Stock Analysis on Net

Verizon Communications Inc. (NYSE:VZ)

Analysis of Operating Leases

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An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Adjustments to Financial Statements for Operating Leases

Verizon Communications Inc., adjustments to financial statements

US$ in millions

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported) 366,596  316,481  291,727  264,829  257,143 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  —  —  22,236  17,801 
Total assets (adjusted) 366,596  316,481  291,727  287,065  274,944 
Adjustment to Total Debt
Total debt (as reported) 150,868  129,062  111,489  113,063  117,095 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  —  —  22,236  17,801 
Add: Current operating lease liabilities 3,859  3,485  3,261  —  — 
Add: Non-current operating lease liabilities 23,203  18,000  18,393  —  — 
Total debt (adjusted) 177,930  150,547  133,143  135,299  134,896 

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Verizon Communications Inc., adjusted financial ratios

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Total Asset Turnover1
Reported total asset turnover 0.36 0.41 0.45 0.49 0.49
Adjusted total asset turnover 0.36 0.41 0.45 0.46 0.46
Debt to Equity2
Reported debt to equity 1.84 1.90 1.82 2.13 2.72
Adjusted debt to equity 2.18 2.22 2.17 2.55 3.13
Return on Assets3 (ROA)
Reported ROA 6.02% 5.62% 6.60% 5.86% 11.71%
Adjusted ROA 6.02% 5.62% 6.60% 5.41% 10.95%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc. adjusted total asset turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Verizon Communications Inc. adjusted debt to equity ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc. adjusted ROA deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

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


Adjusted Total Asset Turnover

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Operating revenues 133,613  128,292  131,868  130,863  126,034 
Total assets 366,596  316,481  291,727  264,829  257,143 
Activity Ratio
Total asset turnover1 0.36 0.41 0.45 0.49 0.49
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Operating revenues 133,613  128,292  131,868  130,863  126,034 
Adjusted total assets 366,596  316,481  291,727  287,065  274,944 
Activity Ratio
Adjusted total asset turnover2 0.36 0.41 0.45 0.46 0.46

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Total asset turnover = Operating revenues ÷ Total assets
= 133,613 ÷ 366,596 = 0.36

2 Adjusted total asset turnover = Operating revenues ÷ Adjusted total assets
= 133,613 ÷ 366,596 = 0.36

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Verizon Communications Inc. adjusted total asset turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Adjusted Debt to Equity

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Total debt 150,868  129,062  111,489  113,063  117,095 
Equity attributable to Verizon 81,790  67,842  61,395  53,145  43,096 
Solvency Ratio
Debt to equity1 1.84 1.90 1.82 2.13 2.72
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 177,930  150,547  133,143  135,299  134,896 
Equity attributable to Verizon 81,790  67,842  61,395  53,145  43,096 
Solvency Ratio
Adjusted debt to equity2 2.18 2.22 2.17 2.55 3.13

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Debt to equity = Total debt ÷ Equity attributable to Verizon
= 150,868 ÷ 81,790 = 1.84

2 Adjusted debt to equity = Adjusted total debt ÷ Equity attributable to Verizon
= 177,930 ÷ 81,790 = 2.18

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Verizon Communications Inc. adjusted debt-to-equity ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Adjusted Return on Assets (ROA)

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 22,065  17,801  19,265  15,528  30,101 
Total assets 366,596  316,481  291,727  264,829  257,143 
Profitability Ratio
ROA1 6.02% 5.62% 6.60% 5.86% 11.71%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 22,065  17,801  19,265  15,528  30,101 
Adjusted total assets 366,596  316,481  291,727  287,065  274,944 
Profitability Ratio
Adjusted ROA2 6.02% 5.62% 6.60% 5.41% 10.95%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × 22,065 ÷ 366,596 = 6.02%

2 Adjusted ROA = 100 × Net income attributable to Verizon ÷ Adjusted total assets
= 100 × 22,065 ÷ 366,596 = 6.02%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc. adjusted ROA deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.