Time Warner Inc. (NYSE:TWX)

The financial data reveals several notable trends over the analyzed five-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT remained relatively stable with minor fluctuations, beginning at 5,150 million USD in 2013 and ending at 5,040 million USD in 2017. There was a slight decrease observed in 2015 to 4,751 million USD, followed by a modest recovery in subsequent years.

Cost of Capital

The cost of capital fluctuated within a narrow range, starting at 11.32% in 2013, experiencing small variations each year with a low of 10.76% in 2015, and finishing at 11.38% in 2017. This stability indicates consistent borrowing or equity costs over the period.

Invested Capital

Invested capital showed a declining trend initially, reducing from 56,262 million USD in 2013 to 52,455 million USD in 2014. However, from 2015 onwards, there was a gradual increase, culminating at 57,150 million USD in 2017, slightly surpassing the initial value. This suggests reinvestment activities or acquisition growth during the latter part of the period.

Economic Profit

Economic profit was negative throughout the entire timeframe, indicating that the company did not generate returns above its cost of capital. The losses narrowed from -1,221 million USD in 2013 to -784 million USD in 2014 but then worsened again, reaching -1,466 million USD by 2017. This pattern highlights ongoing challenges in creating value beyond capital costs despite relatively stable operating profits.

Overall, the company maintained steady operating profits and cost of capital, but the invested capital increased towards the end of the period. Despite these factors, economic profit remained persistently negative, suggesting that the firm struggled to achieve returns that exceed its cost of capital during these years.

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.

Economic Profit

The company experienced negative economic profit throughout the entire five-year period. The economic profit improved from -1221 million US dollars at the end of 2013 to -784 million US dollars by the end of 2014, indicating a reduction in economic losses. However, from 2014 onwards, economic profit deteriorated again, reaching -1466 million US dollars by 2017. This pattern suggests that despite some initial improvement, the company struggled to generate positive economic returns during this timeframe.

Invested Capital

Invested capital showed a fluctuating but generally upward trend across the years. Starting at 56,262 million US dollars in 2013, it declined to 52,455 million US dollars in 2014. From there, it gradually increased year-over-year, reaching 57,150 million US dollars at the end of 2017. This indicates the company’s steady reinvestment or accumulation of capital over the period despite some initial decrease.

Economic Spread Ratio

The economic spread ratio was negative in all years, reflecting a return on invested capital below the company's cost of capital. The ratio improved slightly from -2.17% in 2013 to -1.49% in 2014, but then worsened consistently afterward, reaching -2.56% in 2017. The downward trend after 2014 signifies increasing inefficiency in generating returns on invested capital.

Overall Analysis

The financial indicators reveal a consistent challenge in achieving economic profitability, with persistent negative economic profit and economic spread ratios over the analyzed period. While invested capital grew moderately after 2014, the company failed to translate this growth into improved economic returns. The deterioration in economic spread after 2014 suggests rising costs or declining operational efficiency relative to capital employed. The initial improvement in 2014 did not sustain, indicating that the company may need to reassess its capital deployment strategy and cost management to enhance value creation.

Adjusted Revenues

The adjusted revenues demonstrated a fluctuating but overall modest upward trend over the five-year period. Starting from US$29,738 million in 2013, revenues declined to US$27,360 million in 2014, representing a temporary reduction. However, revenues subsequently increased annually, reaching US$31,400 million by the end of 2017. This indicates a recovery and gradual growth in revenue generation after the initial dip.

Economic Profit

The economic profit consistently remained negative throughout the entire period, indicating that the company faced challenges in generating returns exceeding its cost of capital. The loss narrowed from -US$1,221 million in 2013 to -US$784 million in 2014, marking the lowest negative value within the timeframe. However, after 2014, economic profit deteriorated again, worsening progressively to -US$1,466 million by 2017. This trend suggests increasing economic losses after an early improvement.

Economic Profit Margin

The economic profit margin exhibited a similar pattern to the economic profit figures, remaining negative and reflecting suboptimal profitability relative to revenues. Beginning at -4.11% in 2013, the margin improved to -2.86% in 2014, aligning with the narrowing of economic losses. Thereafter, the margin declined steadily to -4.67% by 2017, indicating worsening profitability in relation to revenue despite the growth in revenues seen during this period.

Summary

Overall, the company experienced revenue growth after an initial decline, but this was accompanied by persistent negative economic profits and economic profit margins. The temporary improvement in economic performance in 2014 was not sustained, with profitability metrics deteriorating over the subsequent years. This situation implies that revenue increases were insufficient to overcome underlying costs or capital charges, resulting in growing economic value destruction through 2017.