Stock Analysis on Net

Verizon Communications Inc. (NYSE:VZ)

Analysis of Operating Leases

Microsoft Excel

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Adjustments to Financial Statements for Operating Leases

Verizon Communications Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 380,255 379,680 366,596 316,481 291,727
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1
Total assets (adjusted) 380,255 379,680 366,596 316,481 291,727
Adjustment to Total Debt
Total debt (as reported) 150,674 150,639 150,868 129,062 111,489
Add: Operating lease liability (before adoption of FASB Topic 842)2
Add: Current operating lease liabilities 4,266 4,134 3,859 3,485 3,261
Add: Non-current operating lease liabilities 20,002 21,558 23,203 18,000 18,393
Total debt (adjusted) 174,942 176,331 177,930 150,547 133,143

Based on: 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), 10-K (reporting date: 2019-12-31).

1, 2 Equal to total present value of future operating lease payments.


Verizon Communications Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Verizon Communications Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Total Asset Turnover1
Reported total asset turnover 0.35 0.36 0.36 0.41 0.45
Adjusted total asset turnover 0.35 0.36 0.36 0.41 0.45
Debt to Equity2
Reported debt to equity 1.63 1.65 1.84 1.90 1.82
Adjusted debt to equity 1.89 1.93 2.18 2.22 2.17
Return on Assets3 (ROA)
Reported ROA 3.05% 5.60% 6.02% 5.62% 6.60%
Adjusted ROA 3.05% 5.60% 6.02% 5.62% 6.60%

Based on: 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), 10-K (reporting date: 2019-12-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Verizon Communications Inc. adjusted debt to equity ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Operating revenues 133,974 136,835 133,613 128,292 131,868
Total assets 380,255 379,680 366,596 316,481 291,727
Activity Ratio
Total asset turnover1 0.35 0.36 0.36 0.41 0.45
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Operating revenues 133,974 136,835 133,613 128,292 131,868
Adjusted total assets 380,255 379,680 366,596 316,481 291,727
Activity Ratio
Adjusted total asset turnover2 0.35 0.36 0.36 0.41 0.45

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Total asset turnover = Operating revenues ÷ Total assets
= 133,974 ÷ 380,255 = 0.35

2 Adjusted total asset turnover = Operating revenues ÷ Adjusted total assets
= 133,974 ÷ 380,255 = 0.35

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Debt to Equity

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total debt 150,674 150,639 150,868 129,062 111,489
Equity attributable to Verizon 92,430 91,144 81,790 67,842 61,395
Solvency Ratio
Debt to equity1 1.63 1.65 1.84 1.90 1.82
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 174,942 176,331 177,930 150,547 133,143
Equity attributable to Verizon 92,430 91,144 81,790 67,842 61,395
Solvency Ratio
Adjusted debt to equity2 1.89 1.93 2.18 2.22 2.17

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Debt to equity = Total debt ÷ Equity attributable to Verizon
= 150,674 ÷ 92,430 = 1.63

2 Adjusted debt to equity = Adjusted total debt ÷ Equity attributable to Verizon
= 174,942 ÷ 92,430 = 1.89

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Verizon Communications Inc. adjusted debt-to-equity ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 11,614 21,256 22,065 17,801 19,265
Total assets 380,255 379,680 366,596 316,481 291,727
Profitability Ratio
ROA1 3.05% 5.60% 6.02% 5.62% 6.60%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 11,614 21,256 22,065 17,801 19,265
Adjusted total assets 380,255 379,680 366,596 316,481 291,727
Profitability Ratio
Adjusted ROA2 3.05% 5.60% 6.02% 5.62% 6.60%

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × 11,614 ÷ 380,255 = 3.05%

2 Adjusted ROA = 100 × Net income attributable to Verizon ÷ Adjusted total assets
= 100 × 11,614 ÷ 380,255 = 3.05%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.