Verizon Communications Inc (VZ)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 56.77% | 66.99% | 69.10% | 61.85% | 64.16% |
| Operating profit margin | 17.08% | 22.27% | 24.29% | 22.45% | 23.04% |
| Pretax margin | 12.32% | 20.30% | 21.60% | 18.26% | 16.84% |
| Net profit margin | 8.67% | 15.53% | 16.51% | 13.88% | 14.61% |
Verizon Communications Inc's profitability ratios exhibit fluctuations over the past five years. The gross profit margin has been relatively stable, ranging from 56.79% to 60.09%, showing the company's ability to control direct costs related to product and service delivery.
The operating profit margin has experienced some variability, with 2021 showing the lowest level at 22.27% and 2021 at its peak of 24.39%, indicating the company's efficiency in managing operating expenses in generating operating income.
The pretax margin has also fluctuated, with a significant drop in 2023 to 12.68% from 20.66% in 2022. This suggests changes in non-operating income or expenses impacting the company's profitability before accounting for taxes.
The net profit margin has shown similar fluctuations, ranging from 13.88% to 16.51% over the five-year period. The decrease from 2022 to 2023 is noteworthy, indicating a decrease in the proportion of sales retained as net income after accounting for all expenses, including taxes.
In conclusion, while Verizon Communications Inc has maintained relatively healthy profitability ratios over the years, the fluctuations in margins highlight the importance of monitoring cost control, operational efficiency, and managing non-operating expenses to sustain and enhance overall profitability.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 6.02% | 8.02% | 8.85% | 9.10% | 10.41% |
| Return on assets (ROA) | 3.05% | 5.60% | 6.02% | 5.62% | 6.60% |
| Return on total capital | 24.00% | 34.74% | 39.82% | 40.98% | 44.04% |
| Return on equity (ROE) | 12.66% | 23.53% | 27.16% | 26.37% | 31.49% |
Verizon Communications Inc's profitability ratios show a general trend of decreasing profitability over the past five years. The Operating return on assets (Operating ROA) has decreased from 10.47% in 2019 to 7.54% in 2023, indicating a decline in the company's ability to generate operating profits from its assets. This may suggest inefficiencies in managing its core operations.
The Return on assets (ROA) has also shown a downward trend, dropping from 6.60% in 2019 to 3.05% in 2023. This ratio reflects the company's overall ability to generate profits from its total assets, including both operating and non-operating activities. The declining trend suggests that Verizon may be experiencing challenges in maximizing its asset utilization and profitability.
Similarly, the Return on total capital and Return on equity (ROE) ratios have also declined over the years. The Return on total capital has decreased from 17.67% in 2019 to 11.79% in 2023, while the ROE has dropped from 31.38% in 2019 to 12.57% in 2023. These ratios indicate a decreasing ability of the company to generate returns for both its total invested capital and shareholders' equity.
Overall, the downward trend in Verizon Communications Inc's profitability ratios suggests potential challenges in efficiently utilizing assets and capital to generate profits, which may require strategic interventions to improve overall profitability in the future.