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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Verizon Communications Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	19,452)	28,039)	29,903)	24,311)	25,313)
Cost of capital²	7.02%	6.89%	7.14%	7.25%	7.25%
Invested capital³	304,400)	301,478)	290,004)	247,730)	220,656)

Economic profit⁴	(1,907)	7,261)	9,211)	6,360)	9,306)

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 NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 19,452 – 7.02% × 304,400 = -1,907

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Verizon Communications Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc., NOPAT calculation

US$ in millions

12 months ended:	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)
Deferred income tax expense (benefit)¹	2,388)	2,973)	4,264)	1,553)	1,232)
Increase (decrease) in allowance for credit losses²	191)	(70)	(356)	519)	(32)
Increase (decrease) in equity equivalents³	2,579)	2,903)	3,908)	2,072)	1,200)
Interest expense	5,524)	3,613)	3,485)	4,247)	4,730)
Interest expense, operating lease liability⁴	874)	822)	839)	752)	866)
Adjusted interest expense	6,398)	4,435)	4,324)	4,999)	5,596)
Tax benefit of interest expense⁵	(1,344)	(931)	(908)	(1,050)	(1,175)
Adjusted interest expense, after taxes⁶	5,054)	3,504)	3,416)	3,949)	4,421)
(Gain) loss on marketable securities	5)	—)	(1)	(9)	(1)
Interest income	(354)	(146)	(48)	(65)	(121)
Investment income, before taxes	(349)	(146)	(49)	(74)	(122)
Tax expense (benefit) of investment income⁷	73)	31)	10)	16)	26)
Investment income, after taxes⁸	(276)	(115)	(39)	(58)	(96)
Net income (loss) attributable to noncontrolling interest	481)	492)	553)	547)	523)
Net operating profit after taxes (NOPAT)	19,452)	28,039)	29,903)	24,311)	25,313)

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 Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in equity equivalents to net income attributable to Verizon.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 24,268 × 3.60% = 874

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 6,398 × 21.00% = 1,344

⁶ Addition of after taxes interest expense to net income attributable to Verizon.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 349 × 21.00% = 73

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Verizon Communications Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax provision	4,892)	6,523)	6,802)	5,619)	2,945)
Less: Deferred income tax expense (benefit)	2,388)	2,973)	4,264)	1,553)	1,232)
Add: Tax savings from interest expense	1,344)	931)	908)	1,050)	1,175)
Less: Tax imposed on investment income	73)	31)	10)	16)	26)
Cash operating taxes	3,774)	4,451)	3,436)	5,100)	2,863)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Verizon Communications Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Verizon Communications Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Debt maturing within one year	12,973)	9,963)	7,443)	5,889)	10,777)
Long-term debt, excluding maturing within one year	137,701)	140,676)	143,425)	123,173)	100,712)
Operating lease liability¹	24,268)	25,692)	27,062)	21,485)	21,654)
Total reported debt & leases	174,942)	176,331)	177,930)	150,547)	133,143)
Equity attributable to Verizon	92,430)	91,144)	81,790)	67,842)	61,395)
Net deferred tax (assets) liabilities²	45,633)	43,268)	40,517)	35,623)	34,619)
Allowance for credit losses³	1,017)	826)	896)	1,252)	733)
Equity equivalents⁴	46,650)	44,094)	41,413)	36,875)	35,352)
Accumulated other comprehensive (income) loss, net of tax⁵	1,380)	1,865)	927)	71)	(998)
Noncontrolling interests	1,369)	1,319)	1,410)	1,430)	1,440)
Adjusted equity attributable to Verizon	141,829)	138,422)	125,540)	106,218)	97,189)
Work in progress⁶	(12,092)	(12,889)	(13,057)	(8,576)	(9,234)
Marketable securities⁷	(279)	(386)	(409)	(459)	(442)
Invested capital	304,400)	301,478)	290,004)	247,730)	220,656)

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 Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of equity equivalents to equity attributable to Verizon.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of work in progress.

⁷ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Verizon Communications Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	166,994)	166,994)	÷	338,963)	=	0.49	0.49	×	8.45%	=	4.16%
Short-term and long-term debt, including finance leases³	147,701)	147,701)	÷	338,963)	=	0.44	0.44	×	7.70% × (1 – 21.00%)	=	2.65%
Operating lease liability⁴	24,268)	24,268)	÷	338,963)	=	0.07	0.07	×	3.60% × (1 – 21.00%)	=	0.20%
Total:	338,963)					1.00					7.02%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt, including finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	168,037)	168,037)	÷	334,502)	=	0.50	0.50	×	8.45%	=	4.24%
Short-term and long-term debt, including finance leases³	140,773)	140,773)	÷	334,502)	=	0.42	0.42	×	7.38% × (1 – 21.00%)	=	2.45%
Operating lease liability⁴	25,692)	25,692)	÷	334,502)	=	0.08	0.08	×	3.20% × (1 – 21.00%)	=	0.19%
Total:	334,502)					1.00					6.89%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt, including finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	223,828)	223,828)	÷	421,420)	=	0.53	0.53	×	8.45%	=	4.49%
Short-term and long-term debt, including finance leases³	170,530)	170,530)	÷	421,420)	=	0.40	0.40	×	7.79% × (1 – 21.00%)	=	2.49%
Operating lease liability⁴	27,062)	27,062)	÷	421,420)	=	0.06	0.06	×	3.10% × (1 – 21.00%)	=	0.16%
Total:	421,420)					1.00					7.14%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt, including finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	233,805)	233,805)	÷	413,326)	=	0.57	0.57	×	8.45%	=	4.78%
Short-term and long-term debt, including finance leases³	158,036)	158,036)	÷	413,326)	=	0.38	0.38	×	7.69% × (1 – 21.00%)	=	2.32%
Operating lease liability⁴	21,485)	21,485)	÷	413,326)	=	0.05	0.05	×	3.50% × (1 – 21.00%)	=	0.14%
Total:	413,326)					1.00					7.25%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt, including finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	240,707)	240,707)	÷	392,677)	=	0.61	0.61	×	8.45%	=	5.18%
Short-term and long-term debt, including finance leases³	130,316)	130,316)	÷	392,677)	=	0.33	0.33	×	7.25% × (1 – 21.00%)	=	1.90%
Operating lease liability⁴	21,654)	21,654)	÷	392,677)	=	0.06	0.06	×	4.00% × (1 – 21.00%)	=	0.17%
Total:	392,677)					1.00					7.25%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt, including finance leases. See details »

⁴ Operating lease liability. See details »

Verizon Communications Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(1,907)	7,261)	9,211)	6,360)	9,306)
Invested capital²	304,400)	301,478)	290,004)	247,730)	220,656)
Performance Ratio
Economic spread ratio³	-0.63%	2.41%	3.18%	2.57%	4.22%
Benchmarks
Economic Spread Ratio, Competitors⁴
AT&T Inc.	0.19%	-6.57%	0.94%	-6.02%	-2.28%
T-Mobile US Inc.	0.59%	-3.18%	-3.19%	-2.67%	0.69%

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 Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,907 ÷ 304,400 = -0.63%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Verizon Communications Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(1,907)	7,261)	9,211)	6,360)	9,306)
Operating revenues	133,974)	136,835)	133,613)	128,292)	131,868)
Performance Ratio
Economic profit margin²	-1.42%	5.31%	6.89%	4.96%	7.06%
Benchmarks
Economic Profit Margin, Competitors³
AT&T Inc.	0.51%	-16.83%	2.43%	-14.45%	-5.50%
T-Mobile US Inc.	1.40%	-7.46%	-7.35%	-6.91%	1.13%

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 Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenues
= 100 × -1,907 ÷ 133,974 = -1.42%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Verizon Communications Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Verizon Communications Inc. (NYSE:VZ)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin