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.

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

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	4,669)	4,273)	4,025)	9,417)	4,517)	7,896)
Cost of capital²	16.78%	14.96%	14.75%	15.82%	16.28%	16.59%
Invested capital³	47,272)	45,055)	42,462)	44,315)	48,265)	44,434)

Economic profit⁴	(3,265)	(2,466)	(2,237)	2,407)	(3,341)	527)

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
= 4,669 – 16.78% × 47,272 = -3,265

The financial performance between June 30, 2013, and June 30, 2018, is characterized by significant volatility in operating profitability and a recurring failure to generate positive economic profit. While invested capital remained relatively stable, the inconsistency of net operating profit after taxes (NOPAT) resulted in the destruction of shareholder value in four of the six analyzed years.

Net Operating Profit After Taxes (NOPAT): NOPAT exhibited extreme fluctuations over the period. After a strong start in 2013 at 7,896 million US$, a sharp decline occurred in 2014, followed by a peak of 9,417 million US$ in 2015. However, from 2016 through 2018, profitability plateaued at a significantly lower level, ranging between 4,025 million US$ and 4,669 million US$. This instability suggests a lack of consistent operational efficiency or sensitivity to cyclical market conditions.
Cost of Capital and Invested Capital: The cost of capital remained relatively range-bound, fluctuating between a low of 14.75% in 2016 and a high of 16.78% in 2018. Concurrently, invested capital showed stability, maintaining a baseline between 42,462 million US$ and 48,265 million US$. The slight increase in invested capital toward 2018, paired with a rising cost of capital, increased the financial hurdle required to achieve positive economic value.
Economic Profit and Value Creation: Economic profit was negative for the majority of the period, indicating that NOPAT was insufficient to cover the cost of the capital employed. Positive economic profit was only achieved in 2013 (527 million US$) and 2015 (2,407 million US$). The subsequent three years show a trend of increasing value destruction, culminating in a deficit of 3,265 million US$ by June 30, 2018. The widening gap between operating returns and the cost of capital reflects a diminishing ability to create economic value for shareholders.

AI Ask an analyst for more

Download chart

Twenty-First Century Fox Inc., NOPAT 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 income attributable to Twenty-First Century Fox, Inc. stockholders	4,464)	2,952)	2,755)	8,306)	4,514)	7,097)
Deferred income tax expense (benefit)¹	(903)	89)	466)	171)	(39)	480)
Increase (decrease) in allowances for returns and doubtful accounts²	(149)	(39)	70)	(309)	(84)	(87)
Increase (decrease) in deferred revenue³	98)	75)	57)	(242)	13)	(203)
Increase (decrease) in restructuring program liabilities⁴	(89)	41)	(393)	392)	(25)	(87)
Increase (decrease) in equity equivalents⁵	(1,043)	166)	200)	12)	(135)	103)
Interest expense, net	1,248)	1,219)	1,184)	1,198)	1,121)	1,063)
Interest expense, operating lease liability⁶	93)	104)	93)	99)	236)	225)
Adjusted interest expense, net	1,341)	1,323)	1,277)	1,297)	1,357)	1,288)
Tax benefit of interest expense, net⁷	(376)	(463)	(447)	(454)	(475)	(451)
Adjusted interest expense, net, after taxes⁸	966)	860)	830)	843)	882)	837)
(Gain) loss on marketable securities	—)	—)	(7)	(25)	(200)	(81)
Interest income	(39)	(36)	(38)	(39)	(26)	(57)
Investment income, before taxes	(39)	(36)	(45)	(64)	(226)	(138)
Tax expense (benefit) of investment income⁹	11)	13)	16)	22)	79)	48)
Investment income, after taxes¹⁰	(28)	(23)	(29)	(42)	(147)	(90)
(Income) loss from discontinued operations, net of tax¹¹	12)	44)	8)	67)	(729)	(277)
Net income (loss) attributable to noncontrolling interest	298)	274)	261)	231)	132)	226)
Net operating profit after taxes (NOPAT)	4,669)	4,273)	4,025)	9,417)	4,517)	7,896)

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
= 1,553 × 6.01% = 93

⁷ 2018 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 1,341 × 28.00% = 376

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
= 39 × 28.00% = 11

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.

AI Ask an analyst for more

Download chart

Twenty-First Century Fox Inc., cash operating taxes 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
Provision for income taxes from continuing operations	(364)	1,419)	1,130)	1,243)	1,272)	1,690)
Less: Deferred income tax expense (benefit)	(903)	89)	466)	171)	(39)	480)
Add: Tax savings from interest expense, net	376)	463)	447)	454)	475)	451)
Less: Tax imposed on investment income	11)	13)	16)	22)	79)	48)
Cash operating taxes	904)	1,781)	1,095)	1,504)	1,707)	1,612)

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.

AI Ask an analyst for more

Download chart

Twenty-First Century Fox Inc., invested capital calculation (financing approach)

US$ in millions

	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014	Jun 30, 2013
Current borrowings	1,054)	457)	427)	244)	799)	137)
Non-current borrowings	18,469)	19,456)	19,298)	18,795)	18,259)	16,321)
Operating lease liability¹	1,553)	1,729)	1,506)	1,570)	3,690)	3,454)
Total reported debt & leases	21,076)	21,642)	21,231)	20,609)	22,748)	19,912)
Total Twenty-First Century Fox, Inc. stockholders’ equity	19,564)	15,722)	13,661)	17,220)	17,418)	16,998)
Net deferred tax (assets) liabilities²	1,816)	2,585)	2,610)	1,973)	2,668)	2,223)
Allowances for returns and doubtful accounts³	388)	537)	576)	506)	815)	899)
Deferred revenue⁴	826)	580)	505)	448)	690)	677)
Restructuring program liabilities⁵	88)	177)	136)	529)	137)	162)
Equity equivalents⁶	3,118)	3,879)	3,827)	3,456)	4,310)	3,961)
Accumulated other comprehensive (income) loss, net of tax⁷	2,001)	2,018)	2,144)	1,570)	34)	319)
Redeemable noncontrolling interests	764)	694)	552)	621)	541)	519)
Noncontrolling interests	1,234)	1,216)	1,220)	966)	3,483)	3,127)
Adjusted total Twenty-First Century Fox, Inc. stockholders’ equity	26,681)	23,529)	21,404)	23,833)	25,786)	24,924)
Construction in progress⁸	(228)	(116)	(173)	(109)	(145)	(134)
Available-for-sale securities⁹	(257)	—)	—)	(18)	(124)	(268)
Invested capital	47,272)	45,055)	42,462)	44,315)	48,265)	44,434)

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.

AI Ask an analyst for more

Download chart

Twenty-First Century Fox Inc., cost of capital calculations

Jun 30, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	83,959)	83,959)	÷	108,102)	=	0.78	0.78	×	20.36%	=	15.82%
Borrowings³	22,591)	22,591)	÷	108,102)	=	0.21	0.21	×	6.01% × (1 – 28.00%)	=	0.90%
Operating lease liability⁴	1,553)	1,553)	÷	108,102)	=	0.01	0.01	×	6.01% × (1 – 28.00%)	=	0.06%
Total:	108,102)					1.00					16.78%

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 »

Jun 30, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	52,218)	52,218)	÷	77,801)	=	0.67	0.67	×	20.36%	=	13.67%
Borrowings³	23,853)	23,853)	÷	77,801)	=	0.31	0.31	×	6.03% × (1 – 35.00%)	=	1.20%
Operating lease liability⁴	1,729)	1,729)	÷	77,801)	=	0.02	0.02	×	6.03% × (1 – 35.00%)	=	0.09%
Total:	77,801)					1.00					14.96%

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 »

Jun 30, 2016

	Capital (fair value)¹	Weights					Cost of capital
Equity²	48,724)	48,724)	÷	74,216)	=	0.66	0.66	×	20.36%	=	13.37%
Borrowings³	23,986)	23,986)	÷	74,216)	=	0.32	0.32	×	6.17% × (1 – 35.00%)	=	1.30%
Operating lease liability⁴	1,506)	1,506)	÷	74,216)	=	0.02	0.02	×	6.17% × (1 – 35.00%)	=	0.08%
Total:	74,216)					1.00					14.75%

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 »

Jun 30, 2015

	Capital (fair value)¹	Weights					Cost of capital
Equity²	60,826)	60,826)	÷	84,394)	=	0.72	0.72	×	20.36%	=	14.68%
Borrowings³	21,998)	21,998)	÷	84,394)	=	0.26	0.26	×	6.30% × (1 – 35.00%)	=	1.07%
Operating lease liability⁴	1,570)	1,570)	÷	84,394)	=	0.02	0.02	×	6.30% × (1 – 35.00%)	=	0.08%
Total:	84,394)					1.00					15.82%

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 »

Jun 30, 2014

	Capital (fair value)¹	Weights					Cost of capital
Equity²	78,316)	78,316)	÷	104,698)	=	0.75	0.75	×	20.36%	=	15.23%
Borrowings³	22,692)	22,692)	÷	104,698)	=	0.22	0.22	×	6.40% × (1 – 35.00%)	=	0.90%
Operating lease liability⁴	3,690)	3,690)	÷	104,698)	=	0.04	0.04	×	6.40% × (1 – 35.00%)	=	0.15%
Total:	104,698)					1.00					16.28%

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 »

Jun 30, 2013

	Capital (fair value)¹	Weights					Cost of capital
Equity²	72,612)	72,612)	÷	94,822)	=	0.77	0.77	×	20.36%	=	15.59%
Borrowings³	18,756)	18,756)	÷	94,822)	=	0.20	0.20	×	6.51% × (1 – 35.00%)	=	0.84%
Operating lease liability⁴	3,454)	3,454)	÷	94,822)	=	0.04	0.04	×	6.51% × (1 – 35.00%)	=	0.15%
Total:	94,822)					1.00					16.59%

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 »

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	(3,265)	(2,466)	(2,237)	2,407)	(3,341)	527)
Invested capital²	47,272)	45,055)	42,462)	44,315)	48,265)	44,434)
Performance Ratio
Economic spread ratio³	-6.91%	-5.47%	-5.27%	5.43%	-6.92%	1.19%
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 × -3,265 ÷ 47,272 = -6.91%

⁴ Click competitor name to see calculations.

The analysis of economic value creation reveals a period of significant volatility and a general inability to consistently generate returns exceeding the cost of capital. The financial performance is characterized by erratic swings in economic profit, resulting in a predominantly negative economic spread ratio over the observed six-year window.

Economic Spread Ratio Trends: The economic spread ratio exhibited extreme fluctuations, starting at a positive 1.19% in 2013 before dropping sharply to -6.92% in 2014. A recovery occurred in 2015, reaching a peak of 5.43%, followed by a sustained decline into negative territory for the remainder of the period, concluding at -6.91% in 2018. This pattern indicates that the entity struggled to maintain a competitive advantage over its weighted average cost of capital.
Economic Profit Performance: Economic profit mirrored the volatility of the spread ratio, shifting from a positive 527 million US dollars in 2013 to a substantial loss of 3,341 million US dollars in 2014. Despite a temporary return to profitability in 2015 with 2,407 million US dollars, the subsequent years saw deepening losses, with the 2018 deficit reaching 3,265 million US dollars. These figures suggest a persistent failure to create economic value for shareholders in the latter half of the period.
Invested Capital Stability: Invested capital remained relatively stable throughout the period, fluctuating within a range of approximately 42.5 billion to 48.3 billion US dollars. The lack of significant contraction or expansion in the capital base suggests that the volatility in economic profit and spread ratios was driven by operational earnings or changes in the cost of capital rather than by major structural changes in the investment base.

AI Ask an analyst for more

Download chart

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	(3,265)	(2,466)	(2,237)	2,407)	(3,341)	527)

Revenues	30,400)	28,500)	27,326)	28,987)	31,867)	27,675)
Add: Increase (decrease) in deferred revenue	98)	75)	57)	(242)	13)	(203)
Adjusted revenues	30,498)	28,575)	27,383)	28,745)	31,880)	27,472)
Performance Ratio
Economic profit margin²	-10.70%	-8.63%	-8.17%	8.37%	-10.48%	1.92%
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 × -3,265 ÷ 30,498 = -10.70%

³ Click competitor name to see calculations.

The financial performance from June 30, 2013, to June 30, 2018, is characterized by substantial volatility in economic value creation despite relatively stable revenue streams. The organization experienced alternating periods of economic value addition and destruction, with a pronounced downward trajectory in the final three years of the observed period.

Economic Profit Trends: Economic profit exhibited extreme fluctuations, beginning with a positive value of US$ 527 million in 2013 before dropping sharply to a deficit of US$ 3,341 million in 2014. A temporary recovery occurred in 2015, with profit reaching US$ 2,407 million. However, the subsequent three years saw a consistent return to negative territory, culminating in a loss of US$ 3,265 million by June 30, 2018.
Revenue Correlation: Adjusted revenues remained within a range of US$ 27,383 million to US$ 31,880 million throughout the period. The lack of a direct correlation between revenue growth and economic profit suggests that the volatility in economic value was driven by factors other than top-line performance, such as fluctuations in the cost of capital or shifts in operating expenses.
Economic Profit Margin Analysis: The economic profit margin mirrored the volatility of the absolute economic profit. After a modest positive margin of 1.92% in 2013 and a peak of 8.37% in 2015, the margin entered a sustained decline. By 2018, the margin reached its lowest point of -10.70%, indicating a systemic inability to generate returns exceeding the cost of capital during the latter part of the period.

AI Ask an analyst for more

Download chart

Twenty-First Century Fox Inc. (NASDAQ:FOX)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin