Time Warner Inc. (NYSE:TWX)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes remained relatively stable over the five-year period, fluctuating slightly between 4,751 million and 5,167 million US dollars. There was a slight decline in 2015 followed by a gradual recovery in the subsequent years, indicating some variability but no strong growth trend.

Cost of Capital

The cost of capital saw minor fluctuations, ranging from a low of 10.65% in 2015 to a high of 11.31% in 2016. Overall, it remained within a narrow band around 11%, suggesting relatively stable financing conditions during the period under review.

Invested Capital

Invested capital showed a decrease from 56,262 million US dollars in 2013 to a low of 52,455 million in 2014, followed by moderate increases in subsequent years, reaching 57,150 million in 2017. This pattern suggests a phase of divestment or asset reduction early in the period, transitioning into renewed investments later.

Economic Profit

Economic profit was consistently negative throughout all five years, indicating that returns did not exceed the cost of capital. Although there was a reduction in the negative economic profit from -1,156 million in 2013 to -722 million in 2014, the trend reversed afterward with worsening economic losses, culminating in -1,396 million in 2017. This pattern signals persistent value destruction despite stable operating profits and highlights challenges in generating returns above the company's cost of capital.

Summary of Trends

The company maintained steady operational profitability alongside relatively stable cost of capital rates. However, invested capital fluctuations suggest changes in capital allocation strategy over the period. The persistent negative economic profit despite stable NOPAT indicates that the company struggled to create shareholder value, potentially due to the level or efficiency of capital invested and cost structures. These findings point to a need for reassessment of investment returns and capital deployment strategies.

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 over the five-year period reveals several notable trends concerning economic profit, invested capital, and the economic spread ratio.

Economic Profit

The economic profit has consistently been negative throughout the entire period. Starting at -1156 million US dollars in 2013, it shows a general pattern of decline with some fluctuations: an improvement to -722 million in 2014, a deterioration to -914 million in 2015, followed by a more pronounced decline to -1272 million in 2016, and further worsening to -1396 million in 2017. This indicates ongoing challenges in generating value beyond the cost of capital.

Invested Capital

Invested capital demonstrated a slight decrease from 56262 million US dollars in 2013 to 52455 million in 2014. However, from 2014 onward, it showed a gradual increase each year, reaching 57150 million in 2017. This trend suggests ongoing reinvestment or asset accumulation despite the negative economic profit.

Economic Spread Ratio

The economic spread ratio, which represents the return spread over the cost of capital, remained negative during the entire period. It started at -2.05% in 2013, improved to -1.38% in 2014, but then deteriorated in subsequent years, dropping to -1.72% in 2015, -2.31% in 2016, and reaching -2.44% by 2017. The progressive negative trend denotes increasing difficulty in covering the cost of capital and sustaining profitability.

Overall, the analysis indicates persistent economic losses accompanied by gradually increasing invested capital. The worsening economic spread ratio over the last three years of the period highlights deteriorating efficiency in capital utilization and challenges in value creation.

The data over the period from 2013 to 2017 reveals several noteworthy trends relating to the financial performance and economic profitability of the entity.

Adjusted Revenues

There is an overall upward trend in adjusted revenues, beginning at $29,738 million in 2013 and increasing to $31,400 million by 2017. Despite a dip to $27,360 million in 2014, revenues steadily recover and show a positive growth trajectory from 2015 onward.

Economic Profit

Economic profit shows a consistently negative performance throughout the five-year period, indicating that economic value was not created during these years. The loss decreased from -$1,156 million in 2013 to a smaller loss in 2014 of -$722 million, suggesting some improvement. However, economic profit worsened again after 2014, deteriorating to -$1,396 million by 2017, reflecting increasing economic losses despite rising revenues.

Economic Profit Margin

The economic profit margin mirrors the pattern of economic profit, remaining negative throughout and indicating ongoing value destruction relative to revenues. It begins at -3.89% in 2013, improves somewhat to -2.64% in 2014, but then progressively declines to -4.45% by 2017. This signals that the company's profitability relative to its revenue base became more adverse over time.

In summary, while the company demonstrates a recovery and growth in adjusted revenues after an initial decline in 2014, its economic profit and margins indicate persistent and growing economic losses over the period. This suggests challenges in cost management or capital utilization that prevent converted revenues into positive economic profit despite increasing sales.