Charter Communications Inc. (CHTR)

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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread
Economic Profit Margin

Charter Communications Inc., economic profit calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

Based on: 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-21).

2017 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden × hidden = hidden

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Charter Communications Inc.'s economic profit declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

Charter Communications Inc., NOPAT calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Net income (loss) attributable to Charter shareholders
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for doubtful accounts²
	Increase (decrease) in deferred revenue³
	Increase (decrease) in accruals for merger and restructuring costs⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense, net
	Interest expense, operating lease obligations⁶
	Adjusted interest expense, net
	Tax benefit of interest expense, net⁷
	Adjusted interest expense, net, after taxes⁸
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-21).

2017 Calculations

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 accruals for merger and restructuring costs.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Charter shareholders.

⁶ Addition of interest expense on capitalized operating leases. See Details »

⁷ Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= hidden × 35% = hidden

⁸ Addition of after taxes interest expense to net income (loss) attributable to Charter shareholders.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Charter Communications Inc.'s NOPAT increased from 2015 to 2016 but then slightly declined from 2016 to 2017.

Charter Communications Inc., cash operating taxes calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Income tax expense (benefit)
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, net
	Cash operating taxes

Based on: 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-21).

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Charter Communications Inc.'s cash operating taxes increased from 2015 to 2016 and from 2016 to 2017.

Charter Communications Inc., invested capital calculation (financing approach)

USD $ in millions

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Current portion of long-term debt
	Long-term debt, less current portion
	PV of operating lease payments¹
	Total reported debt & leases
	Total Charter shareholders' equity (deficit)
	Net deferred tax (assets) liabilities²
	Allowance for doubtful accounts³
	Deferred revenue⁴
	Accruals for merger and restructuring costs⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Noncontrolling interests
	Adjusted total Charter shareholders' equity (deficit)
	Invested capital

Based on: 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-24), 10-K (filing date: 2014-02-21).

¹ Addition of capitalized operating leases. See Details »

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 accruals for merger and restructuring costs.

⁶ Addition of equity equivalents to total Charter shareholders' equity (deficit).

⁷ Removal of accumulated other comprehensive income.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Charter Communications Inc.'s invested capital increased from 2015 to 2016 but then slightly declined from 2016 to 2017.

Charter Communications Inc., cost of capital calculations


Equity²	÷	=	×		=
Long-term debt, including current portion³	÷	=	×	× (1 – 35%)	=
PV of operating lease payments⁴	÷	=	×	× (1 – 35%)	=
Total:

Based on: 10-K (filing date: 2018-02-02).

¹ USD $ in millions

² Equity. See Details »