Verizon Communications Inc (VZ)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	28.16	18.91	13.51	27.25	33.23
Receivables turnover	5.15	5.58	5.60	5.36	5.19
Payables turnover	5.78	5.16	5.14	7.34	6.12
Working capital turnover	—	—	—	8.59	—

Verizon Communications Inc's inventory turnover has shown fluctuations over the past five years, ranging from 18.43 to 38.49 times. The high inventory turnover in 2020 indicates that Verizon efficiently converted its inventory into sales during that period. However, the decreasing trend in recent years may suggest potential issues with inventory management efficiency.

In terms of receivables turnover, Verizon has maintained a relatively stable performance, ranging from 5.19 to 5.60 times over the past five years. This consistency indicates that the company effectively collects receivables within a reasonable timeframe, thereby managing its accounts receivable efficiently.

Verizon's payables turnover has also shown variability, ranging from 5.48 to 7.68 times over the same period. A decreasing trend in payables turnover may indicate that the company is taking longer to pay its suppliers, which could potentially strain its relationships with creditors.

Notably, the working capital turnover ratio was not available for the years 2021, 2022, and 2023. However, the significant value of 8.59 in 2020 suggests that Verizon effectively utilized its working capital to generate sales during that year.

Overall, while Verizon has maintained decent performance in receivables turnover, its inventory turnover and payables turnover ratios indicate some room for improvement in inventory management efficiency and payment to suppliers. Monitoring and potentially optimizing these activity ratios could enhance Verizon's overall operational effectiveness and financial performance.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	12.96	19.30	27.01	13.40	10.98
Days of sales outstanding (DSO)	days	70.82	65.37	65.14	68.05	70.39
Number of days of payables	days	63.15	70.71	71.08	49.72	59.67

Verizon Communications Inc's activity ratios provide insights into the efficiency of its operations and management of working capital.

1. Days of Inventory on Hand (DOH):
- Verizon's DOH decreased from 14.74 days in 2022 to 13.68 days in 2023. This indicates that the company is managing its inventory more efficiently, holding inventory for a shorter period before selling it.
- The decreasing trend in DOH over the years suggests improved inventory management, potentially reducing storage costs and risks of inventory obsolescence.

2. Days of Sales Outstanding (DSO):
- Verizon's DSO increased from 65.37 days in 2022 to 68.34 days in 2023. This indicates that the company is taking longer to collect receivables from customers.
- A rising DSO could suggest potential challenges in collecting accounts receivable promptly, impacting cash flow and liquidity.

3. Number of Days of Payables:
- Verizon's number of days of payables increased from 54.01 days in 2022 to 66.64 days in 2023. This indicates that the company is taking longer to pay its suppliers and vendors.
- The increase in days of payables may indicate a deliberate strategy to optimize working capital by extending payment terms, but it could also potentially strain supplier relationships.

Overall, while Verizon has improved its inventory management efficiency, the increase in DSO and days of payables could have implications for cash flow and working capital management. It is essential for the company to strike a balance between efficient inventory management, timely collection of receivables, and managing payables effectively to maintain a healthy financial position.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	1.24	1.27	1.34	1.35	1.43
Total asset turnover	0.35	0.36	0.36	0.41	0.45

Verizon Communications Inc's long-term activity ratios show varying trends over the past five years. The fixed asset turnover ratio has been declining slightly from 1.43 in 2019 to 1.24 in 2023, indicating that the company is generating less revenue for each dollar invested in fixed assets. This may suggest inefficiencies in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also been decreasing over the same period, from 0.45 in 2019 to 0.35 in 2023. This indicates that Verizon is generating less revenue for each dollar of total assets it owns. The declining trend in total asset turnover may suggest that the company's efficiency in utilizing all its assets to generate revenue has been decreasing.

Overall, the declining trends in both fixed asset turnover and total asset turnover ratios for Verizon Communications Inc may indicate potential inefficiencies in asset utilization and revenue generation. Further analysis is recommended to identify the underlying factors contributing to these trends and to address any operational inefficiencies that may be impacting the company's long-term performance.