue. The profit margins for the company for the fiscal year 2015 are evidently lower than those for the fiscal year 2014. This illustrates need for the adoption of new measures to limit the liabilities and cut on the operation cost as these make up the elements that have the greatest impact on the revenues that the business stands to generate.
