Analysis of Income Taxes
- Income Tax Expense (Benefit)
- Effective Income Tax Rate (EITR)
- Components of Deferred Tax Assets and Liabilities
- Deferred Tax Assets and Liabilities, Classification
- Adjustments to Financial Statements: Removal of Deferred Taxes
- Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
- Adjusted Net Profit Margin
- Adjusted Total Asset Turnover
- Adjusted Financial Leverage
- Adjusted Return on Equity (ROE)
- Adjusted Return on Assets (ROA)
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- Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Income Tax Expense (Benefit)
Verizon Communications Inc., income tax expense (benefit), continuing operations
US$ in millions
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| Income tax provision |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Income Tax Expense
- The current income tax expense exhibits notable fluctuations over the five-year period. It started at $4,066 million in 2020, decreased substantially to $2,538 million in 2021, rose again to $3,550 million in 2022, then dipped to $2,504 million in 2023, and finally increased sharply to $4,215 million in 2024. This pattern indicates considerable volatility in the current tax expense, with no clear trend of consistent increase or decrease.
- Deferred Income Tax Expense
- The deferred income tax expense shows a pronounced peak and subsequent decline during the period. It rose sharply from $1,553 million in 2020 to a peak of $4,264 million in 2021, declined to $2,973 million in 2022, continued to fall to $2,388 million in 2023, and further decreased to $815 million in 2024. This trend suggests a significant deferred tax liability or asset adjustment in 2021, followed by a gradual normalization or reduction in deferred tax impacts in the later years.
- Total Income Tax Provision
- The total income tax provision, which combines current and deferred expenses, increased from $5,619 million in 2020 to a peak of $6,802 million in 2021. It then decreased to $6,523 million in 2022, dropped more substantially to $4,892 million in 2023, and slightly increased to $5,030 million in 2024. The expenses reflect overall variability, with the highest burden observed in 2021 followed by a declining trend, indicating changing tax expense dynamics possibly due to variations in taxable income, tax credits, or changes in tax regulations.
- Summary Insights
- The data reveal that the current income tax expense is somewhat volatile with periods of both increase and decrease, while deferred income tax expense peaked markedly in 2021 before steadily declining. The total income tax provision mirrors these movements, with a peak in 2021 attributable primarily to the spike in deferred taxes. The significant drop in deferred tax expense after 2021 may indicate changes in temporary differences or tax planning strategies affecting deferred tax assets or liabilities. Overall, the variability in tax expenses points to dynamic tax positions and effective tax rate fluctuations over the period analyzed.
Effective Income Tax Rate (EITR)
Verizon Communications Inc., effective income tax rate (EITR) reconciliation
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- U.S. federal statutory tax rate
- The federal statutory tax rate remained constant at 21% throughout the five-year period, showing no variation.
- State and local income taxes, net of federal income tax effect
- This tax component was relatively stable between 3.8% and 3.9% from 2020 to 2023, but exhibited a notable decline to 2.5% in 2024.
- Foreign tax effects
- The foreign tax impact, absent in initial years, became negative starting in 2022, fluctuating mildly between -0.4% and -0.1%, and returning to -0.3% in 2024, suggesting some tax relief or credits from foreign operations.
- Effect of cross-border tax laws
- This factor appeared only in 2022 and 2023 at a minor positive level (0.1%), then ceased to be reported in 2024, indicating transient influences from cross-border tax regulatory changes.
- Tax credits
- Tax credits have progressively diminished in magnitude, from -0.8% in 2020 to a minimal -0.1% in 2024, signaling reduced availability or utilization of such credits over time.
- Changes in valuation allowances
- This element appeared solely in 2024 at 0.1%, representing a slight positive adjustment in valuation allowances during that year.
- Goodwill impairment
- Goodwill impairment was only recorded in 2023, significantly increasing to 6.8%, which likely represents a one-time charge affecting the tax rate in that year.
- Other
- Various other adjustments exhibited minor fluctuations, with values ranging from -0.5% to -0.8% in 2022 and 2023, and returning to -0.5% in 2024.
- Nontaxable or nondeductible items
- A notable spike to 6.0% in 2023 contrasts with negative values (-0.5%) in 2022 and 2024, indicating an unusual, possibly nonrecurring event that increased the tax rate substantially in 2023.
- Changes in unrecognized tax benefits
- These benefits shifted from a negative impact in 2022 and 2023 (-0.4%, -0.2%) to a slight positive effect of 0.2% in 2024, suggesting evolving positions on uncertain tax benefits.
- Federal refund claims
- Refund claims impacted the rate negatively in 2023 (-1.4%) and marginally in 2024 (-0.1%), implying some tax recoveries during these years.
- Other adjustments
- This category generally showed negative values, increasing in magnitude from -0.5% in 2022 to -1.7% in 2023 before easing to -1.0% in 2024, reflecting various downward adjustments to the effective tax rate.
- Effective income tax rate
- The effective income tax rate was relatively stable around 23% during 2020-2022, then surged to 28.8% in 2023, largely driven by goodwill impairment and nontaxable/nondeductible items. In 2024, the rate decreased sharply to 21.9%, below prior years, influenced by lower state and local taxes and diminishing tax credits.
Components of Deferred Tax Assets and Liabilities
Verizon Communications Inc., components of deferred tax assets and liabilities
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial data reveals several notable trends in assets, liabilities, and amortization expenses over the analyzed period.
- Employee Benefits
- There is a consistent decline in employee benefits from US$5,218 million in 2020 to US$3,676 million in 2024, indicating a reduction of approximately 30%. This suggests potential cost control measures or changes in workforce-related obligations.
- Tax Loss, Credit, and Other Carry Forwards
- This item shows a downward trend from US$2,848 million in 2020 to US$1,719 million in 2024, reflecting a decrease of nearly 40%. The reduction could imply the utilization of these carryforwards or diminished new accruals.
- Lease Liabilities
- Lease liabilities appear starting from 2022 at US$5,395 million, slightly increasing to US$5,480 million in 2023, and then decreasing to US$5,138 million in 2024. This emerging liability and its recent decline may result from new lease arrangements and subsequent repayments or terminations.
- Other Assets
- The 'Other, assets' category presents an irregular pattern with a substantial increase from US$6,096 million in 2020 to US$7,314 million in 2021, followed by a sharp drop to US$1,591 million in 2022, then a slight recovery through 2024. This volatility indicates possible reclassification or write-downs impacting these assets.
- Gross Deferred Tax Assets
- Beginning at US$14,162 million in 2020, gross deferred tax assets show a steady decline to US$12,268 million by 2024. This consistent decrease indicates a reduction in potential future tax benefits.
- Valuation Allowances
- Valuation allowances become less negative from -US$2,183 million in 2020 to -US$1,347 million in 2022, stabilizing thereafter and slightly worsening to -US$1,399 million in 2024. The easing of allowances suggests improved realizability of deferred tax assets, despite a minor reversal recently.
- Deferred Tax Assets
- Net deferred tax assets first increase from US$11,979 million in 2020 to US$12,352 million in 2021, then decline to US$10,869 million by 2024. This fluctuation aligns with changes in gross assets and valuation allowances, indicating adjustments in expected tax recovery.
- Spectrum and Other Intangible Amortization
- Amortization expenses steadily increase in magnitude, from -US$22,726 million in 2020 to -US$29,302 million in 2024. This trend points to escalating amortization charges related to intangible assets, possibly due to new acquisitions or accelerated amortization schedules.
- Depreciation
- Depreciation expense grows from -US$18,009 million in 2020 to a peak of -US$21,388 million in 2022, then somewhat declines to -US$20,424 million by 2024. The initial increase may reflect capital investment growth, while the subsequent decrease may indicate asset disposals or moderating capital expenditures.
- Lease Right-of-Use Assets
- Starting in 2022 at -US$5,007 million, the lease right-of-use assets show a small decline to -US$4,822 million in 2024, consistent with lease liability trends and suggesting ongoing amortization or lease terminations.
- Other Liabilities
- Other liabilities decrease sharply from -US$6,867 million in 2020 to -US$2,489 million in 2022, then slightly increase to around -US$2,904 million by 2024. This significant drop and subsequent stability may result from liability settlements or reclassification.
- Deferred Tax Liabilities
- Deferred tax liabilities consistently rise from -US$47,602 million in 2020 to -US$57,452 million in 2024, indicating growing obligations or timing differences creating tax liabilities over time.
- Net Deferred Tax Asset (Liability)
- The net position deteriorates over the period, moving from -US$35,623 million in 2020 to -US$46,583 million in 2024. This increasing net liability reflects the combined effects of increasing deferred tax liabilities and fluctuating deferred tax assets, possibly illustrating increased taxable temporary differences relative to deductible ones.
Deferred Tax Assets and Liabilities, Classification
Verizon Communications Inc., deferred tax assets and liabilities, classification
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Deferred tax liabilities |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the available financial data reveals distinct trends in deferred tax assets and liabilities over the five-year period.
- Deferred Tax Assets
- Deferred tax assets have shown an overall increasing trend from US$88 million in 2020 to US$149 million in 2024. There was a noticeable rise between 2020 and 2021, with the amount nearly doubling. This was followed by a slight increase in 2022. However, in 2023, deferred tax assets decreased somewhat before stabilizing at a level slightly above the 2023 figure in 2024.
- Deferred Tax Liabilities
- Deferred tax liabilities consistently increased each year, moving from US$35.7 billion in 2020 to US$46.7 billion in 2024. The growth in deferred tax liabilities has been steady and continuous, with the largest increments occurring between 2021-2022 and 2022-2023 periods. This indicates an expanding obligation related to deferred tax on the company’s balance sheet.
In summary, while deferred tax assets show modest growth with some fluctuations, deferred tax liabilities demonstrate a strong and persistent upward trajectory over the five-year span. The widening gap between liabilities and assets suggests an increasing net deferred tax liability position, which may affect future tax payments and the company's tax-related financial strategy.
Adjustments to Financial Statements: Removal of Deferred Taxes
Verizon Communications Inc., adjustments to financial statements
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Total Assets
- The reported total assets demonstrated a consistent upward trajectory over the five-year period, increasing from $316,481 million in 2020 to $384,711 million in 2024. The adjusted total assets closely followed this pattern, exhibiting a similar growth trend from $316,393 million to $384,562 million during the same timeframe. The marginal differences between reported and adjusted figures suggest minor adjustments with minimal impact on the overall asset base.
- Total Liabilities
- Reported total liabilities initially rose from $247,209 million in 2020 to a peak of $287,217 million in 2022, followed by a gradual decline to $284,136 million by 2024. Adjusted total liabilities, however, presented a contrasting trend: increasing from $211,498 million in 2020 to $243,776 million in 2022, then steadily decreasing to $237,404 million in 2024. The adjusted liabilities consistently remain significantly lower than the reported liabilities, indicating notable adjustments primarily benefiting the liability figures.
- Equity Attributable to Verizon
- Reported equity attributable to Verizon increased steadily from $67,842 million in 2020 to $99,237 million in 2024. The adjusted equity revealed a more pronounced growth, rising from $103,465 million to $145,820 million over the same period. This substantial upward trend in adjusted equity, coupled with its consistently higher values compared to the reported figures, reflects positive adjustments that strengthen the equity position.
- Net Income Attributable to Verizon
- The reported net income showed fluctuations over the period, starting at $17,801 million in 2020, peaking at $22,065 million in 2021, then declining to $11,614 million in 2023 before recovering to $17,506 million in 2024. Adjusted net income followed a similar pattern but maintained higher levels throughout, ranging from $19,354 million in 2020 to $18,321 million in 2024. The adjustments appear to smooth variations, though both reported and adjusted net income indicate volatility with a notable dip in 2023.
- Overall Analysis
- The data presents a general improvement in the company's financial position over the five years, with total assets and equity steadily increasing. Liabilities peaked mid-period and then declined, especially under adjusted figures, signaling improved debt management or accounting adjustments that decrease reported obligations. The net income trends reveal income volatility, especially a downturn around 2023, yet adjusted figures suggest some stabilization. The consistent differences between reported and adjusted figures highlight the importance of accounting for deferred income taxes and other adjustments to gain a clearer understanding of the underlying financial health.
Verizon Communications Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Verizon Communications Inc., adjusted financial ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net Profit Margin
- The reported net profit margin showed an increase from 13.88% in 2020 to a peak of 16.51% in 2021, followed by a slight decline to 15.53% in 2022. A significant drop occurred in 2023 to 8.67%, with a partial recovery to 12.99% in 2024. The adjusted net profit margin displayed a similar pattern but consistently exceeded the reported values, rising from 15.09% in 2020 to 19.71% in 2021, then declining steadily to 13.59% by 2024.
- Total Asset Turnover
- Both reported and adjusted total asset turnover ratios were stable over the five-year period. Starting at 0.41 in 2020, they declined slightly to 0.36 in 2021 and remained steady at 0.35 from 2023 onwards, indicating limited changes in the efficiency of asset utilization.
- Financial Leverage
- Reported financial leverage demonstrated a gradual decrease from 4.66 in 2020 to 3.88 in 2024. The adjusted financial leverage also decreased consistently, from 3.06 in 2020 to 2.64 in 2024. This trend suggests a steady reduction in reliance on debt financing when considering adjusted figures.
- Return on Equity (ROE)
- Reported ROE increased slightly from 26.24% in 2020 to 26.98% in 2021, followed by a decline to 23.32% in 2022 and a more pronounced drop to 12.57% in 2023. There was a moderate recovery to 17.64% in 2024. The adjusted ROE also peaked in 2021 at 21.53%, then declined each year to 12.56% in 2024. The adjusted ROE was consistently lower than the reported, indicating adjustments had a material effect on equity returns.
- Return on Assets (ROA)
- Reported ROA increased from 5.62% in 2020 to 6.02% in 2021, then decreased to 5.60% in 2022 and dropped significantly to 3.05% in 2023. A recovery to 4.55% occurred in 2024. Adjusted ROA mirrored this trajectory with higher values: rising from 6.12% in 2020 to 7.19% in 2021, falling to 3.68% in 2023, and slightly improving to 4.76% in 2024.
- Overall Analysis
- The data reveals that profitability indicators (net profit margin, ROE, and ROA) experienced improvements between 2020 and 2021, followed by declines in subsequent years, most notably in 2023. Although there was some recovery in 2024, levels remained below earlier peaks. Asset turnover ratios remained relatively steady, implying stable operational efficiency. Financial leverage decreased consistently, especially on an adjusted basis, indicating a trend toward lower debt dependency. Adjusted measures consistently showed more conservative profitability and leverage metrics compared to reported figures, highlighting the impact of tax-related adjustments on financial performance and risk metrics.
Verizon Communications Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Net profit margin = 100 × Net income attributable to Verizon ÷ Operating revenues
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Verizon ÷ Operating revenues
= 100 × ÷ =
The data reveals fluctuating trends in both reported and adjusted net income attributable to Verizon Communications Inc. over the five-year period from 2020 to 2024. Reported net income increased from 17,801 million US dollars in 2020 to reach a peak of 22,065 million US dollars in 2021, before experiencing a slight decline in 2022 to 21,256 million US dollars. A significant drop is observed in 2023 to 11,614 million US dollars, followed by a recovery in 2024 to 17,506 million US dollars, nearly returning to the 2020 level.
Adjusted net income follows a similar pattern but consistently remains higher than the reported figures, indicating notable adjustments made for deferred income taxes or other factors. It rose from 19,354 million US dollars in 2020 to a high of 26,329 million US dollars in 2021. Subsequently, it decreased to 24,229 million in 2022 and sharply dropped to 14,002 million in 2023. In 2024, the adjusted net income recorded a rebound to 18,321 million US dollars, surpassing the initial 2020 figure.
In terms of profitability, the reported net profit margin exhibits a rise from 13.88% in 2020 to 16.51% in 2021, followed by a gradual decline to 15.53% in 2022. There is a marked fall in 2023 to 8.67%, indicating reduced profitability during that year. The margin then improves to 12.99% in 2024, though it remains below the earlier peak levels.
The adjusted net profit margin consistently exceeds the reported margin and shows a comparable trajectory. It increased sharply from 15.09% in 2020 to 19.71% in 2021, then declined to 17.71% in 2022. A significant reduction to 10.45% is observed in 2023, with a partial recovery to 13.59% in 2024.
Overall, the data portrays a period of growth and higher profitability up to 2021, followed by a downward correction in 2022 and a pronounced dip in 2023. The subsequent year displays signs of improvement but not a complete return to prior peak performance. The consistent premium on adjusted earnings and margins suggests that accounting adjustments substantially impact the reported financial outcomes.
Adjusted Total Asset Turnover
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Total asset turnover = Operating revenues ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Operating revenues ÷ Adjusted total assets
= ÷ =
The analysis of the financial data over the five-year period reveals several key trends related to total assets and asset turnover ratios.
- Total Assets
- The reported total assets show a consistent upward trajectory from 316,481 million USD at the end of 2020 to 384,711 million USD by the end of 2024. This represents an overall increase of approximately 21.5% over the five years. The adjusted total assets display a very similar pattern, starting at 316,393 million USD in 2020 and rising steadily to 384,562 million USD in 2024. The slight differences between reported and adjusted figures are minimal, indicating limited adjustments related to deferred income tax.
- Total Asset Turnover Ratios
- Both reported and adjusted total asset turnover ratios have declined over the analyzed period. The ratio decreased from 0.41 in 2020 to 0.35 in 2024. After an initial drop from 0.41 to 0.36 in 2021, the ratio remained stable at 0.36 through 2022, followed by a slight further decline to 0.35 in 2023 and stabilization at that level in 2024. This trend suggests a gradual reduction in the efficiency with which the company is utilizing its assets to generate revenue.
In summary, while the company's asset base has expanded consistently, its ability to generate sales per unit of asset has diminished moderately over the five years. The near-identical figures for reported and adjusted data imply that adjustments for deferred income tax have minimal impact on these measures, indicating stable tax-related accounting treatments during the period.
Adjusted Financial Leverage
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Financial leverage = Total assets ÷ Equity attributable to Verizon
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to Verizon
= ÷ =
- Total Assets
- The reported total assets show a consistent upward trend over the observed periods, increasing from $316.5 billion in 2020 to approximately $384.7 billion in 2024. Similarly, the adjusted total assets follow a nearly parallel trajectory, starting at $316.4 billion in 2020 and rising to around $384.6 billion in 2024. The close alignment between reported and adjusted figures indicates minimal impact from deferred tax adjustments on total asset evaluation.
- Equity Attributable to Verizon
- Reported equity attributable to Verizon demonstrates steady growth, rising from $67.8 billion in 2020 to nearly $99.2 billion in 2024. Notably, the adjusted equity figures are substantially higher throughout, beginning at $103.5 billion in 2020 and increasing to $145.8 billion in 2024. This divergence suggests that deferred tax adjustments significantly enhance the equity base when accounted for, and both reported and adjusted equity show consistent annual increases, reflecting strengthening shareholder equity over time.
- Financial Leverage
- Reported financial leverage exhibits a declining trend, moving from 4.66 times in 2020 to 3.88 times in 2024, indicating a gradual reduction in reliance on debt relative to equity. The adjusted financial leverage, which incorporates income tax adjustments, follows a similar but lower pattern, decreasing from 3.06 to 2.64 over the same period. The consistently lower adjusted leverage ratios compared to reported figures imply that the deferred tax adjustments reduce perceived financial risk associated with leverage. Both measures signal improving capital structure and potentially lower financial risk.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 ROE = 100 × Net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to Verizon ÷ Adjusted equity attributable to Verizon
= 100 × ÷ =
The data reveals variations and trends in both reported and adjusted financial metrics over a five-year period.
- Net Income
- The reported net income attributable to the company increased from 17,801 million US dollars in 2020 to a peak of 22,065 million in 2021. It then slightly decreased to 21,256 million in 2022 before a significant decline to 11,614 million in 2023. The value recovered to 17,506 million in 2024, though it remained below the 2021 and 2022 levels.
- The adjusted net income followed a similar pattern, starting at 19,354 million in 2020, peaking at 26,329 million in 2021, and then gradually decreasing to 24,229 million in 2022. A sharp drop occurred in 2023 to 14,002 million, with a partial recovery to 18,321 million in 2024, reflecting a similar trend but consistently higher values than the reported net income.
- Equity
- Reported equity attributable to the company showed a consistent upward trend every year, rising from 67,842 million in 2020 to 99,237 million in 2024. This indicates steady growth in shareholders' equity over time.
- Adjusted equity values were notably higher than reported equity, beginning at 103,465 million in 2020 and steadily increasing each year to reach 145,820 million by 2024. The adjusted figures suggest significant adjustments that increase equity, and their growth trend reflects an expanding equity base.
- Return on Equity (ROE)
- Reported ROE started strong at 26.24% in 2020, increased slightly to 26.98% in 2021, then decreased to 23.32% in 2022. A sharp decline occurred in 2023, dropping to 12.57%, followed by a partial recovery to 17.64% in 2024. This reflects a general weakening of profitability relative to equity in recent years despite some rebound.
- Adjusted ROE values are lower than reported ROE throughout the period, moving from 18.71% in 2020 to 21.53% in 2021 before declining to 18.03% in 2022 and experiencing a notable decrease to 10.14% in 2023. There was a slight recovery to 12.56% in 2024. The adjusted ROE trend mirrors that of the reported ROE but with consistently lower profitability ratios.
Overall, the data illustrates a period of growth in equity but a weakening in net income and profitability metrics in recent years, particularly in 2023. Adjusted figures consistently show higher equity levels and net income but lower returns on equity compared to reported figures, implying significant accounting adjustments that affect equity size and profitability ratios. The partial recovery in 2024 suggests some stabilization following the downturn experienced in 2023.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to Verizon ÷ Adjusted total assets
= 100 × ÷ =
The financial data over the five-year period reveals several notable trends regarding income, asset base, and return on assets (ROA) both on reported and adjusted bases.
- Net Income Trends
- Reported net income attributable to the company showed an initial increase from 17,801 million US dollars in 2020 to a peak of 22,065 million in 2021. This was followed by a slight decline to 21,256 million in 2022, then a more pronounced drop to 11,614 million in 2023, before recovering to 17,506 million in 2024. Adjusted net income follows a similar pattern but consistently remains higher than the reported figures, indicating adjustments increased the recognized income. Adjusted net income peaked in 2021 at 26,329 million, declined thereafter, reached a low point in 2023 at 14,002 million, and improved to 18,321 million in 2024.
- Asset Base Development
- The company’s reported total assets steadily increased over the period, beginning at 316,481 million US dollars in 2020 and growing each year, reaching 384,711 million by 2024. Adjusted total assets track closely with reported assets, showing only minor differences and a similar upward trend. This steady growth in total assets suggests continued investment or asset accumulation over time.
- Return on Assets (ROA) Analysis
- Return on assets showed a declining trend after 2021. Reported ROA rose from 5.62% in 2020 to 6.02% in 2021, then declined to 5.6% in 2022. There was a substantial decrease to 3.05% in 2023, with a partial recovery to 4.55% in 2024. Adjusted ROA replicated this pattern but at higher percentages, starting at 6.12% in 2020, peaking at 7.19% in 2021, and then decreasing to 6.38% in 2022. It dropped significantly to 3.68% in 2023 and recovered slightly to 4.76% in 2024. The notable dip in ROA in 2023 corresponds with the drop in net income despite continued asset growth.
Overall, the data indicates that while the asset base continued to grow steadily, profitability as measured by net income and ROA faced challenges particularly in 2023, with some signs of recovery in 2024. The adjusted figures consistently exceed the reported amounts, suggesting the adjustments serve to improve the presentation of profitability and asset returns.