The net profit margin is calculated as Net Profit ÷Revenue (*100) and it tells us the proportion of profits retained by the company after the deduction of all operating expenses, cost of goods/services, tax and interest charges.
2015
The NPM of AT&T has shown a fluctuating trend.
In 2015, AT&T’s selling, general and admin costs fell by 17% due to workforce reductions and the sale of AT&T’s Connecticut operations.51(AT&T, 2015) However, because of the increasing content costs and the DIRECTV acquisition, AT&T displayed a sharp uptake in their operating expenses, most of all in broadcasting, programming and operations (+$7921). On the other hand, neutralizing these costs was the considerable boost in operating income (+103%) that was brought about largely as a result of the recorded actuarial gain of $2152 and the 10.8% increase in revenues.52 (AT&T, 2015) …show more content…
Due to the acquisitions in Mexico and of DIRECTV, and an $18.2 billion bid to acquire AWS-3 Spectrum53(Fiercewireless.com, 2016), AT&T’s debt soared in 2015. At the beginning of quarter 2, to take advantage of lower interest rates in the market and to aid them in the acquisition of DIRECTV, AT&T sold 31-year-bonds for approx. $17.5 billion54(Cherney, 2016), further raising their debts. As a result, overall interest expense rose by