Chapter 9, Problem 9.3MAD

Analyze Verizon

Verizon Communications Inc. (VZ) is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets:

	End of Year (in millions)	Beginning of Year (in millions)
Property, plant, and equipment	$232,215	$ 220,163
Accumulated depreciation	(147,464)	(136,622)
Property, plant and equipment (net)	$ 84,751	$ 83,541

Verizon’s revenue for the year was $125,980 million. Assume the fixed asset turnover ratio for the telecommunications industry averages approximately 1.1.

a. Determine Verizon’s fixed asset turnover ratio. Round to one decimal place.

b.     Interpret this ratio with respect to the industry average.