Economic Value Added (EVA)
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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.
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Twenty-First Century Fox Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Price to Sales (P/S) since 2005
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
Twenty-First Century Fox Inc., economic profit calculation
US$ in millions
| 12 months ended: | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values exhibit considerable volatility over the six-year period. Starting at 7,896 million USD in 2013, it sharply declines to 4,517 million USD in 2014, then peaks at 9,417 million USD in 2015. Following this peak, there is another decline to 4,025 million USD in 2016, after which a moderate recovery is observed, reaching 4,669 million USD by 2018. The pattern suggests fluctuations in operational efficiency or market conditions impacting profitability.
- Cost of Capital
- The cost of capital shows a generally decreasing trend from 14.22% in 2013 to a low of 12.72% in 2016, indicating a reduction in the required rate of return or perceived risk during this period. However, the cost rises again to 14.38% by 2018, which may reflect changes in market conditions, risk profile, or financing structure towards the end of the period.
- Invested Capital
- Invested capital displays modest fluctuations but remains relatively stable, starting at 44,434 million USD in 2013 and ending at 47,272 million USD in 2018. There is a slight increase overall, with a dip in 2016 (42,462 million USD) before a gradual recovery and growth through 2017 and 2018. This stability indicates consistent capital investment with some adjustments but no drastic shifts in asset base or capital structure.
- Economic Profit
- Economic profit reveals a challenging performance trend. It is positive at 1,579 million USD in 2013 but turns negative to -2,225 million USD in 2014, indicating value destruction relative to the cost of capital. It recovers strongly to 3,394 million USD in 2015, coinciding with the peak in NOPAT that year, before declining sharply into negative territory again from 2016 through 2018, with values of -1,375 million USD, -1,531 million USD, and -2,130 million USD respectively. This persistent negative economic profit in recent years suggests that the returns generated did not adequately compensate for the capital costs, raising concerns about long-term value creation.
Net Operating Profit after Taxes (NOPAT)
Twenty-First Century Fox Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for returns and doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring program liabilities.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Twenty-First Century Fox, Inc. stockholders.
6 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2018 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 28.00% =
8 Addition of after taxes interest expense to net income attributable to Twenty-First Century Fox, Inc. stockholders.
9 2018 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 28.00% =
10 Elimination of after taxes investment income.
11 Elimination of discontinued operations.
- Net Income Attributable to Stockholders
- The net income showed notable fluctuations over the analyzed periods. It started at 7,097 million USD in 2013, then declined significantly to 4,514 million USD in 2014. In 2015, there was a strong rebound with net income increasing to 8,306 million USD, marking the highest value in the timeframe. Afterward, net income dropped sharply to 2,755 million USD in 2016 and remained relatively low in 2017, with a slight increase to 2,952 million USD. In 2018, net income rose again to 4,464 million USD, indicating partial recovery but still below the earlier peak.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrated a pattern similar to net income but with somewhat less pronounced variation. Starting at 7,896 million USD in 2013, it decreased substantially to 4,517 million USD in 2014. NOPAT peaked at 9,417 million USD in 2015, exceeding the initial period's value. Following this peak, it declined sharply to 4,025 million USD in 2016. The next two years showed moderate growth, with NOPAT increasing to 4,273 million USD in 2017 and 4,669 million USD in 2018.
- Overall Trend Analysis
- Both net income and NOPAT experienced significant volatility throughout the six years. The years 2014 and 2016 are characterized by marked downturns in profitability metrics. The year 2015 stands out as a peak period for both measures, reflecting a temporary strong financial performance. After 2016, there is evidence of gradual operational improvement through 2018, though neither net income nor NOPAT returned to their earlier peak levels by the end of the period. The data suggests a cycle of recovery following considerable profit contractions, warranting further examination of underlying causes during downturn years.
Cash Operating Taxes
Twenty-First Century Fox Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
- Provision for income taxes from continuing operations
- The provision for income taxes generally declined from 2013 to 2016, starting at 1,690 million US dollars in 2013 and decreasing steadily to 1,130 million in 2016. In 2017, there was a notable increase to 1,419 million, followed by a significant drop to a negative figure of -364 million in 2018, which may indicate a tax benefit or a reversal of previous tax provisions.
- Cash operating taxes
- Cash operating taxes fluctuated over the period. Beginning at 1,612 million US dollars in 2013, the figure increased to 1,707 million in 2014, then decreased to 1,504 million in 2015. A more marked decline occurred in 2016 with taxes dropping to 1,095 million. Subsequently, there was a sharp rise to 1,781 million in 2017 before falling significantly to 904 million in 2018. The fluctuations suggest variability in cash tax payments potentially linked to changing profitability or tax planning strategies.
Invested Capital
Twenty-First Century Fox Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
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 restructuring program liabilities.
6 Addition of equity equivalents to total Twenty-First Century Fox, Inc. stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
9 Subtraction of available-for-sale securities.
- Total reported debt & leases
- The total reported debt and leases displayed fluctuations over the six-year period. Starting at $19,912 million in 2013, the debt increased to a peak of $22,748 million in 2014. Following this peak, there was a general decline in debt, descending to $20,609 million in 2015 and remaining relatively stable through 2016 and 2017, with slight increases and decreases respectively. By 2018, the debt had further decreased to $21,076 million. Overall, the debt levels demonstrate initial growth followed by a slight reduction and stabilization trend.
- Total Twenty-First Century Fox, Inc. stockholders’ equity
- Stockholders' equity showed an overall increasing trend despite some variability. Beginning at $16,998 million in 2013, there was a moderate increase to $17,418 million in 2014, followed by a small decrease to $17,220 million in 2015. A notable decline occurred in 2016, when equity dropped sharply to $13,661 million. After this decline, equity rebounded, increasing to $15,722 million in 2017 and further to $19,564 million in 2018, marking the highest equity value in the period.
- Invested capital
- Invested capital demonstrated a fluctuating but generally downward trend in the earlier years, followed by recovery in later years. It began at $44,434 million in 2013, increased to $48,265 million in 2014, then decreased significantly to $44,315 million in 2015 and further declined to $42,462 million in 2016. From 2016 onwards, invested capital increased, reaching $45,055 million in 2017 and $47,272 million in 2018, though it did not quite return to the previous peak observed in 2014.
Cost of Capital
Twenty-First Century Fox Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 28.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 28.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2016-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2015-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2014-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2013-06-30).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Twenty-First Century Fox Inc., economic spread ratio calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| 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: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis of the annual financial data reveals several key trends and insights regarding the company’s economic performance and capital investment over the six-year period examined.
- Economic Profit
- The economic profit demonstrates considerable volatility throughout the period. It starts positively at 1,579 million US dollars in mid-2013 but sharply declines to a negative 2,225 million US dollars by mid-2014. The figure recovers considerably in mid-2015, reaching 3,394 million US dollars, the highest point in the series. However, it then reverts back to negative territory in the subsequent years, ending at a negative 2,130 million US dollars in mid-2018. This pattern indicates intermittent profitability with significant fluctuations, implying challenges in sustaining economic profit consistently.
- Invested Capital
- Invested capital shows a generally increasing trend over the period. Starting at 44,434 million US dollars in mid-2013, the figure sees a peak at 48,265 million US dollars in mid-2014 before a decline to 44,315 million US dollars in mid-2015. Following this, the invested capital remains somewhat stable around the mid-42,000 to 45,000 million US dollars range, rising again to 47,272 million US dollars by mid-2018. This upward trend indicates continued or renewed investment activity despite fluctuations in economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrors the fluctuations observed in economic profit, highlighting periods of positive and negative value creation. It begins at a positive 3.55% in mid-2013, drops to a negative 4.61% in mid-2014, then spikes to a positive 7.66% in mid-2015, its highest value. Subsequently, it declines consistently to negative values from mid-2016 through mid-2018, ending at -4.51%. This pattern underscores volatility in returns relative to the cost of capital, with limited sustained periods of positive economic value generation.
In summary, the company experiences fluctuating economic profitability with intermittent positive results overshadowed by several years of negative economic profit and spread. Invested capital trends upward overall, suggesting ongoing investment despite difficulties in generating consistent economic value. The economic spread ratio confirms the instability in efficiently allocating capital to generate returns above cost.
Economic Profit Margin
Twenty-First Century Fox Inc., economic profit margin calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| 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: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 Economic profit. See details »
2 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits significant fluctuations over the observed periods. It started positively in 2013 at 1,579 million US dollars but turned negative in 2014 with a substantial loss of 2,225 million US dollars. The figure rebounded in 2015, reaching a peak of 3,394 million US dollars, before declining again over the subsequent three years, remaining negative and deepening losses up to 2,130 million US dollars in 2018.
- Adjusted Revenues
- Adjusted revenues show a generally stable but moderately fluctuating pattern. There is an increase from 27,472 million US dollars in 2013 to a peak at 31,880 million US dollars in 2014. This was followed by a decline in 2015 and 2016, bottoming out at 27,383 million US dollars, before experiencing a recovery in 2017 and 2018, reaching 30,498 million US dollars in the last year reported.
- Economic Profit Margin
- The economic profit margin mirrors the volatility seen in economic profit. It was positive in 2013 at 5.75%, dropped to -6.98% in 2014, surged to a high of 11.81% in 2015, and then declined consistently over the final three years, staying negative and reaching -6.98% again in 2018. This indicates a pattern of profitability fluctuation relative to revenues, consistent with the economic profit trend.
- Summary
- The data reveals a challenging and unstable financial performance over the six-year period. Despite relatively steady adjusted revenues, the company’s economic profit and economic profit margin have shown considerable volatility, with only one year of significant positive performance in 2015. The negative economic profits and margins in most years suggest ongoing difficulties in value creation, highlighting potential cost or operational issues despite stable revenue generation.