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Verizon Communications Inc. (VZ) | Analysis of Investments

Investment Accounting Policy

Cash and Cash Equivalents

Verizon considers all highly liquid investments with a maturity of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates quoted market value and include amounts held in money market funds.

Marketable Securities

Verizon has investments in marketable securities, which are considered "available-for-sale" under the provisions of the accounting standard for certain debt and equity securities, and are included in the accompanying consolidated balance sheets in Short-term investments, Investments in unconsolidated businesses or Other assets. Verizon continually evaluate investments in marketable securities for impairment due to declines in market value considered to be other-than-temporary. That evaluation includes, in addition to persistent, declining stock prices, general economic and company-specific evaluations. In the event of a determination that a decline in market value is other-than-temporary, a charge to earnings is recorded for the loss, and a new cost basis in the investment is established.

Source: Verizon Communications Inc., Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

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Verizon Communications Inc., adjustment to Net Income Attributable To Verizon

USD $ in millions

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  12 months ended Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007
chart Net income attributable to Verizon (as reported)
chart Add: Unrealized gains (losses) on marketable securities
chart Net income attributable to Verizon (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

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Verizon Communications Inc., adjusted ratios

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    Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007
  Net Profit Margin
chart Reported net profit margin % % % % %
chart Adjusted net profit margin % % % % %
  Return on Equity (ROE)
chart Reported ROE % % % % %
chart Adjusted ROE % % % % %
  Return on Assets (ROA)
chart Reported ROA % % % % %
chart Adjusted ROA % % % % %
Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Verizon Communications Inc.'s adjusted net profit margin deteriorated from 2009 to 2010 and from 2010 to 2011.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders' equity. Verizon Communications Inc.'s adjusted ROE deteriorated from 2009 to 2010 and from 2010 to 2011.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Verizon Communications Inc.'s adjusted ROA deteriorated from 2009 to 2010 and from 2010 to 2011.

Adjusted Net Profit Margin

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    Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007
  As Reported
chart Net income attributable to Verizon (USD $ in millions)
chart Operating revenues (USD $ in millions)
   
chart Net profit margin1 % % % % %
  Adjusted: Mark to Market Available-for-sale Securities
chart Adjusted net income attributable to Verizon (USD $ in millions)
chart Operating revenues (USD $ in millions)
   
chart Adjusted net profit margin2 % % % % %

2011 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 × ÷ = %

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Verizon Communications Inc.'s adjusted net profit margin deteriorated from 2009 to 2010 and from 2010 to 2011.

Adjusted Return On Equity (ROE)

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    Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007
  As Reported
chart Net income attributable to Verizon (USD $ in millions)
chart Equity attributable to Verizon (USD $ in millions)
   
chart ROE1 % % % % %
  Adjusted: Mark to Market Available-for-sale Securities
chart Adjusted net income attributable to Verizon (USD $ in millions)
chart Equity attributable to Verizon (USD $ in millions)
   
chart Adjusted ROE2 % % % % %

2011 Calculations

1 ROE = 100 × Net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × ÷ = %

2 Adjusted ROE = 100 × Adjusted net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × ÷ = %

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders' equity. Verizon Communications Inc.'s adjusted ROE deteriorated from 2009 to 2010 and from 2010 to 2011.

Adjusted Return On Assets (ROA)

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    Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007
  As Reported
chart Net income attributable to Verizon (USD $ in millions)
chart Total assets (USD $ in millions)
   
chart ROA1 % % % % %
  Adjusted: Mark to Market Available-for-sale Securities
chart Adjusted net income attributable to Verizon (USD $ in millions)
chart Total assets (USD $ in millions)
   
chart Adjusted ROA2 % % % % %

2011 Calculations

1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × ÷ = %

2 Adjusted ROA = 100 × Adjusted net income attributable to Verizon ÷ Total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Verizon Communications Inc.'s adjusted ROA deteriorated from 2009 to 2010 and from 2010 to 2011.

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