AT&T Inc. (NYSE:T)

The income tax expense exhibits considerable fluctuation over the five-year period. A significant shift from a negative value in 2021 to positive values in subsequent years is observed. The composition of this expense, broken down into current and deferred components, reveals distinct patterns.

Current Income Tax

The current income tax component began at a negative value of -36 million in 2021, indicating a tax benefit. This reversed dramatically in 2022, rising to 706 million, and continued to increase substantially to 2,769 million in 2023 and peaking at 3,696 million in 2024. A considerable decrease is then noted in 2025, falling to 745 million. This suggests a volatile relationship between current taxable income and applicable tax rates, or potentially the utilization of tax loss carryforwards in 2021.

Deferred Income Tax

The deferred income tax component demonstrates a decreasing trend from 2021 to 2023, starting at 5,504 million, declining to 3,074 million in 2022, and further decreasing to 1,456 million in 2023. A further decline to 749 million is observed in 2024, followed by a substantial increase to 2,876 million in 2025. This pattern could be linked to changes in temporary differences between the book and tax bases of assets and liabilities, or alterations in tax laws impacting future tax obligations.

Total Income Tax Expense

The total income tax expense mirrors the combined effect of the current and deferred components. It increased from 5,468 million in 2021 to 3,780 million in 2022, then rose to 4,225 million in 2023 and 4,445 million in 2024. A decrease to 3,621 million is evident in 2025. The overall trend suggests a period of increasing tax expense followed by a recent decline, influenced by the offsetting movements in the current and deferred tax portions. The significant fluctuations warrant further investigation into the underlying drivers of these changes, such as changes in profitability, tax legislation, and the recognition/reversal of deferred tax assets and liabilities.

The interplay between current and deferred tax components indicates a complex tax position. The substantial changes observed across all years suggest that the company’s tax strategy and financial reporting are sensitive to various economic and legislative factors.

The effective income tax rate exhibits significant fluctuations over the observed period. While the U.S. federal statutory tax rate remained constant at 21.00% throughout the years, the effective income tax rate demonstrates considerable variance, indicating factors beyond the statutory rate influence the company’s tax obligations.

Effective Income Tax Rate Trend

In 2021, the effective income tax rate was 20.30%, slightly below the statutory rate. A substantial and negative effective income tax rate of -122.20% was recorded in 2022. This was followed by a return to a positive rate of 21.30% in 2023, increasing to 26.60% in 2024. The most recent year, 2025, shows a decrease to 13.40%.

The negative effective income tax rate in 2022 suggests the presence of substantial tax benefits or loss carryforwards that reduced the company’s tax liability below zero. The subsequent increase in 2023 and 2024 could be attributed to a reduction in these benefits, changes in the mix of taxable income, or the impact of specific tax provisions. The decline in the effective income tax rate in 2025 may indicate a renewed utilization of tax benefits or shifts in the company’s earnings composition.

Discrepancy between Statutory and Effective Rates

The consistent difference between the statutory and effective income tax rates throughout the period highlights the impact of various items, such as tax credits, deductions, and differing tax rates in international jurisdictions, on the company’s overall tax burden. The magnitude of this difference, particularly the negative rate in 2022, warrants further investigation into the underlying causes.

Continued monitoring of the effective income tax rate is recommended to assess the sustainability of these fluctuations and their potential impact on future financial performance. Understanding the drivers behind these changes is crucial for accurate financial forecasting and tax planning.

The composition of deferred tax assets and liabilities reveals several noteworthy trends between 2021 and 2025. A consistent net deferred tax liability is present throughout the period, with fluctuations occurring in the underlying components. The largest contributors to this liability stem from depreciation and amortization, and licenses and nonamortizable intangibles, consistently representing a significant portion of the subtotal.

Depreciation and Amortization

This item consistently generates a deferred tax liability, ranging from approximately US$36.5 billion to US$47.4 billion in absolute value. A general downward trend is observed from 2021 to 2022, followed by relative stability, with a slight increase in 2025. This suggests a potential slowing in the rate of asset write-off or changes in applicable tax rates impacting the deferred tax calculation.

Licenses and Nonamortizable Intangibles

Similar to depreciation, this component consistently contributes to a deferred tax liability. The absolute value of this liability increases steadily from US$15.6 billion in 2021 to US$21.7 billion in 2025. This continuous growth suggests ongoing investments in, or recognition of, these types of assets.

Lease Related Items

Lease right-of-use assets and lease liabilities began to be reported in 2022. The lease liabilities generate a deferred tax asset, while the lease right-of-use assets generate a deferred tax liability. The net effect is a liability, and the values remain relatively stable between US$5.1 billion and US$5.4 billion in absolute value over the period.

Employee Benefits

Employee benefits generate a deferred tax asset, with values fluctuating between US$2.3 billion and US$3.3 billion. A slight increase is observed from 2021 to 2023, followed by a decrease in 2025. These fluctuations likely correlate with changes in benefit plan obligations and associated tax implications.

Equity in Partnership

This item consistently generates a deferred tax liability, decreasing from US$3.3 billion in 2021 to US$0.014 billion in 2025. This substantial decrease suggests a reduction in the equity method investments or changes in the tax treatment of partnership income.

Net Operating Loss and Other Carryforwards

This component represents a deferred tax asset, ranging from US$5.6 billion to US$6.8 billion. The values remain relatively stable throughout the period, indicating a consistent ability to utilize these tax benefits.

Other, Net

This category exhibits significant volatility, shifting from a liability of US$2.3 billion in 2021 to an asset of US$0.2 billion in 2022, then back to a liability of US$1.4 billion in 2025. This variability suggests the presence of numerous smaller, offsetting items with changing tax effects.

Valuation Allowance

A valuation allowance against deferred tax assets is maintained throughout the period, ranging from US$3.9 billion to US$4.7 billion. The allowance decreases slightly over the period, potentially indicating increased confidence in the realizability of the deferred tax assets.

The net deferred tax liability decreases from US$65.0 billion in 2021 to US$58.2 billion in 2025. This reduction is primarily driven by the decrease in the equity in partnership liability and the relatively stable net operating loss carryforwards asset, offset by increases in licenses and nonamortizable intangibles. The consistent presence of a valuation allowance suggests ongoing assessment of the realizability of deferred tax assets.

The composition of noncurrent deferred tax assets and liabilities exhibits distinct trends over the five-year period. A significant disparity exists between the amounts of these items, with noncurrent deferred tax liabilities consistently and substantially exceeding noncurrent deferred tax assets.

Noncurrent Deferred Tax Assets

Noncurrent deferred tax assets demonstrate a consistent downward trend, decreasing from 230 US$ millions in 2021 to 72 US$ millions in 2025. The most substantial decrease occurred between 2021 and 2022, with a reduction of 144 US$ millions. Subsequent annual declines are more moderate, ranging from 1 to 8 US$ millions per year.

Noncurrent Deferred Tax Liabilities

Noncurrent deferred tax liabilities remain at a high level throughout the period, fluctuating between 57,032 and 65,226 US$ millions. A notable decrease is observed between 2021 and 2022, falling from 65,226 to 57,032 US$ millions. Following this decline, the liabilities increased slightly in 2023 and 2024 before decreasing again in 2025 to 58,312 US$ millions. The overall change from 2021 to 2025 is a decrease of 6,914 US$ millions.

The consistent decline in noncurrent deferred tax assets, coupled with the relatively stable, albeit high, level of noncurrent deferred tax liabilities, suggests a potential shift in the sources of future taxable or deductible temporary differences. The large difference between the two items indicates a net deferred tax liability position, which could imply a higher future tax obligation compared to the current tax position. Further investigation into the specific temporary differences driving these trends would be necessary to fully understand the implications.

The financial information reveals significant adjustments related to deferred tax assets and liabilities between 2021 and 2025. These adjustments impact reported financial statement figures, notably total assets, total liabilities, stockholders’ equity, and net income. A consistent pattern emerges where adjusted figures differ substantially from reported figures, suggesting a material effect from the removal or revaluation of deferred tax items.

Total Assets

Reported total assets decreased from US$551,622 million in 2021 to US$402,853 million in 2022, before stabilizing around US$400-420 billion through 2025. The adjusted total assets show a similar trend, but the magnitude of the initial decrease is less pronounced. The difference between reported and adjusted assets remains relatively consistent, ranging from approximately US$49 million to US$57 million across the period, indicating a consistent impact from deferred tax adjustments.

Total Liabilities

Reported total liabilities experienced a substantial decline from US$367,767 million in 2021 to US$274,570 million in 2024, with a slight increase to US$291,706 million in 2025. The adjusted total liabilities demonstrate a more significant reduction, falling from US$302,541 million in 2021 to US$215,631 million in 2024, and then increasing to US$233,394 million in 2025. The gap between reported and adjusted liabilities widens considerably from 2021 to 2024, suggesting a larger removal of deferred tax liabilities during this period.

Stockholders’ Equity

Reported stockholders’ equity attributable to AT&T fluctuated, decreasing from US$166,332 million in 2021 to US$97,500 million in 2022, then increasing to US$110,533 million in 2025. Adjusted stockholders’ equity shows a more substantial increase over the period, rising from US$231,328 million in 2021 to US$168,773 million in 2025. The adjustments consistently increase the reported equity position, indicating the recognition of deferred tax assets or a reduction in deferred tax liabilities that benefit equity.

Net Income

Reported net income experienced volatility, with a loss of US$-8,524 million in 2022, followed by positive income in subsequent years, peaking at US$21,953 million in 2025. The adjusted net income also shows a similar pattern, but with higher values in 2021, 2023, 2024, and 2025. The adjustments consistently increase the reported net income, suggesting that the removal of deferred tax liabilities or the recognition of deferred tax assets positively impacts profitability. The largest adjustment occurs in 2021, adding US$5,504 million to the reported net income.

In summary, the adjustments consistently increase stockholders’ equity and net income while decreasing total liabilities. The magnitude of these adjustments remains significant throughout the period, indicating a substantial impact from deferred tax considerations on the company’s financial position and performance. The consistent difference between reported and adjusted figures suggests a systematic approach to managing and recognizing deferred tax items.

The financial performance, as indicated by a set of key ratios, exhibits notable differences when deferred tax impacts are removed. Generally, the adjusted ratios present a more stable, though not universally improved, picture compared to their reported counterparts. A consistent pattern emerges where the removal of deferred tax effects tends to increase profitability ratios, while the asset efficiency and leverage ratios are generally reduced.

Profitability

Reported net profit margin demonstrates significant volatility, swinging from 11.89% in 2021 to -7.06% in 2022, recovering to 11.76% in 2023, and culminating in 17.47% in 2025. The adjusted net profit margin, while also fluctuating, exhibits a less dramatic range, moving from 15.15% to -4.51% over the same period, and reaching 19.76% in 2025. This suggests deferred taxes are significantly impacting reported earnings. A similar pattern is observed in both ROE and ROA. Reported ROE experiences a substantial decline to -8.74% in 2022, while the adjusted ROE remains comparatively higher at -3.53%. The same trend is visible in ROA, with the adjusted values consistently exceeding the reported values. The difference between reported and adjusted profitability ratios narrows in the later years, indicating a potential stabilization of deferred tax impacts.

Asset Turnover and Leverage

Total asset turnover remains remarkably stable across the observed period for both reported and adjusted values, consistently around 0.30-0.31. This indicates no substantial change in the efficiency with which assets are used to generate revenue, regardless of deferred tax adjustments. Conversely, financial leverage is noticeably affected by the removal of deferred taxes. Reported financial leverage increases from 3.32 in 2021 to 4.13 in 2022, then declines to 3.80 in 2025. The adjusted financial leverage is consistently lower, ranging from 2.38 to 2.61 during the initial period and increasing to 2.49 in 2025. This suggests that deferred tax liabilities are contributing to a higher reported leverage position.

In summary, the adjustments for deferred taxes reveal a more consistent underlying profitability picture, while also demonstrating a lower level of financial leverage. The asset turnover remains unaffected by these adjustments. The significant differences observed in the reported versus adjusted profitability metrics highlight the substantial impact of deferred taxes on the company’s reported financial performance.

The period under review demonstrates considerable fluctuation in reported and adjusted net income, consequently impacting associated profit margins. A notable divergence exists between the reported and adjusted figures, suggesting the presence of significant non-recurring items or accounting adjustments impacting the reported results.

Adjusted Net Profit Margin Trend

The adjusted net profit margin exhibited a decline from 15.15% in 2021 to -4.51% in 2022. This represents a substantial decrease, indicating a significant reduction in profitability on an adjusted basis. A recovery is then observed, with the margin increasing to 12.95% in 2023 and 9.56% in 2024. The most recent year, 2025, shows a further increase to 19.76%, reaching the highest point within the analyzed timeframe. This suggests improving operational performance or a more favorable impact from adjustments in later years.

Relationship between Reported and Adjusted Margins

The difference between the reported and adjusted net profit margins varied considerably. In 2021, the adjusted margin exceeded the reported margin by 3.26 percentage points. This difference widened in 2022, with the adjusted margin being 2.55 percentage points higher than the reported margin, though both were negative. The gap narrowed in 2023 and 2024, and expanded again in 2025 to 2.31 percentage points. This consistent difference highlights the impact of adjustments on the overall profitability picture.

Volatility and Recovery

The substantial negative adjusted net profit margin in 2022 is a key observation. The subsequent years demonstrate a recovery, with margins trending upwards. This suggests that the factors contributing to the 2022 loss were largely addressed or were non-recurring in nature. The strong performance in 2025 indicates a potential stabilization of profitability, though continued monitoring is warranted.

Overall, the analysis reveals a period of significant volatility followed by a positive trend in adjusted profitability. The consistent difference between reported and adjusted figures underscores the importance of considering adjustments when evaluating the company’s financial performance.

The analysis reveals a consistent pattern in both reported and adjusted total asset turnover ratios over the five-year period. Total asset values demonstrate fluctuation, yet the asset turnover ratios remain remarkably stable.

Reported Total Assets

Reported total assets decreased from US$551,622 million in 2021 to US$402,853 million in 2022, representing a substantial decline. A modest increase was observed in 2023 to US$407,060 million, followed by a further decrease to US$394,795 million in 2024. The final year, 2025, shows a recovery to US$420,198 million, but remains below the 2021 level.

Adjusted Total Assets

Adjusted total assets mirror the trend of reported total assets closely. A decrease from US$551,392 million in 2021 to US$402,767 million in 2022 is evident. Similar to reported assets, adjusted assets increased slightly in 2023 to US$406,977 million, decreased in 2024 to US$394,715 million, and then increased again in 2025 to US$420,126 million.

Total Asset Turnover (Reported & Adjusted)

Both the reported and adjusted total asset turnover ratios exhibit minimal variation throughout the period. The ratio consistently fluctuates between 0.30 and 0.31. Specifically, the ratio is 0.31 in 2021, 0.30 in 2022 and 2023, 0.31 in 2024, and returns to 0.30 in 2025. This suggests a stable relationship between revenue generated and the level of assets employed, despite the changes in the total asset base.

The consistency in the asset turnover ratios, despite the fluctuations in total asset values, indicates that the company maintains a relatively constant efficiency in utilizing its assets to generate sales. The lack of significant change in this ratio over the five-year period suggests a stable operational performance in terms of asset utilization.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over a five-year period. Total assets experienced a decrease from 2021 to 2022, followed by relative stability and a slight increase through 2025. Stockholders’ equity attributable to AT&T also decreased from 2021 to 2022, then showed incremental increases in subsequent years, though remaining below the 2021 level until 2025.

Reported Financial Leverage

Reported financial leverage peaked at 4.13 in 2022, representing an increase from 3.32 in 2021. A subsequent downward trend was observed, decreasing to 3.78 in 2024 before stabilizing at 3.80 in 2025. This suggests a reduction in the proportion of assets financed by equity when using reported figures, followed by a slight improvement in the capital structure.

Adjusted Financial Leverage

Adjusted financial leverage followed a similar pattern to the reported leverage, reaching a high of 2.61 in 2022 from 2.38 in 2021. It then decreased to 2.42 in 2024, and increased slightly to 2.49 in 2025. The adjusted leverage consistently remained lower than the reported leverage throughout the period, indicating that adjustments to the equity base result in a more favorable leverage position.

Asset and Equity Trends

The difference between reported and adjusted total assets remained relatively consistent across the period, suggesting a systematic adjustment is being applied. A more substantial difference exists between reported and adjusted stockholders’ equity, with adjusted equity consistently higher. This indicates that the adjustments to equity significantly impact the overall financial leverage calculation.

The observed trends suggest that while the company experienced increased leverage in 2022, it has since taken steps to moderate this, as evidenced by the declining reported and adjusted leverage ratios. The consistent difference between reported and adjusted figures highlights the importance of understanding the nature of these adjustments when assessing the company’s financial risk profile.

The period under review demonstrates considerable fluctuation in reported and adjusted net income, impacting return on equity calculations. Stockholders’ equity, both reported and adjusted, exhibits a generally increasing trend, though with notable variations. A detailed examination of the reported and adjusted ROE, alongside their underlying components, reveals key insights into the company’s performance.

Reported Net Income and ROE

Reported net income experienced a significant decline from US$20,081 million in 2021 to a loss of US$8,524 million in 2022. This resulted in a corresponding decrease in reported ROE from 12.07% to -8.74%. A recovery was observed in 2023, with reported net income rising to US$14,400 million and ROE to 13.94%. Further gains were made in 2024, with net income at US$10,948 million and ROE at 10.49%. The strongest performance occurred in 2025, with reported net income reaching US$21,953 million and ROE climbing to 19.86%.

Adjusted Net Income and ROE

Adjusted net income followed a similar pattern to reported net income, though the magnitude of the loss in 2022 was less pronounced at US$5,450 million. Consequently, adjusted ROE decreased to -3.53% in 2022, compared to 11.06% in 2021. Adjusted net income increased to US$15,856 million in 2023, resulting in an adjusted ROE of 9.79%. Growth continued into 2024, with adjusted net income at US$11,697 million and ROE at 7.17%. The highest adjusted ROE was recorded in 2025, at 14.71%, supported by adjusted net income of US$24,829 million.

Stockholders’ Equity

Reported stockholders’ equity decreased substantially from US$166,332 million in 2021 to US$97,500 million in 2022. A partial recovery occurred in 2023, with equity rising to US$103,297 million, and continued through 2025, reaching US$110,533 million. Adjusted stockholders’ equity mirrored this trend, declining from US$231,328 million in 2021 to US$154,446 million in 2022, and then increasing to US$168,773 million by 2025. The difference between reported and adjusted equity values remained consistent throughout the period.

ROE Discrepancy

The adjusted ROE consistently fell below the reported ROE across all years. This suggests that the adjustments made to net income and/or stockholders’ equity had a dampening effect on the calculated return. The largest difference between reported and adjusted ROE was observed in 2021 (1.01 percentage points), while the smallest difference was in 2025 (5.15 percentage points). The magnitude of this difference increased over the period.

In summary, the company experienced significant volatility in profitability between 2021 and 2025. While both reported and adjusted ROE demonstrate improvement over the period, the adjustments to net income and equity consistently resulted in a lower ROE calculation. The increasing trend in stockholders’ equity provides a foundation for future profitability, but continued monitoring of net income and the impact of adjustments is warranted.

The period between 2021 and 2025 demonstrates fluctuating financial performance as reflected in both reported and adjusted return on assets. Reported net income experienced significant volatility, beginning with a positive value in 2021, a substantial loss in 2022, and subsequent recovery through 2025. Adjusted net income mirrored this pattern, though with less pronounced negative impact in 2022. Total assets, both reported and adjusted, exhibited a decline from 2021 to 2024 before increasing in 2025.

Reported Return on Assets (ROA)

Reported ROA began at 3.64% in 2021, decreased substantially to -2.12% in 2022, and then showed a recovery to 3.54% in 2023 and 2.77% in 2024. A further increase was observed in 2025, reaching 5.22%. This indicates a strong correlation between reported ROA and reported net income, with the negative net income in 2022 directly impacting the ROA.

Adjusted Return on Assets (ROA)

Adjusted ROA followed a similar trend to the reported ROA, starting at 4.64% in 2021. It decreased to -1.35% in 2022, then increased to 3.90% in 2023 and 2.96% in 2024. The adjusted ROA also peaked in 2025 at 5.91%. The adjusted ROA consistently exceeded the reported ROA throughout the period, suggesting that adjustments to net income and total assets positively influence profitability metrics.

Relationship between Reported and Adjusted ROA

The difference between reported and adjusted ROA remained relatively consistent across the years, indicating that the adjustments applied were systematic and did not disproportionately impact the results in any single year. The adjustments consistently resulted in a higher ROA, suggesting that certain items were excluded from the reported net income or asset base that, when included, provide a more comprehensive view of the company’s profitability.

Asset Trends

Both reported and adjusted total assets decreased from 2021 through 2024, indicating a period of asset reduction or disposal. The increase in assets observed in 2025 suggests a reversal of this trend, potentially due to new acquisitions, investments, or revaluation of existing assets. The close alignment between reported and adjusted asset values suggests that the adjustments made to assets were not substantial.

Overall, the financial performance exhibited a period of instability followed by improvement. The adjustments made to net income and assets consistently presented a more favorable profitability picture, highlighting the importance of considering these adjustments when evaluating the company’s financial health. The increase in both net income and assets in 2025 suggests a potential positive shift in the company’s trajectory.