The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.
Warning Sign:
Altman Z-score of 1.15 is in distress zone. This implies bankruptcy possibility in the next two years.
Verizon Communications has a Altman Z-Score of 1.15, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.
The zones of discrimination were as such:
When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.
The historical rank and industry rank for Verizon Communications's Altman Z-Score or its related term are showing as below:
VZ' s Altman Z-Score Range Over the Past 10 Years
Min: 1.13 Med: 1.51 Max: 1.68
Current: 1.15
During the past 13 years, Verizon Communications's highest Altman Z-Score was 1.68. The lowest was 1.13. And the median was 1.51.
Verizon Communications Altman Z-Score Historical Data
The historical data trend for Verizon Communications's Altman Z-Score can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
Verizon Communications Annual Data | ||||||||||||||||||||
Trend | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | ||||||||||
Altman Z-Score | 1.65 | 1.61 | 1.36 | 1.25 | 1.13 |
Verizon Communications Quarterly Data | ||||||||||||||||||||
Mar19 | Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | |
Altman Z-Score | 1.25 | 1.27 | 1.24 | 1.18 | 1.13 |
Competitive Comparison
For the Telecom Services subindustry, Verizon Communications's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Verizon Communications Altman Z-Score Distribution
For the Telecommunication Services industry and Communication Services sector, Verizon Communications's Altman Z-Score distribution charts can be found below:
* The bar in red indicates where Verizon Communications's Altman Z-Score falls into.
Verizon Communications Altman Z-Score Calculation
Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
Verizon Communications's Altman Z-Score for today is calculated with this formula:
Z | = | 1.2 | * | X1 | + | 1.4 | * | X2 | + | 3.3 | * | X3 | + | 0.6 | * | X4 | + | 1.0 | * | X5 |
= | 1.2 | * | -0.0432 | + | 1.4 | * | 0.2181 | + | 3.3 | * | 0.0592 | + | 0.6 | * | 0.5895 | + | 1.0 | * | 0.3523 | |
= | 1.15 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.
Trailing Twelve Months (TTM) ended in Dec. 2023:
Total Assets was $380,255 Mil.
Total Current Assets was $36,814 Mil.
Total Current Liabilities was $53,223 Mil.
Retained Earnings was $82,915 Mil.
Pre-Tax Income was -1817 + 6192 + 6112 + 6500 = $16,987 Mil.
Interest Expense was -1599 + -1433 + -1285 + -1207 = $-5,524 Mil.
Revenue was 35130 + 33336 + 32596 + 32912 = $133,974 Mil.
Market Cap (Today) was $168,863 Mil.
Total Liabilities was $286,456 Mil.
* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.
X1 | = | Working Capital | / | Total Assets |
= | (Total Current Assets - Total Current Liabilities) | / | Total Assets | |
= | (36814 - 53223) | / | 380255 | |
= | -0.0432 |
X2 | = | Retained Earnings | / | Total Assets |
= | 82915 | / | 380255 | |
= | 0.2181 |
X3 | = | Earnings Before Interest and Taxes | / | Total Assets |
= | (Pre-Tax Income - Interest Expense) | / | Total Assets | |
= | (16987 - -5524) | / | 380255 | |
= | 0.0592 |
X4 | = | Market Value Equity | / | Book Value of Total Liabilities |
= | Market Cap | / | Total Liabilities | |
= | 168863.100 | / | 286456 | |
= | 0.5895 |
X5 | = | Revenue | / | Total Assets |
= | 133974 | / | 380255 | |
= | 0.3523 |
The zones of discrimination were as such:
Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones
Verizon Communications has a Altman Z-Score of 1.15 indicating it is in Distress Zones.
Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.
Verizon Communications(NYSE:VZ) Altman Z-Score Explanation
X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.
X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.
X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.
X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.
X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.
Read more about Altman Z-Score and the original research.
Be Aware
Altman Z-Score does not apply to financial companies.
Verizon Communications Altman Z-Score Related Terms
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Verizon Communications (Verizon Communications) Business Description
Industry
GURUFOCUS.COM »STOCK LIST »Communication Services » Telecommunication Services » Verizon Communications Inc (NYSE:VZ) » Definitions » Altman Z-Score
Comparable Companies
CMCSA TMUS T CHTR LBRDA LBTYA FYBR TIGO IRDM CCOI SHSE:600941 XTER:DTE TSE:9432 NSE:BHARTIARTL TSE:9984 HKSE:00728 TSE:9433 TSE:9434 AMX B SAU:7010
Traded in Other Exchanges
Address
1095 Avenue of the Americas, New York, NY, USA, 10036
Website
Verizon Communications is primarily a wireless business (it provides about 70% of service revenue and nearly all operating income). It serves about 92 million postpaid and 22 million prepaid phone customers (following the acquisition of Tracfone) via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks in the Northeast, which reach about 25 million homes and businesses and serve about 8 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, often using a mixture of its own and other carriers' networks.
Executives
Craig L. Silliman | officer: EVP of PubPolicy & Gen Counsel | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Samantha Hammock | officer: EVP & Chief HR Officer | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Joseph J. Russo | officer: EVP&Pres-Global Networks&Tech | VERIZON COMMUNICATIONS INC., 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Mary-lee Stillwell | officer: SVP and Controller | 804 CARNEGIE CENTER, PRINCETON NJ 08540 |
Kyle Malady | officer: EVP & Chief Technology Officer | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Vittorio Colao | director | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Vandana Venkatesh | officer: EVP and General Counsel | VERIZON COMMUNICATIONS INC., 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Sowmyanarayan Sampath | officer: EVP and Group CEO-VZ Business | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Tami A. Erwin | officer: EVP and Group CEO-VZ Business | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Hans Erik Vestberg | director, officer: Chairman and CEO | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Manon Brouillette | officer: EVP and Group CEO-VZ Consumer | 40 AVENUE SPRINGGROVE, MONTREAL Z4 H3C 4M8 |
Carol B Tome | director | 55 GLENLAKE PARKWAY, NE, ATLANTA GA 30328 |
Kumara Guru Gowrappan | officer: EVP and Group CEO-VZ Media | 1095 AVENUE OF THE AMERICAS, NEW YORK NY 10036 |
Laxman Narasimhan | director | PEPSICO, INC., 700 ANDERSON HILL ROAD, PURCHASE NY 10577 |
Shellye L Archambeau | director | 1095 AVENUE OF THE AMERICAS, 8TH FLOOR, NEW YORK NY 10036 |
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