Return on Equity (ROE)
since 2005
Calculation
Time Warner Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net income (loss) attributable to Time Warner Inc. shareholders1 | ÷ | Total Time Warner Inc. shareholders’ equity1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | 18.49% | = | 100 | × | 5,247) | ÷ | 28,375) |
| Dec 31, 2016 | 16.13% | = | 100 | × | 3,926) | ÷ | 24,335) |
| Dec 31, 2015 | 16.23% | = | 100 | × | 3,833) | ÷ | 23,619) |
| Dec 31, 2014 | 15.64% | = | 100 | × | 3,827) | ÷ | 24,476) |
| Dec 31, 2013 | 12.34% | = | 100 | × | 3,691) | ÷ | 29,904) |
| Dec 31, 2012 | 10.10% | = | 100 | × | 3,019) | ÷ | 29,877) |
| Dec 31, 2011 | 9.63% | = | 100 | × | 2,886) | ÷ | 29,957) |
| Dec 31, 2010 | 7.83% | = | 100 | × | 2,578) | ÷ | 32,940) |
| Dec 31, 2009 | 7.39% | = | 100 | × | 2,468) | ÷ | 33,383) |
| Dec 31, 2008 | -31.69% | = | 100 | × | (13,402) | ÷ | 42,288) |
| Dec 31, 2007 | 7.49% | = | 100 | × | 4,387) | ÷ | 58,536) |
| Dec 31, 2006 | 10.85% | = | 100 | × | 6,552) | ÷ | 60,389) |
| Dec 31, 2005 | 4.63% | = | 100 | × | 2,905) | ÷ | 62,715) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in millions
The Return on Equity (ROE) for Time Warner Inc. exhibited significant volatility between 2005 and 2017, characterized by a severe collapse in 2008 followed by a sustained period of recovery and expansion. While the early period was marked by instability, the latter half of the timeframe shows a consistent upward trajectory in capital efficiency.
- Impact of the 2008 Financial Event
- A critical inflection point occurred in 2008, where net income plummeted to a loss of 13,402 million US dollars. This resulted in a sharp decline in ROE to -31.69%, the lowest point in the observed period. The magnitude of this loss also triggered a substantial reduction in total shareholders' equity, which fell from 58,536 million US dollars in 2007 to 42,288 million US dollars by the end of 2008.
- Recovery and Growth Phase (2009–2017)
- Following the 2008 contraction, a steady recovery in profitability was observed. Net income returned to positive territory in 2009 and grew progressively to reach 5,247 million US dollars by 2017. Consequently, ROE climbed from 7.39% in 2009 to a peak of 18.49% in 2017, indicating a robust recovery in the company's ability to generate profits from shareholders' investments.
- Equity Base Compression and ROE Amplification
- The increase in ROE was driven not only by rising net income but also by a significant contraction in the equity base. Total shareholders' equity declined from 62,715 million US dollars in 2005 to a low of 23,619 million US dollars in 2015. This reduction in the denominator of the ROE calculation amplified the ratio, contributing to the accelerated growth of ROE from 10.10% in 2012 to 18.49% in 2017, even during years when net income growth was more incremental.
- Long-term Profitability Trend
- The data reveals a transition from a capital-heavy structure with low returns in 2005 (ROE of 4.63%) to a more lean equity structure with higher returns by 2017. The final three years of the analysis show a stabilization of equity alongside increasing net income, resulting in the highest ROE levels recorded over the thirteen-year period.
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Comparison to Competitors
Time Warner Inc., ROE, long-term trends, comparison to competitors
| Time Warner Inc. | Alphabet Inc. | Comcast Corp. | Meta Platforms Inc. | Netflix Inc. | Walt Disney Co. | |
|---|---|---|---|---|---|---|
| Dec 31, 2017 | 18.49% | 8.30% | 33.11% | 21.43% | 15.60% | 21.74% |
| Dec 31, 2016 | 16.13% | 14.01% | 16.12% | 17.26% | 6.97% | 21.71% |
| Dec 31, 2015 | 16.23% | 13.59% | 15.62% | 8.34% | 5.52% | 18.83% |
| Dec 31, 2014 | 15.64% | 13.82% | 15.90% | 8.14% | 14.36% | 16.68% |
| Dec 31, 2013 | 12.34% | 14.80% | 13.45% | 9.70% | 8.43% | 13.51% |
| Dec 31, 2012 | 10.10% | 14.97% | 12.57% | 0.45% | 2.30% | 14.29% |
| Dec 31, 2011 | 9.63% | 16.75% | 8.80% | — | 35.18% | 12.86% |
| Dec 31, 2010 | 7.83% | 18.39% | 8.20% | — | 55.44% | 10.56% |
| Dec 31, 2009 | 7.39% | 18.11% | 8.52% | — | 58.18% | 9.80% |
| Dec 31, 2008 | -31.69% | 14.97% | 6.30% | — | 23.92% | 13.70% |
| Dec 31, 2007 | 7.49% | 18.53% | 6.26% | — | 15.54% | 15.24% |
| Dec 31, 2006 | 10.85% | 18.06% | 6.15% | — | 11.85% | 10.60% |
| Dec 31, 2005 | 4.63% | 15.56% | 2.31% | — | 18.58% | 9.66% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Media & Entertainment)
Time Warner Inc., ROE, long-term trends, comparison to sector (media & entertainment)
| Time Warner Inc. | Media & Entertainment | |
|---|---|---|
| Dec 31, 2017 | 18.49% | 17.88% |
| Dec 31, 2016 | 16.13% | 16.09% |
| Dec 31, 2015 | 16.23% | 13.93% |
| Dec 31, 2014 | 15.64% | 13.96% |
| Dec 31, 2013 | 12.34% | 13.73% |
| Dec 31, 2012 | 10.10% | 13.09% |
| Dec 31, 2011 | 9.63% | 13.20% |
| Dec 31, 2010 | 7.83% | 12.67% |
| Dec 31, 2009 | 7.39% | 12.06% |
| Dec 31, 2008 | -31.69% | 11.13% |
| Dec 31, 2007 | 7.49% | 12.13% |
| Dec 31, 2006 | 10.85% | 9.99% |
| Dec 31, 2005 | 4.63% | 6.53% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Communication Services)
Time Warner Inc., ROE, long-term trends, comparison to industry (communication services)
| Time Warner Inc. | Communication Services | |
|---|---|---|
| Dec 31, 2017 | 18.49% | 22.85% |
| Dec 31, 2016 | 16.13% | 16.35% |
| Dec 31, 2015 | 16.23% | 16.38% |
| Dec 31, 2014 | 15.64% | 14.00% |
| Dec 31, 2013 | 12.34% | 16.63% |
| Dec 31, 2012 | 10.10% | 10.32% |
| Dec 31, 2011 | 9.63% | 8.87% |
| Dec 31, 2010 | 7.83% | 13.88% |
| Dec 31, 2009 | 7.39% | 11.62% |
| Dec 31, 2008 | -31.69% | 12.77% |
| Dec 31, 2007 | 7.49% | 11.11% |
| Dec 31, 2006 | 10.85% | 8.87% |
| Dec 31, 2005 | 4.63% | 10.06% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).