Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Selected Financial Data since 2006
- Operating Profit Margin since 2006
- Return on Equity (ROE) since 2006
- Return on Assets (ROA) since 2006
- Price to Operating Profit (P/OP) since 2006
- Analysis of Debt
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Profitability Ratios (Summary)
Time Warner Cable Inc., profitability ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
- Gross Profit Margin
- The gross profit margin exhibited a significant increase from 53.56% in 2011 to a peak of 78.01% in 2012, followed by a slight decline through subsequent years, ending at 75.46% in 2015. Despite this decrease after 2012, the margin remained substantially higher than the 2011 level, indicating stronger control over the cost of goods sold relative to revenue.
- Operating Profit Margin
- The operating profit margin maintained relative stability from 2011 to 2014, fluctuating marginally around 20.6% to 20.8%. However, in 2015, there was a noticeable decline to 17.89%, suggesting either increased operating expenses or reduced operating income in that year.
- Net Profit Margin
- The net profit margin showed moderate variation, increasing from 8.46% in 2011 to a peak of 10.08% in 2012, then generally trending downward to 7.78% in 2015. This decrease in profitability at the net level may reflect rising costs, financial expenses, or taxation impacting the company's bottom line over time.
- Return on Equity (ROE)
- ROE increased from 22.11% in 2011 to a high of 29.61% in 2012, followed by a gradual decline to 20.5% by 2015. This decrease suggests diminishing efficiency in generating returns on shareholders' equity, possibly due to reduced profitability or changes in capital structure.
- Return on Assets (ROA)
- ROA rose from 3.45% in 2011 to 4.33% in 2012, then experienced a modest decline to 3.74% in 2015. The pattern indicates an initial improvement in asset utilization efficiency, followed by some erosion in effective asset profitability over the later years.
Return on Sales
Return on Investment
Gross Profit Margin
Time Warner Cable Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data presents a clear overview of the revenue and profitability trends over a five-year period.
- Revenue Trend
- Revenue showed a consistent upward trend from 2011 through 2015, rising from 19,675 million US dollars in 2011 to 23,697 million US dollars in 2015. This reflects a steady growth rate, indicating successful revenue generation and expansion throughout the period.
- Gross Profit Trend
- Gross profit also increased substantially during this time frame, more than doubling from 10,537 million US dollars in 2011 to 17,882 million US dollars in 2015. The growth in gross profit closely follows the increase in revenue, confirming improved absolute financial performance year over year.
- Gross Profit Margin
- The gross profit margin showed a notable variation within the period. It started at 53.56% in 2011 and surged sharply to around 78% by 2012, maintaining a relatively stable but slightly declining margin thereafter, ending at 75.46% in 2015. This indicates an improvement in cost efficiency or pricing power leading up to 2012, followed by a modest contraction in margin percentage, yet remaining significantly higher than the initial year.
- Overall Financial Performance Insights
- The overall performance suggests successful revenue growth alongside strong gross profit improvement. Despite a mild decline in margin percentage after 2012, the gross profit margin remained robust, indicating the company was able to sustain substantial profitability. The combination of increasing revenue and high gross profit margins points towards effective operational management and potentially favorable market conditions during the analyzed years.
Operating Profit Margin
Time Warner Cable Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue
- The revenue of the company has demonstrated a steady upward trend over the five-year period, increasing from $19,675 million in 2011 to $23,697 million in 2015. This consistent growth indicates an expanding top line, reflecting either increased sales volume, pricing, or market penetration.
- Operating Income
- Operating income also showed an increasing trend from 2011 to 2014, rising from $4,069 million to a peak of $4,632 million. However, in 2015, there was a noticeable decline to $4,239 million. This suggests that despite growing revenue, operating income faced pressures or increased costs that year, leading to reduced operating profitability.
- Operating Profit Margin
- The operating profit margin remained relatively stable from 2011 through 2014, fluctuating slightly between 20.31% and 20.78%. The margin peaked at 20.78% in 2012, then gradually decreased to 17.89% in 2015. This decline in margin despite increasing revenue suggests either rising operating expenses or other factors negatively impacting operational efficiency in the latter year.
- Overall Financial Performance Insights
- The company exhibited growth in revenue throughout the period, accompanied by increasing operating income for the first four years. However, the reduction in operating income and operating profit margin in the final year indicates emerging challenges in maintaining profitability. This divergence between revenue growth and profit margins warrants further investigation into cost structure, market conditions, or competitive factors affecting operating results.
Net Profit Margin
Time Warner Cable Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to TWC shareholders | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Net profit margin = 100 × Net income attributable to TWC shareholders ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period ending December 31, 2015, reveals several important trends related to profitability and revenue performance.
- Net Income Attributable to Shareholders
- Net income exhibited an overall increasing trend from 2011 to 2012, rising significantly from 1,665 million US dollars to 2,155 million US dollars. Following this peak, net income showed a declining pattern with fluctuations, dropping to 1,954 million in 2013, recovering slightly to 2,031 million in 2014, and then decreasing again to 1,844 million by the end of 2015. This indicates some variability in profitability after a strong gain in 2012.
- Revenue
- Revenue demonstrated consistent growth throughout the period, increasing year over year from 19,675 million US dollars in 2011 to 23,697 million US dollars in 2015. This steady upward movement suggests ongoing expansion and increasing sales volume or pricing power, contributing positively to the company's top line.
- Net Profit Margin
- Net profit margin showed variability throughout the analyzed years. It improved from 8.46% in 2011 to a peak of 10.08% in 2012, aligning with the peak in net income for that year. Subsequently, the margin decreased to 8.83% in 2013 and remained relatively stable at 8.9% in 2014 before declining further to 7.78% in 2015. The downward trend in margin despite revenue growth suggests that cost pressures or other operational factors might have affected overall profitability.
In summary, the company experienced solid revenue growth, but net income and net profit margin showed fluctuations with a tendency to decline after the peak year of 2012. The divergence between rising revenues and decreasing profitability margins could indicate increasing expenses or diminishing operational efficiency during the latter years.
Return on Equity (ROE)
Time Warner Cable Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to TWC shareholders | ||||||
| Total TWC shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROE = 100 × Net income attributable to TWC shareholders ÷ Total TWC shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period from 2011 to 2015.
- Net Income
- The net income attributable to shareholders showed an overall positive trajectory with fluctuations. It increased significantly from 1,665 million US dollars in 2011 to a peak of 2,155 million in 2012. Following this peak, it declined in 2013 to 1,954 million, slightly recovered in 2014 to 2,031 million, but then fell again in 2015 to 1,844 million. Despite these variations, net income in 2015 remained above the 2011 level.
- Total Shareholders’ Equity
- Total shareholders’ equity exhibited a more variable pattern. It decreased steadily from 7,530 million US dollars in 2011 to 6,943 million in 2013, marking a three-year downward trend. Then, it reversed course and increased in the subsequent two years, reaching 8,013 million in 2014 and further rising to 8,995 million in 2015, surpassing the initial value observed in 2011.
- Return on Equity (ROE)
- ROE demonstrated a general decline over the period despite some fluctuations. Starting at 22.11% in 2011, it rose markedly to 29.61% in 2012 and slightly decreased to 28.14% in 2013. Subsequently, a downward trend continued with ROE dropping to 25.35% in 2014 and declining further to 20.5% in 2015. This reduction signals a decreasing efficiency in generating earnings from shareholders’ equity over the last three years.
In summary, the company experienced a peak in profitability in 2012, followed by some instability in net income and equity levels thereafter. Equity levels reached their lowest in 2013 before rebounding significantly by 2015. Despite the recovery in equity, the efficiency of equity utilization—as measured by ROE—decreased consistently after 2012, suggesting that net income growth did not keep pace with the increase in shareholders’ equity during the later years.
Return on Assets (ROA)
Time Warner Cable Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to TWC shareholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROA = 100 × Net income attributable to TWC shareholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to TWC Shareholders
- The net income showed an overall increasing trend from 2011 to 2012, rising from 1,665 million USD to 2,155 million USD, which indicates a significant improvement in profitability. However, in the following years from 2012 to 2015, net income experienced a decline with minor fluctuations, decreasing to 1,844 million USD by the end of 2015. This suggests a peak in 2012 followed by a gradual reduction, reflecting potential challenges in maintaining the previous levels of earnings.
- Total Assets
- Total assets exhibited relative stability over the five-year period, with minor year-to-year variations. The values ranged between approximately 48,000 million USD and 49,000 million USD, indicating little change in the asset base. This stability suggests that the company maintained a consistent asset structure without significant expansion or contraction during this timeframe.
- Return on Assets (ROA)
- The return on assets demonstrated a similar pattern to net income, peaking at 4.33% in 2012 and then declining gradually to 3.74% by 2015. Despite some fluctuations, the ROA remained within a relatively narrow range around 3.5% to 4.3%, indicating that overall asset efficiency in generating profit decreased slightly after the peak in 2012 but stayed stable thereafter.
- Summary
- In summary, the data indicate that the company experienced its highest profitability and asset efficiency in 2012, with net income and ROA reaching peak values. Subsequent years saw a decline in profitability and return on assets, while the total asset base remained stable. This pattern suggests that despite maintaining asset levels, the company's ability to convert these assets into net income diminished somewhat after 2012.