Analysis of Investments
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- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Verizon Communications Inc., adjustment to net income attributable to Verizon
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Reported net income attributable to Verizon fluctuated over the five-year period, exhibiting a decrease from 2021 to 2022, a significant decline in 2023, and subsequent increases in 2024 and 2025. The adjusted net income attributable to Verizon mirrors this trend, demonstrating similar patterns of change across the same timeframe.
- Overall Trend
- The difference between reported and adjusted net income remains consistently small throughout the period, suggesting that adjustments related to mark-to-market changes in available-for-sale securities have a limited impact on the overall net income figure. The largest absolute difference between reported and adjusted net income occurs in 2023, coinciding with the lowest reported net income of the period.
- Year-over-Year Changes
- From 2021 to 2022, both reported and adjusted net income decreased by approximately US$809 million. A substantial decrease is observed from 2022 to 2023, with reported net income falling by approximately US$9,642 million and adjusted net income decreasing by US$9,610 million. This represents the most significant year-over-year decline within the observed period. Subsequently, both metrics increased from 2023 to 2024, with reported net income rising by approximately US$5,892 million and adjusted net income increasing by US$5,889 million. The increase continued from 2024 to 2025, though at a slower pace, with reported net income increasing by US$328 million and adjusted net income increasing by US$3 million.
- Adjustment Impact
- The adjustment to net income, stemming from mark-to-market changes in available-for-sale securities, is consistently minor, ranging from a US$7 million adjustment in 2021 to a US$3 million adjustment in 2025. This indicates that fluctuations in the fair value of these securities do not materially alter the reported net income attributable to Verizon. The adjustments are all positive, suggesting that, on balance, unrealized gains on available-for-sale securities are being recognized.
In summary, while reported net income experiences considerable variation, the adjustments related to available-for-sale securities are consistently small and do not significantly alter the overall net income picture. The largest impact of these adjustments is observed in 2023, coinciding with the lowest reported net income during the period.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Verizon Communications Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The period under review demonstrates fluctuations in profitability and returns. Reported and adjusted profitability ratios exhibit similar trends, suggesting that mark-to-market adjustments of available-for-sale securities have a minimal impact on the observed performance. A significant decline in profitability ratios is evident between 2021 and 2022, followed by a more substantial drop in 2023, before a partial recovery occurs in 2024 and 2025.
- Net Profit Margin
- Both reported and adjusted net profit margins decreased from 16.51% in 2021 to 15.53% in 2022. A more pronounced decrease occurred in 2023, falling to 8.67%. Margins partially recovered in 2024 (12.99%) and 2025 (12.43%), but did not return to levels seen in the earlier years of the period. The consistency between reported and adjusted values indicates that changes in the fair value of available-for-sale securities did not materially affect net profit margin.
- Return on Equity (ROE)
- Reported and adjusted ROE mirrored the trend observed in net profit margin. ROE declined from 26.98% in 2021 to 23.32% in 2022, then experienced a substantial decrease to 12.57% in 2023. A recovery was observed in 2024 (17.64%) and 2025 (16.44%), though ROE remained below the 2021 and 2022 levels. The negligible difference between reported and adjusted ROE suggests that changes in available-for-sale securities did not significantly influence shareholder returns.
- Return on Assets (ROA)
- ROA followed a similar pattern to the other ratios. It decreased from 6.02% in 2021 to 5.60% in 2022, with a more significant decline to 3.05% in 2023. ROA showed some improvement in 2024 (4.55%) and 2025 (4.25%), but remained considerably lower than the initial values. The minimal variance between reported and adjusted ROA reinforces the observation that mark-to-market adjustments of available-for-sale securities had a limited impact on asset utilization efficiency.
Overall, the observed trends suggest a period of declining profitability and returns, with a partial recovery towards the end of the reviewed timeframe. The consistency between reported and adjusted ratios indicates that fluctuations in the value of available-for-sale securities did not materially alter the core profitability and return metrics.
Verizon Communications Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 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 × ÷ =
The period between 2021 and 2025 demonstrates fluctuations in profitability metrics. Reported net income attributable to Verizon initially decreased from 2021 to 2023, before recovering in 2024 and 2025, remaining relatively stable between those two years. A similar pattern is observed in adjusted net income attributable to Verizon. The corresponding net profit margins, both reported and adjusted, mirror these income trends.
- Reported Net Profit Margin
- The reported net profit margin experienced a decline from 16.51% in 2021 to 8.67% in 2023. This represents a substantial contraction in profitability during this timeframe. A subsequent recovery occurred, with the margin increasing to 12.99% in 2024 and stabilizing at 12.43% in 2025. While a recovery is evident, the margin did not return to the levels observed in 2021 and 2022.
- Adjusted Net Profit Margin
- The adjusted net profit margin exhibited an identical trend to the reported net profit margin. It decreased from 16.51% in 2021 to 8.67% in 2023, followed by an increase to 12.99% in 2024 and a stabilization at 12.43% in 2025. The consistency between the reported and adjusted margins suggests that adjustments made to net income did not significantly alter the overall profitability picture.
- Relationship between Net Income and Margin
- The correlation between net income and net profit margin is strong. The decrease in net income between 2021 and 2023 directly contributed to the decline in both reported and adjusted net profit margins. Conversely, the increase in net income from 2023 to 2025 drove the subsequent margin improvement. This indicates that changes in profitability are primarily influenced by fluctuations in net income.
- Overall Trend
- The period under review shows a cyclical pattern. Initial profitability was strong in 2021 and 2022, followed by a significant downturn in 2023, and a partial recovery in 2024 and 2025. The stabilization of margins at 12.43% in both 2024 and 2025 suggests a potential leveling off of profitability, although further monitoring is needed to confirm this trend.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 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 × ÷ =
The period under review demonstrates fluctuations in both reported and adjusted net income attributable to Verizon, which correspondingly impact reported and adjusted return on equity (ROE). A general pattern of decline followed by recovery is observable across the five-year span.
- Net Income
- Reported net income attributable to Verizon decreased from US$22,065 million in 2021 to US$21,256 million in 2022. A significant decline occurred in 2023, falling to US$11,614 million. A recovery is then noted in 2024, with net income rising to US$17,506 million, and remaining relatively stable in 2025 at US$17,174 million. Adjusted net income mirrors this trend closely, exhibiting minimal divergence from reported figures throughout the period.
- Return on Equity (ROE)
- Reported ROE followed a similar trajectory to net income. It decreased from 26.98% in 2021 to 23.32% in 2022, then experienced a substantial drop to 12.57% in 2023. A recovery began in 2024, with ROE increasing to 17.64%, and continued into 2025, reaching 16.44%. Adjusted ROE exhibited nearly identical values to reported ROE in each year, indicating that adjustments to net income had a negligible impact on the overall ROE calculation.
The substantial decrease in both net income and ROE in 2023 warrants further investigation to determine the underlying causes. The subsequent recovery in 2024 and stabilization in 2025 suggest a potential stabilization of performance, although ROE remains below the levels observed in 2021 and 2022. The consistency between reported and adjusted ROE suggests that the adjustments made to net income are not materially altering the overall profitability picture.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 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 × ÷ =
The period between 2021 and 2025 demonstrates fluctuations in reported and adjusted net income attributable to Verizon, which correspondingly impact reported and adjusted return on assets (ROA). While reported and adjusted net income figures are nearly identical each year, the ROA figures show a distinct pattern of decline followed by partial recovery.
- Reported Net Income
- Reported net income attributable to Verizon decreased from US$22,065 million in 2021 to US$21,256 million in 2022. A significant decline was then observed in 2023, falling to US$11,614 million. This was followed by a substantial increase in 2024 to US$17,506 million, and a slight decrease in 2025 to US$17,174 million.
- Adjusted Net Income
- Adjusted net income attributable to Verizon mirrors the trend of reported net income closely. It decreased from US$22,056 million in 2021 to US$21,231 million in 2022, then declined sharply to US$11,621 million in 2023. A similar recovery occurred in 2024, reaching US$17,503 million, with a minor decrease to US$17,179 million in 2025. The consistency between reported and adjusted net income suggests limited adjustments are being made.
- Reported ROA
- Reported ROA experienced a decline from 6.02% in 2021 to 5.60% in 2022. The most substantial decrease occurred between 2022 and 2023, with ROA falling to 3.05%. A partial recovery was seen in 2024, increasing to 4.55%, and continued modestly in 2025 to 4.25%.
- Adjusted ROA
- Adjusted ROA follows the same trajectory as reported ROA. It decreased from 6.02% in 2021 to 5.59% in 2022, then dropped significantly to 3.06% in 2023. The ROA then increased to 4.55% in 2024 and remained stable at 4.25% in 2025. The near-identical values for reported and adjusted ROA indicate that the adjustments to net income do not materially impact the overall return on assets calculation.
The decline in ROA between 2022 and 2023 warrants further investigation, as it suggests a decrease in profitability relative to the asset base. The subsequent recovery in 2024 and 2025 indicates a potential stabilization, but the ROA remains below the levels observed in 2021 and 2022. The consistency between reported and adjusted ROA suggests that the underlying drivers of these trends are related to core operational performance rather than accounting adjustments.