Profitability Analysis

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).


Ratios (Summary)

Verizon Communications Inc., profitability ratios

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Return on Sales
Gross profit margin 62.76% 60.05% 58.62% 58.57% 58.91%
Operating profit margin 26.52% 11.36% 11.62% 13.74% 13.01%
Net profit margin 9.54% 0.76% 2.17% 2.39% 3.39%
Return on Investment
Return on equity (ROE) 29.60% 2.64% 6.68% 6.61% 8.78%
Return on assets (ROA) 4.19% 0.39% 1.04% 1.16% 1.61%

Source: Based on data from Verizon Communications Inc. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Verizon Communications Inc.'s gross profit margin improved from 2011 to 2012 and from 2012 to 2013.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Verizon Communications Inc.'s operating profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Verizon Communications Inc.'s net profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
ROE A profitability ratio calculated as net income divided by shareholders' equity. Verizon Communications Inc.'s ROE deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
ROA A profitability ratio calculated as net income divided by total assets. Verizon Communications Inc.'s ROA deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Gross Profit Margin

Verizon Communications Inc., gross profit margin calculation

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Gross profit 75,663  69,571  65,000  62,416  63,509 
Operating revenues 120,550  115,846  110,875  106,565  107,808 
Ratio
Gross profit margin1 62.76% 60.05% 58.62% 58.57% 58.91%

Source: Based on data from Verizon Communications Inc. Annual Reports

2013 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Operating revenues
= 100 × 75,663 ÷ 120,550 = 62.76%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Verizon Communications Inc.'s gross profit margin improved from 2011 to 2012 and from 2012 to 2013.

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Operating Profit Margin

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

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Operating income 31,968  13,160  12,880  14,645  14,027 
Operating revenues 120,550  115,846  110,875  106,565  107,808 
Ratio
Operating profit margin1 26.52% 11.36% 11.62% 13.74% 13.01%
Benchmarks
Operating Profit Margin, Competitors
AT&T Inc. 23.67% 10.20% 7.27% 15.75% 17.47%
Operating Profit Margin, Sector
Fixed Line Telecommunications 25.05% 10.75% 9.30% 14.82% 15.39%

Source: Based on data from Verizon Communications Inc. Annual Reports

2013 Calculations

1 Operating profit margin = 100 × Operating income ÷ Operating revenues
= 100 × 31,968 ÷ 120,550 = 26.52%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Verizon Communications Inc.'s operating profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Net Profit Margin

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

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to Verizon 11,497  875  2,404  2,549  3,651 
Operating revenues 120,550  115,846  110,875  106,565  107,808 
Ratio
Net profit margin1 9.54% 0.76% 2.17% 2.39% 3.39%
Benchmarks
Net Profit Margin, Competitors
AT&T Inc. 14.17% 5.70% 3.11% 15.98% 10.19%
Net Profit Margin, Sector
Fixed Line Telecommunications 11.93% 3.35% 2.67% 9.71% 7.01%

Source: Based on data from Verizon Communications Inc. Annual Reports

2013 Calculations

1 Net profit margin = 100 × Net income attributable to Verizon ÷ Operating revenues
= 100 × 11,497 ÷ 120,550 = 9.54%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Verizon Communications Inc.'s net profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Return on Equity (ROE)

Verizon Communications Inc., ROE calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to Verizon 11,497  875  2,404  2,549  3,651 
Equity attributable to Verizon 38,836  33,157  35,970  38,569  41,606 
Ratio
ROE1 29.60% 2.64% 6.68% 6.61% 8.78%
Benchmarks
ROE, Competitors
AT&T Inc. 20.06% 7.86% 3.74% 17.79% 12.30%
ROE, Sector
Fixed Line Telecommunications 22.91% 6.48% 4.49% 14.92% 11.28%

Source: Based on data from Verizon Communications Inc. Annual Reports

2013 Calculations

1 ROE = 100 × Net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × 11,497 ÷ 38,836 = 29.60%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. Verizon Communications Inc.'s ROE deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Return on Assets (ROA)

Verizon Communications Inc., ROA calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to Verizon 11,497  875  2,404  2,549  3,651 
Total assets 274,098  225,222  230,461  220,005  227,251 
Ratio
ROA1 4.19% 0.39% 1.04% 1.16% 1.61%
Benchmarks
ROA, Competitors
AT&T Inc. 6.57% 2.67% 1.46% 7.40% 4.66%
ROA, Sector
Fixed Line Telecommunications 5.39% 1.64% 1.27% 4.59% 3.26%

Source: Based on data from Verizon Communications Inc. Annual Reports

2013 Calculations

1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × 11,497 ÷ 274,098 = 4.19%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. Verizon Communications Inc.'s ROA deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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