Time Warner Inc. (NYSE:TWX)

The financial data indicates several notable trends in the intangible assets and goodwill over the five-year period from 2013 to 2017.

Film Library

The value of the film library remained nearly constant, showing a minimal decrease from 3,452 million USD in 2013 to 3,430 million USD in 2017, suggesting stable valuation without significant impairment or additions.

Brands, Tradenames and Other Intangible Assets

This category experienced a sharp decline in 2014, dropping from 2,156 million USD in 2013 to 710 million USD, and then stabilized around 700 million USD through 2017. This significant drop may indicate a revaluation or impairment in 2014, followed by steady maintenance of remaining intangible assets.

Intangible Assets Subject to Amortization

The gross amount of intangible assets subject to amortization decreased from 5,608 million USD in 2013 to approximately 4,137 million USD in 2017. Correspondingly, accumulated amortization increased in absolute terms (less negative) from -3,688 million USD to -3,552 million USD. However, the net intangible assets subject to amortization showed a consistent decreasing trend, declining from 1,920 million USD in 2013 to 585 million USD in 2017, reflecting ongoing amortization expenses or asset disposals over time.

Intangible Assets Not Subject to Amortization

Values in this category declined modestly from 7,629 million USD in 2013 to 7,006 million USD in 2017, indicating slight reductions but overall stability in non-amortizable intangible assets.

Total Intangible Assets

Combining both amortizable and non-amortizable assets, the total intangible assets decreased steadily from 9,549 million USD in 2013 to 7,591 million USD in 2017, emphasizing a net reduction due to amortization and possible impairments or disposals.

Goodwill

Goodwill declined significantly from 30,563 million USD in 2013 to 27,565 million USD in 2014, followed by relative stabilization around 27,700 million USD through 2017. This initial large decrease may indicate impairment or divestitures of goodwill assets, with subsequent years showing a steady holding pattern.

Goodwill and Intangible Assets Combined

The combined value decreased from 40,112 million USD in 2013 to 35,367 million USD in 2017, reflecting the aggregate impact of asset reductions in both goodwill and intangible assets categories over the period.

Overall, the data reveals a pattern of notable impairment or revaluation in 2014, followed by continued amortization-driven reductions in intangible assets, while the goodwill component stabilized after an initial significant decrease. The steady film library values suggest minimal volatility within that asset class. This trend suggests a strategic contraction or more conservative valuation of intangible assets and goodwill during the reported years.

Total Assets

Reported total assets showed a decreasing trend from 67,994 million USD in 2013 to 63,259 million USD in 2014. This was followed by a slight increase in 2015 to 63,848 million USD, with continued growth in 2016 and 2017 reaching 65,966 million USD and 69,209 million USD respectively. Adjusted total assets, which exclude goodwill, mirrored the overall pattern but at significantly lower absolute values, decreasing from 37,431 million USD in 2013 to 35,694 million USD in 2014, then gradually increasing to 41,433 million USD by 2017.

Shareholders’ Equity

The reported shareholders’ equity exhibited a decline from 29,904 million USD in 2013 to 24,476 million USD in 2014, and further decreased to 23,619 million USD in 2015. There was a modest recovery observed in 2016 with equity at 24,335 million USD, followed by a more substantial increase in 2017 reaching 28,375 million USD. In contrast, the adjusted shareholders’ equity reflected negative values throughout the period from 2013 to 2016, starting at -659 million USD in 2013 and deteriorating to -4,070 million USD in 2015, before improving slightly to -3,417 million USD in 2016. A notable positive turnaround occurred in 2017, with adjusted equity increasing to a positive 599 million USD.

Insights and Summary

The data indicate that while reported total assets and shareholders’ equity experienced some volatility, with an initial decline followed by recovery, the adjusted figures suggest the presence of significant goodwill that impacts the financial structure. The considerable difference between reported and adjusted values underscores the importance of goodwill in the company’s asset and equity composition. The negative adjusted shareholders’ equity for most years indicates that excluding goodwill, the company’s net asset value may have been under pressure, with only a recovery to positive territory in 2017. This improvement in 2017 could point to either asset base strengthening, reduction in intangible asset impairments, or other balance sheet adjustments affecting goodwill and equity.

Total Asset Turnover

The reported total asset turnover ratio remained relatively stable over the five-year period, fluctuating narrowly between 0.43 and 0.45. This indicates consistent efficiency in utilizing assets to generate sales. In contrast, the adjusted total asset turnover started at 0.80 in 2013 and gradually declined to 0.75 by 2017, showing a slight decrease in efficiency when goodwill adjustments are considered.

Financial Leverage

The reported financial leverage increased steadily from 2.27 in 2013 to a peak of 2.71 in 2016, before decreasing to 2.44 in 2017. This trend suggests a cautious increase in debt or other liabilities relative to equity, followed by a modest reduction in leverage. The adjusted financial leverage figure is significantly higher at 69.17 in 2017, which may reflect the impact of goodwill adjustment on the equity base, drastically altering the leverage calculation.

Return on Equity (ROE)

Reported ROE shows a clear upward trajectory, rising from 12.34% in 2013 to 18.49% in 2017. This positive trend indicates improving profitability and efficient use of shareholder equity over the period under review. However, the adjusted ROE reported in 2017 is extraordinarily high at 875.96%, which suggests that goodwill adjustments significantly inflate the return measure, likely due to the reduced equity denominator.

Return on Assets (ROA)

Reported ROA increased from 5.43% in 2013 to 7.58% in 2017, demonstrating improved overall asset profitability. The adjusted ROA values are consistently higher than the reported ones, beginning at 9.86% in 2013 and rising to 12.66% in 2017. This consistent difference implies that excluding goodwill enhances the apparent asset efficiency and profitability.

Overall Insights

The stability in reported total asset turnover combined with rising reported ROE and ROA suggests growing operational effectiveness and profitability in the reported figures. The leverage pattern shows an initial rise followed by a slight decline, implying a possible strategy to manage financial risk. Adjusted figures reveal pronounced differences, particularly in financial leverage and ROE, underscoring the strong impact of goodwill on the company’s financial ratios. These adjustments highlight that goodwill has a substantial effect in magnifying leverage and returns when excluded from equity and assets.

Total Assets

The reported total assets experienced a decline from 67,994 million USD in 2013 to 63,259 million USD in 2014, followed by a modest increase in subsequent years, reaching 69,209 million USD by the end of 2017. In contrast, the adjusted total assets, which exclude goodwill, showed a consistent decrease from 37,431 million USD in 2013 to 35,694 million USD in 2014, but gradually increased thereafter to 41,433 million USD by 2017. Overall, the adjusted figures remain significantly lower than the reported totals, reflecting the impact of goodwill on the asset base.

Total Asset Turnover

The reported total asset turnover ratio remained relatively stable over the five-year period, fluctuating slightly between 0.43 and 0.45. This indicates a steady performance in generating revenue from the reported asset base. Conversely, the adjusted total asset turnover ratio, which considers the adjusted asset figures, began at a higher level of 0.80 in 2013 and exhibited a gradual downward trend to 0.75 by 2017. This decline suggests a reduction in efficiency when measuring revenue generation against the adjusted, goodwill-excluded asset base.

Insights

The divergence between reported and adjusted total assets points to a significant portion of the asset base being attributable to goodwill. The relative stability in reported asset turnover ratios, combined with the declining trend in adjusted ratios, implies that while the company maintained consistent revenue relative to reported assets, its operational efficiency based on tangible or adjusted assets may have decreased over time. This pattern suggests that goodwill plays a key role in inflating asset figures, and that the company’s revenue-generating efficiency on a tangible asset basis has softened somewhat during the analyzed period.

Over the observed period from 2013 to 2017, the reported total assets of the company demonstrated a general upward trend, increasing from approximately 67.99 billion US dollars in 2013 to 69.21 billion US dollars in 2017. There was a slight dip in 2014, followed by a steady increase through to 2017. The adjusted total assets, which exclude goodwill, showed a consistent rise from 37.43 billion in 2013 to 41.43 billion in 2017, indicating growth in core assets independent of goodwill adjustments.

Regarding shareholders’ equity, the reported figures declined from 29.9 billion in 2013 to a low of 23.62 billion in 2015, before recovering slightly to 28.38 billion by 2017. Conversely, adjusted shareholders’ equity, which accounts for goodwill, was negative throughout the five-year span except for 2017 when it turned positive at 599 million. This persistent negative adjusted equity from 2013 to 2016 suggests that goodwill significantly impacted the equity value, dragging it below zero during these years before improving in 2017.

Analyzing financial leverage, the reported ratio increased from 2.27 in 2013, peaking at 2.71 in 2016, then declining to 2.44 in 2017. This pattern indicates a rising reliance on debt relative to equity until 2016, followed by some deleveraging in the final year. Notably, adjusted financial leverage is only reported for 2017 and shows an extremely high value of 69.17, reflecting the very low adjusted shareholder equity in that year and suggesting a substantial leverage position when goodwill is excluded.

Assets

Reported total assets grew moderately over the period with minor fluctuations, while adjusted total assets showed steady growth, highlighting expansion in fundamental assets.

Shareholders’ Equity

Reported equity decreased initially but recovered towards the end of the period. Adjusted equity remained negative until 2017, indicating significant goodwill impairments or adjustments affecting equity valuation.

Financial Leverage

Reported leverage increased and then decreased slightly, reflecting changing capital structure strategies. The extraordinarily high adjusted leverage in 2017 underscores a high debt load when goodwill is excluded.

Over the observed time frame, the reported total shareholders’ equity demonstrated fluctuations with an overall declining trend from 2013 to 2016, followed by a rebound in 2017. Specifically, the equity decreased from 29,904 million US dollars in 2013 to a low of 23,619 million in 2015, before slightly increasing to 24,335 million in 2016 and significantly rising to 28,375 million in 2017.

In contrast, the adjusted total shareholders’ equity, which accounts for goodwill adjustments, consistently showed negative values from 2013 through 2016, indicating that the adjustments considerably reduced the equity figures. Starting at -659 million US dollars in 2013, the adjusted equity further declined to -4,070 million by 2015, then showed some improvement, increasing to -3,417 million in 2016 and turning positive to 599 million in 2017. This shift to positive adjusted equity in 2017 may suggest successful impairment reversals, asset revaluations, or other adjustments that enhanced the equity base once goodwill impact was considered.

Regarding profitability metrics, the reported return on equity (ROE) displayed an upward trend throughout the period. It increased from 12.34% in 2013 to 18.49% in 2017, indicating improving efficiency in generating profits from shareholders’ equity. The ROE values peaked in 2015 at 16.23%, dipped slightly in 2016, then reached the highest point in 2017.

The adjusted ROE, however, is only provided for the last period and presents an anomalously high value of 875.96%. This exceptionally elevated figure suggests either a very low or negative adjusted equity base leading to inflated returns or potential data irregularities for the adjusted ROE calculation in 2017. Without data for previous years, it is not possible to assess the trend for adjusted ROE, but the 2017 result signals significant volatility or restructuring effects on adjusted profitability measurements.

In summary, the analysis highlights that while reported equity and profitability improved notably by 2017 following earlier declines or stagnation, the adjusted figures reflecting goodwill impacts experienced negative equity levels until 2017 and a highly volatile adjusted return on equity. The recovery in adjusted equity and the extraordinary adjusted ROE in 2017 merit further examination to understand the underlying financial adjustments and their implications for the company’s true economic position.

The analysis of the annual financial data reveals several notable trends in asset valuation and return on assets (ROA) metrics over the five-year period.

Total Assets

Reported total assets experienced a moderate decline from US$67,994 million in 2013 to US$63,259 million in 2014, followed by a slight increase over the subsequent years, eventually reaching US$69,209 million by the end of 2017. In contrast, the adjusted total assets, representing the values excluding goodwill, consistently showed a downward trend initially — decreasing from US$37,431 million in 2013 to US$35,694 million in 2014 — but then gradually increased to US$41,433 million by 2017.

Return on Assets (ROA)

The reported ROA showed minor fluctuations over the period, beginning at 5.43% in 2013, rising to a peak of 6.05% in 2014, slightly decreasing thereafter, but surging to 7.58% in 2017. The adjusted ROA, which excludes the effect of goodwill, consistently outperformed the reported ROA by a significant margin. It rose steadily from 9.86% in 2013 to 10.72% in 2014, maintained a slight downward trend through to 2016, before climbing markedly to 12.66% in 2017.

These trends suggest that while the total assets reported fluctuated moderately, the exclusion of goodwill resulted in a generally increasing asset base over time. The persistent superiority of adjusted ROA compared to reported ROA indicates that the adjusted measure may provide a more favorable and possibly more accurate perspective on asset profitability. The strong improvement in adjusted ROA in the final year highlights enhanced efficiency or profitability relative to the asset base when goodwill is excluded.