Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Verizon Communications Inc. (NYSE:VZ)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure

Verizon Communications Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Wireless licenses 96,097  95,059  94,130  88,417  86,673 
Goodwill 24,773  24,389  24,614  29,172  27,205 
Customer lists 4,021  3,896  3,951  3,621  2,884 
Non-network internal-use software 21,685  20,530  18,603  18,010  16,135 
Other 1,771  1,967  1,988  2,474  1,854 
Other intangible assets, gross amount 27,477  26,393  24,542  24,105  20,873 
Accumulated amortization (18,064) (16,895) (14,767) (13,858) (11,976)
Other intangible assets, net amount 9,413  9,498  9,775  10,247  8,897 
Wireless licenses, goodwill and other intangible assets 130,283  128,946  128,519  127,836  122,775 

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Verizon Communications Inc.’s goodwill decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Wireless licenses, goodwill and other intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Verizon Communications Inc.’s wireless licenses, goodwill and other intangible assets increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Goodwill

Verizon Communications Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 316,481  291,727  264,829  257,143  244,180 
Less: Goodwill 24,773  24,389  24,614  29,172  27,205 
Total assets (adjusted) 291,708  267,338  240,215  227,971  216,975 
Adjustment to Equity Attributable To Verizon
Equity attributable to Verizon (as reported) 67,842  61,395  53,145  43,096  22,524 
Less: Goodwill 24,773  24,389  24,614  29,172  27,205 
Equity attributable to Verizon (adjusted) 43,069  37,006  28,531  13,924  (4,681)
Adjustment to Net Income Attributable To Verizon
Net income attributable to Verizon (as reported) 17,801  19,265  15,528  30,101  13,127 
Add: Media goodwill impairment —  186  4,591  —  — 
Net income attributable to Verizon (adjusted) 17,801  19,451  20,119  30,101  13,127 

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

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

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Verizon Communications Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net Profit Margin
Reported net profit margin 13.88% 14.61% 11.87% 23.88% 10.42%
Adjusted net profit margin 13.88% 14.75% 15.37% 23.88% 10.42%
Total Asset Turnover
Reported total asset turnover 0.41 0.45 0.49 0.49 0.52
Adjusted total asset turnover 0.44 0.49 0.54 0.55 0.58
Financial Leverage
Reported financial leverage 4.66 4.75 4.98 5.97 10.84
Adjusted financial leverage 6.77 7.22 8.42 16.37 —
Return on Equity (ROE)
Reported ROE 26.24% 31.38% 29.22% 69.85% 58.28%
Adjusted ROE 41.33% 52.56% 70.52% 216.18% —
Return on Assets (ROA)
Reported ROA 5.62% 6.60% 5.86% 11.71% 5.38%
Adjusted ROA 6.10% 7.28% 8.38% 13.20% 6.05%

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

Financial 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 ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Verizon Communications Inc.’s adjusted financial leverage ratio decreased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Verizon Communications Inc.’s adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Verizon Communications Inc.’s adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.

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

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 17,801  19,265  15,528  30,101  13,127 
Operating revenues 128,292  131,868  130,863  126,034  125,980 
Profitability Ratio
Net profit margin1 13.88% 14.61% 11.87% 23.88% 10.42%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Verizon 17,801  19,451  20,119  30,101  13,127 
Operating revenues 128,292  131,868  130,863  126,034  125,980 
Profitability Ratio
Adjusted net profit margin2 13.88% 14.75% 15.37% 23.88% 10.42%

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

2020 Calculations

1 Net profit margin = 100 × Net income attributable to Verizon ÷ Operating revenues
= 100 × 17,801 ÷ 128,292 = 13.88%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Verizon ÷ Operating revenues
= 100 × 17,801 ÷ 128,292 = 13.88%

Profitability 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 ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Operating revenues 128,292  131,868  130,863  126,034  125,980 
Total assets 316,481  291,727  264,829  257,143  244,180 
Activity Ratio
Total asset turnover1 0.41 0.45 0.49 0.49 0.52
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Operating revenues 128,292  131,868  130,863  126,034  125,980 
Adjusted total assets 291,708  267,338  240,215  227,971  216,975 
Activity Ratio
Adjusted total asset turnover2 0.44 0.49 0.54 0.55 0.58

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

2020 Calculations

1 Total asset turnover = Operating revenues ÷ Total assets
= 128,292 ÷ 316,481 = 0.41

2 Adjusted total asset turnover = Operating revenues ÷ Adjusted total assets
= 128,292 ÷ 291,708 = 0.44

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 316,481  291,727  264,829  257,143  244,180 
Equity attributable to Verizon 67,842  61,395  53,145  43,096  22,524 
Solvency Ratio
Financial leverage1 4.66 4.75 4.98 5.97 10.84
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 291,708  267,338  240,215  227,971  216,975 
Adjusted equity attributable to Verizon 43,069  37,006  28,531  13,924  (4,681)
Solvency Ratio
Adjusted financial leverage2 6.77 7.22 8.42 16.37 —

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

2020 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to Verizon
= 316,481 ÷ 67,842 = 4.66

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to Verizon
= 291,708 ÷ 43,069 = 6.77

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Verizon Communications Inc.’s adjusted financial leverage ratio decreased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 17,801  19,265  15,528  30,101  13,127 
Equity attributable to Verizon 67,842  61,395  53,145  43,096  22,524 
Profitability Ratio
ROE1 26.24% 31.38% 29.22% 69.85% 58.28%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Verizon 17,801  19,451  20,119  30,101  13,127 
Adjusted equity attributable to Verizon 43,069  37,006  28,531  13,924  (4,681)
Profitability Ratio
Adjusted ROE2 41.33% 52.56% 70.52% 216.18% —

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

2020 Calculations

1 ROE = 100 × Net income attributable to Verizon ÷ Equity attributable to Verizon
= 100 × 17,801 ÷ 67,842 = 26.24%

2 Adjusted ROE = 100 × Adjusted net income attributable to Verizon ÷ Adjusted equity attributable to Verizon
= 100 × 17,801 ÷ 43,069 = 41.33%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Verizon Communications Inc.’s adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 17,801  19,265  15,528  30,101  13,127 
Total assets 316,481  291,727  264,829  257,143  244,180 
Profitability Ratio
ROA1 5.62% 6.60% 5.86% 11.71% 5.38%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Verizon 17,801  19,451  20,119  30,101  13,127 
Adjusted total assets 291,708  267,338  240,215  227,971  216,975 
Profitability Ratio
Adjusted ROA2 6.10% 7.28% 8.38% 13.20% 6.05%

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-21).

2020 Calculations

1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × 17,801 ÷ 316,481 = 5.62%

2 Adjusted ROA = 100 × Adjusted net income attributable to Verizon ÷ Adjusted total assets
= 100 × 17,801 ÷ 291,708 = 6.10%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Verizon Communications Inc.’s adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.