Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Charter Communications Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2010
- Current Ratio since 2010
- Debt to Equity since 2010
- Price to Operating Profit (P/OP) since 2010
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Economic Profit
Charter Communications Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
An analysis of the economic value added reveals that the company consistently generated negative economic profit throughout the five-year period ending December 31, 2024. However, a clear trend of narrowing losses is observed between 2020 and 2023, indicating an improvement in the relationship between operational earnings and the cost of capital, although a slight regression occurred in the final year.
- Net Operating Profit After Taxes (NOPAT)
- A general upward trajectory is observed in NOPAT, which grew from 7,242 million in 2020 to 9,837 million in 2024. This increase reflects an expansion in operational profitability over the period.
- Cost of Capital
- The cost of capital experienced a steady decline from 12.19% in 2020 to a low of 9.17% in 2023. This downward trend contributed to the reduction of economic losses, although a slight uptick to 9.46% was recorded in 2024.
- Invested Capital
- Invested capital remained relatively stable over the analyzed timeframe, moving from 133,151 million in 2020 to 136,388 million in 2024. The lack of significant volatility suggests a consistent level of capital deployment.
- Economic Profit
- Economic profit remained in negative territory, meaning the NOPAT was insufficient to cover the weighted cost of invested capital. The deficit narrowed significantly from 8,982 million in 2020 to 2,915 million in 2023. In 2024, the economic profit slightly deteriorated to negative 3,068 million, coinciding with the increase in the cost of capital and the rise in total invested capital.
Net Operating Profit after Taxes (NOPAT)
Charter Communications Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Charter shareholders.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Charter shareholders.
- Net Income Attributable to Charter Shareholders
- The net income attributable to Charter shareholders exhibited an overall upward trend from 2020 to 2024. Starting at 3,222 million USD in 2020, it increased significantly to 4,654 million USD in 2021, representing a marked improvement. The upward momentum continued into 2022, reaching 5,055 million USD, the highest observed within the period. However, in 2023, net income experienced a decline to 4,557 million USD, indicating a temporary setback or potential challenges faced during that year. This decline was followed by a recovery in 2024, with net income rising again to 5,083 million USD, surpassing the previous peak in 2022. The pattern reflects generally positive profitability with some short-term volatility.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes also demonstrated consistent growth over the analyzed period. NOPAT rose from 7,242 million USD in 2020 to 9,333 million USD in 2021, showing a strong operational improvement. This growth trend continued, albeit at a slower pace, reaching 9,688 million USD in 2022. In 2023, there was a slight decrease to 9,377 million USD, which mirrors the decline seen in net income for the same year, suggesting a possible operational impact affecting profitability. However, in 2024, NOPAT recovered to 9,837 million USD, the highest level in the period, indicating strengthened operational efficiency or profitability drivers.
- Summary Insight
- The data indicate robust and generally increasing profitability over the five-year span, with both net income and NOPAT peaking in 2024. The dip in both metrics in 2023 represents a point of concern, potentially due to external or internal factors affecting performance that year. The rebound in 2024 suggests effective management responses or favorable conditions restoring profitability. The consistent gap between NOPAT and net income reflects the differing nature of these metrics, with NOPAT generally showing higher figures due to its focus on operating profitability, excluding non-operating items and tax effects.
Cash Operating Taxes
Charter Communications Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense shows a consistent upward trend over the five-year period. Starting at 626 million USD in 2020, it rises significantly to 1068 million USD in 2021. This increasing pattern continues, reaching 1613 million USD in 2022, with a slight stabilization around 1593 million USD in 2023, and again increasing to 1649 million USD in 2024. The overall growth in income tax expense indicates increasing taxable income or possible changes in tax rates or policies affecting the company.
- Cash Operating Taxes
- Cash operating taxes exhibit a marked increase over the period under review. The amount grows from 980 million USD in 2020 to 1100 million USD in 2021, displaying a moderate increase. However, a sharp rise is observed in 2022, with cash operating taxes more than doubling to 2493 million USD. This upward trajectory continues to 2776 million USD in 2023 and further to 2849 million USD in 2024. This pronounced growth suggests increased cash outflows for tax payments, potentially stemming from higher operating profits or changes in cash tax obligations.
- Comparative Observations
- Both income tax expense and cash operating taxes demonstrate a growing tax burden over the five years. Notably, cash operating taxes increase at a steeper rate compared to income tax expense, especially from 2021 onward. This divergence might imply timing differences between tax accruals and cash payments, or variations in tax planning strategies and deferred tax calculations. The steady rise in both indicators points to an expanding scale of operations or profitability, resulting in higher tax liabilities.
Invested Capital
Charter Communications Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to total Charter shareholders’ equity.
6 Removal of accumulated other comprehensive income.
- Total Reported Debt & Leases
-
The total reported debt and leases showed a steady increase from 84,097 million USD at the end of 2020 to a peak of 99,620 million USD at the end of 2023. In 2024, there was a slight decrease to 97,176 million USD. This pattern indicates an overall growth in leverage over the period, with a marginal reduction in the most recent year.
- Total Charter Shareholders’ Equity
-
The shareholders’ equity declined sharply from 23,805 million USD at the end of 2020 to 9,119 million USD by the end of 2022, representing a significant erosion of equity value during this timeframe. However, in 2023 and 2024, equity showed signs of recovery, increasing to 11,086 million USD and then to 15,587 million USD respectively. This rebound suggests some stabilization and potential rebuilding of the equity base after a period of losses or distributions.
- Invested Capital
-
The invested capital remained relatively stable over the five-year period, beginning at 133,151 million USD in 2020 and gradually increasing to 136,388 million USD by the end of 2024. The slight upward trend indicates steady investment levels or capital deployment, with no major fluctuations.
- Summary of Financial Trends
-
The data reflects a company operating with high financial leverage, as evidenced by the substantial debt levels sustained throughout the period. The significant reduction in shareholders’ equity through 2022 may indicate challenges such as net losses, asset impairments, or substantial distributions during those years. The partial recovery of equity in the latter years points to improved financial performance or capital restructuring efforts. Meanwhile, the invested capital’s stability suggests consistent capital investment without significant expansion or contraction in asset base. The combination of these trends may imply a focus on managing leverage risks while attempting to restore shareholder value.
Cost of Capital
Charter Communications Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion, and equipment installment plan financing facility3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion, and equipment installment plan financing facility. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion, and equipment installment plan financing facility3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion, and equipment installment plan financing facility. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion, and equipment installment plan financing facility3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion, and equipment installment plan financing facility. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion, and equipment installment plan financing facility3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion, and equipment installment plan financing facility. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion, and equipment installment plan financing facility3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion, and equipment installment plan financing facility. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Charter Communications Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
An analysis of the economic value added metrics indicates a persistent failure to generate positive economic profit over the period from 2020 to 2024. While the company has not yet achieved a positive spread, a notable trend of recovery was observed between 2020 and 2023, followed by a period of stabilization and a slight reversal in the final year.
- Economic Profit Trends
- Economic profit remained negative throughout the evaluated period, indicating that the returns generated were insufficient to cover the cost of invested capital. A significant reduction in economic losses occurred from 2020 to 2023, with the deficit narrowing from -8,982 million US$ to -2,915 million US$. This improvement plateaued in 2024, as economic profit shifted slightly downward to -3,068 million US$.
- Invested Capital Stability
- The total invested capital exhibited relative stability, oscillating within a narrow range. After a slight decrease in 2021 to 130,911 million US$, a steady upward trajectory was observed, reaching 136,388 million US$ by the end of 2024. This suggests a consistent level of asset employment despite the fluctuating economic performance.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the weighted average cost of capital, showed an improving trend from 2020 to 2023. The ratio moved from -6.75% to -2.17%, signaling a closing gap between returns and capital costs. In alignment with the economic profit trend, the spread ratio experienced a marginal decline in 2024, ending at -2.25%.
Economic Profit Margin
Charter Communications Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial performance from 2020 to 2024 is characterized by a consistent period of negative economic profit, although a significant trend of recovery was observed between 2020 and 2023. While the entity has not yet achieved a positive economic profit, the magnitude of the loss has decreased substantially over the analyzed period, coinciding with steady growth in adjusted revenues.
- Economic Profit Trends
- A marked improvement in economic profit occurred between 2020 and 2023, with the deficit narrowing from -8,982 million USD to -2,915 million USD. This represents a significant reduction in the gap between the net operating profit after tax and the required return on capital. However, this recovery trend plateaued in 2024, as the economic profit declined slightly to -3,068 million USD.
- Adjusted Revenue Growth
- Adjusted revenues exhibited a consistent upward trajectory throughout the five-year period, rising from 48,074 million USD in 2020 to 55,032 million USD in 2024. While growth remained positive every year, the rate of increase decelerated in the later years, moving from a growth of approximately 7.5% between 2020 and 2021 to a more modest increase between 2023 and 2024.
- Economic Profit Margin Analysis
- The economic profit margin reflects the overall improvement in capital efficiency, moving from -18.68% in 2020 to a peak improvement of -5.34% in 2023. This indicates that the company successfully reduced its economic loss relative to its revenue scale for three consecutive years. The margin experienced a slight reversal in 2024, shifting to -5.58%, which suggests a marginal increase in the cost of capital relative to the earnings generated or a slight dip in operational efficiency.
In summary, the analysis indicates a period of substantial narrowing of economic losses. The convergence of increasing revenues and a decreasing economic profit deficit suggests an improvement in the company's ability to cover its cost of capital, despite the slight regression observed in the final year of the period.