Compute and interpret liquidity, solvency, and coverage ratios. Selected balance sheet and income statement information from Verizon communications.
($millions) 2005 2004
current assets $16,448 $19,479
current liabilities 25,063 23,129
total liabilities 101,696 103,345
equity 66,434 62,613
earning before interest and taxes12,784 12,496
interest expense 2,180 2,384
net cash flow from operating 22,012 21,820
required
Compute the current ratio for each year and discus any trend in liquid. What additional information about the number used to compute this ratio might be useful in helping you assess liquidity?
Compute times interest earned, total liabilities-to-equity, and net cash from operating activities to total liabilities ratios for each year and discuss any trend for each. Do you have any extent about Verizon’s financial leverage and the company’s ability to meet interest obligation?
Verizon’s capital expenditure are expected to increase substantially as it to seek respond to competitive pressure to upgrade the quality of its communication infrastructure. Asses Version’s liquidity and solvency in light of this strategies direction.