Verizon Communications Inc. (NYSE:VZ)

Return on Assets (ROA)

The return on assets shows a generally fluctuating trend over the observed periods. Starting from the earliest available data in March 2020, the ROA was 5.62% and increased slightly to a peak of 6.24% by December 2020. Following this peak, the ROA gradually declined with some variability, falling to 5.14% in December 2022 before experiencing a modest recovery in early 2023. However, in 2024, the ROA demonstrated a notable downward trend, reaching a low near 2.57% by December 2024 before improving slightly to 4.68% in March 2025. This suggests periods of operational efficiency fluctuations, with a marked decline in asset profitability during the later periods.

Financial Leverage

Financial leverage exhibited a consistent downward trend over the entire period. Starting from a high of 4.89 in March 2020, the leverage ratio steadily decreased to 3.78 by March 2025. This decline indicates a reduction in the reliance on debt financing relative to equity or assets, reflecting a possible strategic move toward deleveraging or strengthening the equity base. The reduction is steady without abrupt changes, suggesting an intentional and gradual adjustment in capital structure.

Return on Equity (ROE)

Return on equity showed a pattern of initial growth followed by a sustained decline. From March 2020, where ROE was around 26.24%, it rose to a high of 28.61% by December 2020. After this peak, there was a notable and continuous decrease, dropping to a low of approximately 10.17% in December 2024. A slight rebound to around 17.66% by March 2025 was observed. This pattern suggests that shareholder returns were strong early in the period but diminished significantly, which may correlate with the decreasing asset returns and financial leverage, potentially reflecting challenges in maintaining profitability or capital efficiency.

Overall Interpretation

The trends indicate that while the company started with strong profitability and a high level of financial leverage, there was a gradual shift toward lower leverage over time. This deleveraging coincided with declining returns on assets and equity, especially pronounced in the most recent periods. The fall in ROA and ROE suggests reduced profit generation from both assets and equity holders, which may be due to operational challenges, increased costs, or competitive pressures. The recovery signs toward early 2025 could indicate initial improvements or the effects of strategic adjustments impacting financial performance.

Net Profit Margin

The net profit margin shows an overall upward trend from the first recorded quarter in March 2021, starting at 13.88% and increasing to a peak of 16.51% in March 2022. Following this peak, there is a gradual decline, reaching a low of 7.3% in December 2024. However, it recovers to 13.14% by March 2025. This pattern indicates periods of improvement in profitability followed by some pressure on margins before a partial recovery.

Asset Turnover

Asset turnover remains relatively stable throughout the observed periods, fluctuating narrowly around 0.35 to 0.41. It starts at 0.41 in March 2021, decreases slightly to a recurring 0.35–0.36 range from late 2021 onwards, suggesting consistent efficiency in asset utilization without significant volatility.

Financial Leverage

Financial leverage shows a clear downward trend from a high of 4.89 in March 2020 to 3.78 by March 2025. This steady reduction indicates a consistent decrease in the company’s reliance on debt relative to equity over the five-year period, suggesting a potential strengthening of the equity base or deleveraging strategy.

Return on Equity (ROE)

ROE initially increases, starting from 26.24% in March 2021 and peaking at 28.61% in December 2021. Afterward, it trends downward to a low of 10.17% by December 2024, before partially recovering to 17.66% in March 2025. The decline in ROE aligns with the decreasing net profit margin and financial leverage, reflecting a possible reduction in profitability and leverage impact on equity returns.

The analysis of the quarterly financial ratios over the periods from March 31, 2020, through March 31, 2025, reveals several notable trends and shifts in the company's financial performance and efficiency metrics.

Tax Burden

The tax burden ratio remained relatively stable, fluctuating narrowly around 0.76 to 0.78 in most quarters from March 2021 onward. A slight decrease is seen in the quarters ending from December 2023 through December 2024, with values around 0.69 to 0.70, before rising again to approximately 0.77 by March 2025. This indicates a consistent effective tax rate with minor volatility toward the end of the period.

Interest Burden

Interest burden showed a gradual decline over the years. Initial ratios were around 0.85-0.88 in 2020 and 2021, improving slightly to 0.89-0.90. However, from late 2023 to 2024, a decline is observed with values dropping to as low as 0.68 before rising modestly to 0.78 by March 2025. This trend suggests improved interest cost management earlier, but some increased pressure or costs later, leading to reduced interest burden coverage during this interval.

EBIT Margin

The EBIT margin exhibited fluctuations with an overall downward trajectory in the latter part of the analysis. Margins were relatively high from 2020 to 2022, mostly staying in the low 20% range, peaking near 24.43% at the end of 2020. The margin declined significantly during 2023 and 2024, reaching a low near 15.44% by December 2024, before rebounding sharply to approximately 21.65% by in early 2025. This pattern indicates volatility in operating profitability, with a notable dip and subsequent recovery.

Asset Turnover

The asset turnover ratio remained largely flat throughout the entire period, consistently around 0.35 to 0.41. Minor declines are noted over time from 0.41 in early 2020 to about 0.35 in the later quarters, reflecting stable but slightly decreasing efficiency in asset utilization to generate revenue.

Financial Leverage

Financial leverage showed a steady decline from 4.89 in March 2020 down to approximately 3.78 by March 2025. This gradual decrease indicates a reduction in reliance on debt or other leveraged capital sources over the analyzed period, suggesting an improved capital structure and risk profile.

Return on Equity (ROE)

ROE followed a downward trend, dropping from a peak of around 28.61% at the end of 2020 to a low point near 10.17% in December 2024. A moderate recovery is observed in early 2025 where ROE increased to about 17.66%. This movement corresponds with the observed decreases in EBIT margin and financial leverage, reflecting a decline in overall profitability and shareholder returns in the mid-period, with partial recuperation at the end.

In summary, the company's financial performance demonstrates a period of solid profitability and efficiency in early years, followed by a decline in operating margins and returns on equity around 2023-2024, accompanied by stable asset turnover and improving financial leverage ratios. The end of the period reflects signs of recovery in key profitability metrics.

Net Profit Margin

The net profit margin was not reported for the initial three quarters but shows a consistent upward trend starting from March 31, 2020, when it was 13.88%. It increased steadily, reaching a peak of 16.51% by March 31, 2022. Following this peak, there was a gradual decline to 14.22% at the end of 2022, then a fluctuation around the mid-15% range through 2023. A notable decrease occurred in early 2024, dropping to 7.3% by December 31, 2024, before rebounding to approximately 13% by March 31, 2025. This pattern suggests periods of both growth and contraction in profitability, with a significant dip in 2024.

Asset Turnover

Asset turnover, which measures the efficiency of asset use in generating revenue, remained relatively stable over the reported periods. Starting at 0.41 in March 31, 2020, it experienced a slight decline to 0.36 by March 31, 2022. From that point onward, the ratio maintained a consistent value around 0.35 to 0.36, indicating a steady utilization of assets without significant improvement or deterioration.

Return on Assets (ROA)

Return on assets showed a general increase from 5.62% as of March 31, 2020, to a peak of 6.24% at the end of 2020. Subsequently, ROA declined gradually throughout 2021 and 2022, dropping to around 5.14% by December 31, 2022. The ratio remained in the mid-5% range during 2023 but saw a sharp decrease in early 2024, falling to as low as 2.57% by December 31, 2024. A partial recovery is observed by March 31, 2025, with ROA rising back to about 4.55%. This indicates a period of declining efficiency in asset utilization during 2023 and 2024, followed by signs of improvement.

Tax Burden

The tax burden ratio maintains relative stability from the first recorded quarter in March 2021 through March 2025, mostly oscillating between 0.69 and 0.78. It starts at approximately 0.76 and shows minor fluctuations around this level, ending slightly higher at 0.77 in the first quarter of 2025. This indicates consistent tax efficiency over the period with no significant volatility.

Interest Burden

The interest burden ratio exhibits a gradual decline over the observed timeframe. It begins around 0.85 in early 2021, reaching a peak near 0.9 in mid-2021, then steadily decreases to about 0.68 by late 2024. A slight recovery occurs near the end of the period, with a ratio of 0.78 in early 2025. This trend suggests improving management of interest expenses or reduced debt service costs in the later periods.

EBIT Margin

The EBIT margin shows a generally stable pattern with mild fluctuations. Initially, it increases from 21.57% in March 2021 to peaks above 24% toward the end of 2021 but declines gradually to the mid-teens by the end of 2024. There is a noticeable recovery towards the end of the period, with margins rising to around 21.88% by March 2025. These movements indicate varying operational profitability, with an interim downturn possibly related to external or internal challenges followed by a return to stronger earnings before interest and taxes.

Asset Turnover

Asset turnover remains relatively constant throughout the period, fluctuating slightly around 0.35 to 0.41. A modest decline is observed from 0.41 in early 2021 to approximately 0.35 in late 2024, suggesting limited changes in the efficiency of asset utilization in generating sales. The slight rebound to 0.36 by early 2025 points to a stable asset management performance.

Return on Assets (ROA)

The return on assets experiences more notable variability. Beginning at 5.62% in Q1 2021, it climbs to a peak above 6% by late 2021 before declining significantly to around 2.57% toward the end of 2024. A partial recovery occurs through early 2025, with ROA increasing to approximately 4.68%. This variation reflects changes in profitability relating to asset utilization and expense management over the quarters, highlighting a period of lower asset profitability followed by improvement.

Tax Burden Ratio

The tax burden ratio remains relatively stable throughout the observed periods, fluctuating slightly around 0.76 to 0.77 from 2021 to late 2023. Starting in early 2024, there is a small decline to approximately 0.69-0.7, followed by an increase back to around 0.77 by the first quarter of 2025. Overall, the ratio indicates consistent tax expense relative to pre-tax income with limited volatility.

Interest Burden Ratio

The interest burden ratio shows a gradual decline over time. From 2021 through early 2023, the ratio hovers near 0.85-0.9, indicating a moderate charge of interest relative to operating income. However, there is a notable decrease starting in early 2024, dropping to a low near 0.68 by the end of 2024, which suggests increased interest expenses or lower operating income before interest. The ratio recovers somewhat to about 0.77 by the first quarter of 2025.

EBIT Margin

The EBIT margin demonstrates a generally positive and upward trend from 21.57% in early 2020 to peaks near 24.4% in late 2020 and around 23.7% through 2021-2023. There is a marked decrease beginning in early 2024, where the margin falls significantly to a range between 15.4% and 16.6%, indicating a reduction in operating profitability before interest and taxes. The margin shows signs of partial recovery by early 2025, approaching levels above 21%.

Net Profit Margin

Net profit margin trends upward starting at approximately 13.9% in early 2020 and reaching a high of roughly 16.5% at the end of 2020 through 2021. This positive trend indicates improving profitability after all expenses. However, from 2024 onward, a substantial decline occurs, with the margin dropping sharply to a low around 7.3% to 8.7%, reflecting reduced net earnings relative to revenues. The margin experiences some recovery in early 2025, rising back to nearly 13%, suggesting improving net profitability after a period of contraction.