Time Warner Inc. (NYSE:TWX)

Net operating profit after taxes (NOPAT)

The NOPAT values exhibit a generally stable yet slightly fluctuating pattern over the five-year period. Starting at 5150 million US dollars in 2013, the figure shows a marginal increase to 5167 million in 2014, followed by a decline to 4751 million in 2015. Thereafter, a moderate recovery is observed with NOPAT rising to 4943 million in 2016 and further to 5040 million in 2017, not fully reaching the initial levels seen in 2013 and 2014.

Cost of capital

The cost of capital remains relatively consistent, fluctuating slightly between 10.75% and 11.41% during the period in question. The lowest value occurs in 2015 at 10.75%, whereas the highest value is recorded in 2016 at 11.41%. These minor variations suggest a relatively stable capital cost environment without significant upward or downward trends.

Invested capital

Invested capital shows a declining trend initially, decreasing from 56,262 million US dollars in 2013 to 52,455 million in 2014. This is followed by gradual increases over the subsequent years, reaching 53,163 million in 2015, 54,961 million in 2016, and culminating at 57,150 million in 2017. Overall, the invested capital decreases initially but recovers and slightly surpasses the opening value by the end of the analysis period.

Economic profit

Economic profit remains consistently negative throughout the period, indicating that the company did not generate returns exceeding its cost of capital in any year. The deficit narrows from -1,213 million in 2013 to -776 million in 2014, suggesting a short-term improvement. However, this is followed by a deterioration with economic profit declining to -964 million in 2015, -1,330 million in 2016, and further to -1,457 million in 2017. The trend points to increasing economic losses over the latter part of the period.

Summary of trends and insights

The financial indicators reflect a mixed performance. While NOPAT shows some recovery after a dip in 2015, economic profit consistently remains negative and worsens towards the end of the period, implying challenges in covering the cost of capital. The invested capital exhibits fluctuations with an initial decrease followed by gradual growth, indicating potential adjustments or investments. The stable cost of capital suggests external financing conditions remained largely unchanged. The combination of stable to slightly declining profitability and increasing invested capital, alongside persistent negative economic profit, may warrant strategic reviews to improve capital efficiency and profitability.

Net Income Attributable to Time Warner Inc. Shareholders

A consistent upward trend in net income is observable over the five-year period. Starting at $3,691 million in 2013, net income increased marginally each year, reaching $3,927 million in 2016. A notable rise occurred in 2017, with net income sharply increasing to $5,247 million, indicating a significant enhancement in profitability in that year.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a relatively stable but slightly fluctuating pattern. From $5,150 million in 2013, it increased slightly to $5,167 million in 2014, followed by a decline to $4,751 million in 2015. The figure then recovered somewhat in 2016 and 2017, reaching $5,040 million by the end of 2017. Overall, NOPAT remained within a narrow range, suggesting moderate operational profit stability with some variation over the years.

Comparative Observations

While net income demonstrated a robust growth trajectory, especially in the final year, NOPAT displayed greater stability but without a clear upward trend. The divergence between the increasing net income and relatively stable NOPAT in the last year might indicate changes in non-operating factors such as financing activities, tax adjustments, or other income components contributing positively to net income.

Current and Deferred Income Taxes on Income from Continuing Operations

The amount of current and deferred income taxes provided on income from continuing operations exhibited a fluctuating trend over the five-year period. In 2013, the value was 1,749 million US dollars, which decreased significantly to 785 million in 2014. It then increased again to 1,651 million in 2015, followed by a decline to 1,281 million in 2016. By the end of 2017, this measure further dropped to 701 million US dollars, marking the lowest point in the observed range. Overall, the data suggest variability with no clear upward or downward long-term trend, but a general reduction from the starting value.

Cash Operating Taxes

Cash operating taxes showed a more consistent upward trend compared to the income taxes provided on continuing operations. Starting at 1,442 million US dollars in 2013, there was a notable increase to 1,048 million in 2014, which appears to be a decline; however, the following years reversed this pattern with values rising to 1,757 million in 2015 and then slightly decreasing to 1,465 million in 2016. The amount surged substantially in 2017 to 2,078 million US dollars, representing the highest value within the period. This trend indicates growing cash tax liabilities over time, with some minor fluctuations in the middle years.

Comparison Insights

Comparing both tax-related measures reveals divergent patterns: while current and deferred income taxes showed a volatile yet generally declining trend, cash operating taxes tended to increase, especially markedly in the final year. This divergence may indicate changes in tax accounting, timing differences, or shifts in taxable income and cash tax payment obligations across the reporting years.

Total Reported Debt & Leases

The total reported debt and leases exhibited a generally increasing trend from 2013 to 2016, rising from $21,765 million to $25,355 million. However, in 2017, there was a slight decrease to $24,720 million. This indicates an overall growth in debt commitments over the period, with a minor reduction in the final year.

Total Time Warner Inc. Shareholders’ Equity

Shareholders’ equity showed a declining trend from 2013 through 2015, decreasing from $29,904 million to $23,619 million. In 2016, the equity slightly increased to $24,335 million and further rebounded more significantly in 2017 to $28,375 million. This pattern suggests a period of equity contraction followed by recovery toward the end of the analyzed timeframe.

Invested Capital

Invested capital declined from $56,262 million in 2013 to $52,455 million in 2014, followed by a modest increase in subsequent years, reaching $57,150 million in 2017. The leveling and eventual rise in invested capital imply a stabilization and renewed investment activities after an initial drop.

Overall Observations

Over the five-year period, the company’s financial structure demonstrated changes characterized by an initial increase in debt and decrease in equity and invested capital, followed by a stabilization and partial recovery. The reduction in shareholders’ equity between 2013 and 2015 could be indicative of challenges faced, while the subsequent increases in equity and invested capital suggest restored confidence and investment. The relatively stable debt levels near the end of the period highlight a controlled leverage approach.

The financial data reveals several notable trends over the five-year period ending December 31, 2017.

Economic Profit

The economic profit, measured in US$ millions, shows a consistently negative value throughout the entire period. The figure starts at -1,213 million in 2013, improves somewhat in 2014 to -776 million, then deteriorates again in subsequent years. By 2017, the economic profit had declined further to -1,457 million, the lowest point in the data provided. This indicates that the company consistently generated returns below its cost of capital, and this shortfall worsened particularly in the final two years.

Invested Capital

Invested capital exhibits a generally upward trend over the period. Starting at 56,262 million in 2013, it marginally declined to 52,455 million in 2014 but then steadily increased over the remaining years, culminating at 57,150 million by 2017. This suggests ongoing capital deployment or investment activities, with the overall capital base expanding by approximately 1.6% from 2013 to 2017.

Economic Spread Ratio

The economic spread ratio, expressed as a percentage, remains negative across all years, indicating that returns earned on invested capital are below the cost of capital. The ratio improved from -2.16% in 2013 to -1.48% in 2014 but subsequently worsened, reaching -2.55% by 2017. The increase in negative spread suggests deteriorating efficiency in utilizing capital, contributing to the declining economic profit despite growing invested capital.

In summary, the company experienced persistent negative economic profit and economic spread throughout the period, underscoring an inability to generate returns exceeding capital costs. While invested capital expanded moderately, this did not translate into improved economic profitability, with both economic profit and economic spread showing deterioration in the latter years.

Adjusted Revenues

The adjusted revenues demonstrate a generally positive trend over the observed period, increasing from 29,738 million US dollars in 2013 to 31,400 million US dollars in 2017. Although there was a slight dip in 2014 to 27,360 million US dollars, the revenues recovered and continued to grow steadily in the following years.

Economic Profit

The economic profit remained negative throughout the period, indicating consistent economic losses. Despite an improvement in 2014 to -776 million US dollars from -1,213 million US dollars in 2013, economic profit worsened again in the subsequent years, reaching its lowest point at -1,457 million US dollars in 2017. This reflects increasing economic losses despite the growth in revenues.

Economic Profit Margin

The economic profit margin mirrored the trend in economic profit, showing negative values in all years and fluctuating within a narrow range. It improved from -4.08% in 2013 to -2.84% in 2014 but subsequently deteriorated to -4.64% by 2017. This negative margin trend suggests that the company was unable to generate adequate returns relative to its adjusted revenues over the period.

Overall Trends and Insights

The data reveals a paradox where adjusted revenues increased modestly over five years, yet economic profit and profit margins remained negative and worsened after an initial improvement. This may point to escalating costs or inefficiencies not reflected in revenue growth. The sustained negative economic profit margins highlight potential challenges in translating top-line growth into economic value for the company.