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

Verizon Communications Inc. (NYSE:VZ)

Analysis of Operating Leases

Advanced level

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.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Verizon Communications Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total undiscounted future operating lease payments 26,593  20,734  17,875 
Discount rate1 4.10% 3.60% 3.50%
 
Total present value of future operating lease payments 22,236  17,801  15,327 

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).

1 Weighted-average discount rate, finance leases

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.10%
2019 4,043  2019 4,043  3,884 
2020 3,678  2020 3,678  3,394 
2021 3,272  2021 3,272  2,900 
2022 2,871  2022 2,871  2,445 
2023 2,522  2023 2,522  2,063 
2024 and thereafter 10,207  2024 2,522  1,982 
2025 2,522  1,904 
2026 2,522  1,829 
2027 2,522  1,757 
2028 119  80 
Total: 26,593  26,593  22,236 

Based on: 10-K (filing date: 2019-02-15).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.60%
2018 3,290  2018 3,290  3,176 
2019 3,046  2019 3,046  2,838 
2020 2,683  2020 2,683  2,413 
2021 2,301  2021 2,301  1,997 
2022 1,952  2022 1,952  1,636 
2023 and thereafter 7,462  2023 1,952  1,579 
2024 1,952  1,524 
2025 1,952  1,471 
2026 1,606  1,168 
Total: 20,734  20,734  17,801 

Based on: 10-K (filing date: 2018-02-23).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.50%
2017 2,822  2017 2,822  2,727 
2018 2,583  2018 2,583  2,411 
2019 2,304  2019 2,304  2,078 
2020 1,927  2020 1,927  1,679 
2021 1,515  2021 1,515  1,276 
2022 and thereafter 6,724  2022 1,515  1,232 
2023 1,515  1,191 
2024 1,515  1,151 
2025 1,515  1,112 
2026 664  471 
Total: 17,875  17,875  15,327 

Based on: 10-K (filing date: 2017-02-21).


Adjustments to Financial Statements for Operating Leases

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 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  —  22,236  17,801  15,327 
Total assets (adjusted) 316,481  291,727  287,065  274,944  259,507 
Adjustment to Total Debt
Total debt (as reported) 129,062  111,489  113,063  117,095  108,078 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  —  22,236  17,801  15,327 
Add: Current operating lease liabilities 3,485  3,261  —  —  — 
Add: Non-current operating lease liabilities 18,000  18,393  —  —  — 
Total debt (adjusted) 150,547  133,143  135,299  134,896  123,405 

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).

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

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Asset Turnover1
Reported total asset turnover 0.41 0.45 0.49 0.49 0.52
Adjusted total asset turnover 0.41 0.45 0.46 0.46 0.49
Debt to Equity2
Reported debt to equity 1.90 1.82 2.13 2.72 4.80
Adjusted debt to equity 2.22 2.17 2.55 3.13 5.48
Return on Assets3 (ROA)
Reported ROA 5.62% 6.60% 5.86% 11.71% 5.38%
Adjusted ROA 5.62% 6.60% 5.41% 10.95% 5.06%

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 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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Verizon Communications Inc.’s adjusted debt to equity ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

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


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 Operating Leases
Selected Financial Data (US$ in millions)
Operating revenues 128,292  131,868  130,863  126,034  125,980 
Adjusted total assets 316,481  291,727  287,065  274,944  259,507 
Activity Ratio
Adjusted total asset turnover2 0.41 0.45 0.46 0.46 0.49

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 ÷ 316,481 = 0.41

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 Debt to Equity

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 debt 129,062  111,489  113,063  117,095  108,078 
Equity attributable to Verizon 67,842  61,395  53,145  43,096  22,524 
Solvency Ratio
Debt to equity1 1.90 1.82 2.13 2.72 4.80
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 150,547  133,143  135,299  134,896  123,405 
Equity attributable to Verizon 67,842  61,395  53,145  43,096  22,524 
Solvency Ratio
Adjusted debt to equity2 2.22 2.17 2.55 3.13 5.48

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 Debt to equity = Total debt ÷ Equity attributable to Verizon
= 129,062 ÷ 67,842 = 1.90

2 Adjusted debt to equity = Adjusted total debt ÷ Equity attributable to Verizon
= 150,547 ÷ 67,842 = 2.22

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.’s adjusted debt-to-equity ratio improved from 2018 to 2019 but then slightly deteriorated 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 Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Verizon 17,801  19,265  15,528  30,101  13,127 
Adjusted total assets 316,481  291,727  287,065  274,944  259,507 
Profitability Ratio
Adjusted ROA2 5.62% 6.60% 5.41% 10.95% 5.06%

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 × Net income attributable to Verizon ÷ Adjusted total assets
= 100 × 17,801 ÷ 316,481 = 5.62%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Verizon Communications Inc.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.