Stock Analysis on Net

Verizon Communications Inc. (NYSE:VZ)

Financial Reporting Quality: Aggregate Accruals

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Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Verizon Communications Inc., balance sheet computation of aggregate accruals

US$ in millions

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 380,255 379,680 366,596 316,481 291,727
Less: Cash and cash equivalents 2,065 2,605 2,921 22,171 2,594
Operating assets 378,190 377,075 363,675 294,310 289,133
Operating Liabilities
Total liabilities 286,456 287,217 283,396 247,209 228,892
Less: Debt maturing within one year 12,973 9,963 7,443 5,889 10,777
Less: Long-term debt, excluding maturing within one year 137,701 140,676 143,425 123,173 100,712
Operating liabilities 135,782 136,578 132,528 118,147 117,403
 
Net operating assets1 242,408 240,497 231,147 176,163 171,730
Balance-sheet-based aggregate accruals2 1,911 9,350 54,984 4,433
Financial Ratio
Balance-sheet-based accruals ratio3 0.79% 3.96% 27.00% 2.55%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
AT&T Inc. 4.66% -35.04% 3.99% -7.71%
T-Mobile US Inc. -1.84% 0.29% 7.95% 80.88%
Balance-Sheet-Based Accruals Ratio, Sector
Telecommunication Services 1.72% -13.79% 11.76% 8.64%
Balance-Sheet-Based Accruals Ratio, Industry
Communication Services 4.26% -3.77% 10.23% 7.81%

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 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 378,190135,782 = 242,408

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 242,408240,497 = 1,911

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,911 ÷ [(242,408 + 240,497) ÷ 2] = 0.79%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Verizon Communications Inc. improved earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Verizon Communications Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income attributable to Verizon 11,614 21,256 22,065 17,801 19,265
Less: Net cash provided by operating activities 37,475 37,141 39,539 41,768 35,746
Less: Net cash used in investing activities (23,432) (28,662) (67,153) (23,512) (17,581)
Cash-flow-statement-based aggregate accruals (2,429) 12,777 49,679 (455) 1,100
Financial Ratio
Cash-flow-statement-based accruals ratio1 -1.01% 5.42% 24.39% -0.26%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
AT&T Inc. -1.74% -6.03% 3.06% -10.23%
T-Mobile US Inc. -3.19% -1.31% 6.34% 7.80%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Telecommunication Services -1.78% -0.98% 10.19% -4.64%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Communication Services -2.47% -1.31% 6.79% -0.70%

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 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,429 ÷ [(242,408 + 240,497) ÷ 2] = -1.01%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Verizon Communications Inc. improved earnings quality from 2022 to 2023.