Verizon Communications Inc (VZ)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	23.78	28.16	18.91	13.51	27.25
Receivables turnover	4.94	5.15	5.58	5.60	5.36
Payables turnover	5.13	5.78	5.16	5.14	7.34
Working capital turnover	—	—	—	—	8.59

Verizon Communications Inc's activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate revenue.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. In the case of Verizon, the inventory turnover has varied over the years. It decreased from 27.25 in 2020 to 13.51 in 2021 but then increased to 18.91 in 2022, 28.16 in 2023, and 23.78 in 2024. Overall, the trend indicates that Verizon is managing its inventory more efficiently in recent years, suggesting a quicker turnover of inventory.

2. Receivables Turnover:
- The receivables turnover ratio indicates how effectively a company collects outstanding receivables from its customers. Verizon's receivables turnover has remained relatively stable over the years, with values ranging from 4.94 to 5.60. This suggests that Verizon has been efficient in collecting payments from its customers.

3. Payables Turnover:
- The payables turnover ratio measures how quickly a company pays off its suppliers or trade payables. Verizon's payables turnover has also shown consistency, fluctuating between 5.13 and 7.34. A decreasing trend in this ratio may indicate that Verizon is taking longer to pay off its suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio shows how effectively a company uses its working capital to generate sales revenue. The data provided does not include working capital turnover for some years. However, a higher working capital turnover ratio generally indicates that Verizon is efficiently utilizing its working capital to generate sales.

Overall, based on the activity ratios analyzed, Verizon Communications Inc appears to be effectively managing its inventory, receivables, and payables, which is essential for maintaining a healthy cash flow and efficient operations.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	15.35	12.96	19.30	27.01	13.40
Days of sales outstanding (DSO)	days	73.95	70.82	65.37	65.14	68.05
Number of days of payables	days	71.21	63.15	70.71	71.08	49.72

Verizon Communications Inc's activity ratios show fluctuations over the years.

1. Days of Inventory on Hand (DOH):
- The DOH increased from 13.40 days in 2020 to 27.01 days in 2021, indicating a significant increase in the time taken to sell inventory.
- Subsequently, in 2022 and 2024, the DOH decreased to 19.30 days and 15.35 days, respectively.
- In 2023, the DOH dropped further to 12.96 days, indicating a more efficient inventory management compared to the previous years.

2. Days of Sales Outstanding (DSO):
- The DSO remained relatively stable from 2020 to 2022, ranging from 65.14 to 68.05 days, indicating that it took Verizon an average of around 65-68 days to collect its accounts receivable.
- However, in 2023 and 2024, the DSO increased to 70.82 and 73.95 days, suggesting a slower collection of accounts receivable and a potential liquidity challenge.

3. Number of Days of Payables:
- The number of days of payables increased from 49.72 days in 2020 to 71.08 days in 2021, indicating that Verizon took longer to pay its suppliers in 2021.
- In the following years, the number of days of payables fluctuated between 63.15 and 71.21 days, showing some variability in payment periods.

Overall, the analysis of these activity ratios suggests that Verizon may have experienced fluctuations in its efficiency in managing inventory, collecting receivables, and paying its suppliers over the years.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	1.24	1.24	1.27	1.34	1.35
Total asset turnover	0.35	0.35	0.36	0.36	0.41

Verizon Communications Inc's long-term activity ratios can be analyzed using the Fixed Asset Turnover and Total Asset Turnover ratios.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how efficiently the company generates sales from its investment in fixed assets.
- The trend shows a slight decrease from 1.35 in 2020 to 1.24 in 2024. This indicates a decreasing efficiency in generating revenue from fixed assets over the years.
- While a higher ratio is generally preferred as it suggests better asset utilization, the decreasing trend may warrant further investigation into the company's capital expenditure decisions and operational effectiveness.

2. Total Asset Turnover:
- The Total Asset Turnover ratio measures how effectively a company utilizes all its assets to generate revenue.
- The trend shows a consistent level of 0.36 from 2021 to 2024, indicating relatively stable efficiency in generating revenue from total assets.
- A stable Total Asset Turnover ratio suggests that the company is effectively utilizing its total assets to generate sales, but the ratio is relatively low, indicating room for potential improvement in asset utilization.

In conclusion, while Verizon Communications Inc has maintained a stable Total Asset Turnover ratio, the decreasing trend in the Fixed Asset Turnover ratio suggests a potential decline in efficiency in generating revenue from fixed assets. This may require further analysis to identify underlying factors impacting asset utilization and operational performance.