AT&T relies on specific financing policies that guide directors to perform at optimal level in order to generate the most revenues for the company. Obviously, AT&T has made some interesting financial decisions in the past as evident by their long-term debt figure. Their decisions regarding long-term finances are made based on five logical steps (att.com 2003). First of all, they establish their financial current needs and overall goals. They prioritize what they consider as urgent and then they analyze possible solutions and alternatives through research and extensive contemplation. Once the financial choice has been made, they implement the decision while monitoring its performance on a continual basis. Finally, and what is the most important step, they adapt to possible changing circumstances because Murphy's Law will dictate otherwise. It is the company's agenda to balance their increased demands for service with growing capital constraints by bringing together various aspects of their company operations such as mergers and acquisitions, spin-offs, restructuring and all this can not be completed without internal and external financing.
AT&T uses cash flow for capital spending and net working capital and relies on internal financing, debt financing, and external equity financing that make up their total financing. Internal financing comes from the company's cash flow whereas external financing is new debt incurred and new shares of equity net of buy backs. Most of the company's spending is greater than the monies made as evident in the income statement below. In the case for AT&T, their total revenue as of December 31, 2002 is at $37,827,000,000 and yet, the cost of revenue will put their gross profit is at $18,674,000,000. In December 2000, AT&T had more in total revenue and overall gross profit than in 2002 because the spin-off had not yet occurred. Their net income showed a remarkable change to $4,669,000,000 as of December of 2000 to negative $13,082,000,000.
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