Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Price to FCFE (P/FCFE)
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Analysis of Debt
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Return on Invested Capital (ROIC)
Time Warner Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2017 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT demonstrates a slight fluctuation over the analyzed period. Beginning at $5,150 million in 2013, it experienced a marginal increase to $5,167 million in 2014, followed by a notable decrease to $4,751 million in 2015. Subsequently, NOPAT showed recovery with incremental growth, reaching $4,943 million in 2016 and $5,040 million in 2017. Overall, the trend suggests some instability but a general tendency to maintain levels close to the initial value by 2017.
- Invested Capital
- Invested capital exhibited a declining trend in the initial years, decreasing from $56,262 million in 2013 to $52,455 million in 2014. However, from 2014 onwards, invested capital gradually increased each year, climbing to $53,163 million in 2015, $54,961 million in 2016, and reaching $57,150 million in 2017. This pattern indicates an initial contraction followed by sustained growth in investment base.
- Return on Invested Capital (ROIC)
- ROIC rose from 9.15% in 2013 to a peak of 9.85% in 2014, implying improved efficiency in generating returns on invested capital that year. Nevertheless, after 2014, ROIC declined to 8.94% in 2015 and remained relatively stable around 9% in 2016 (8.99%), before slightly dropping to 8.82% in 2017. This downward adjustment after 2014 suggests decreasing profitability relative to the investment base over the latter three years.
- Summary of Trends
- The data reveals that while net operating profits fluctuated, they broadly stabilized near the 2013 level by 2017. Invested capital initially contracted but subsequently expanded beyond its starting point by the end of the period. Although the company experienced its highest ROIC in 2014, there is a gradual decline in returns on invested capital thereafter, indicating potential challenges in maintaining earlier profitability levels despite increasing capital investment.
Decomposition of ROIC
Time Warner Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | = | × | × | ||||
| Dec 31, 2016 | = | × | × | ||||
| Dec 31, 2015 | = | × | × | ||||
| Dec 31, 2014 | = | × | × | ||||
| Dec 31, 2013 | = | × | × |
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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a generally stable trend throughout the observed period, with minor fluctuations. Starting at 22.16% in 2013, it showed a modest increase, peaking at 23.08% in 2015. Following this peak, a slight decline occurred in 2016 to 21.8%, before recovering somewhat to 22.67% in 2017. Overall, the margin remained around the low twenties percentile, indicating relatively consistent operational efficiency.
- Turnover of Capital (TO)
- Turnover of capital remained relatively constant over the five years, fluctuating narrowly between 0.52 and 0.55. It began at 0.53 in 2013, dipped marginally to 0.52 in 2014, and then remained steady at 0.53 in 2015 and 2016. A slight improvement to 0.55 was observed in 2017, suggesting a modest enhancement in asset utilization efficiency in the latter part of the period.
- 1 – Effective Cash Tax Rate (CTR)
- This metric showed significant variability across the years. It started at 78.13% in 2013, increased to a peak of 83.13% in 2014, then decreased notably to 73% in 2015. A rebound to 77.14% occurred in 2016, followed by a decline to 70.8% in 2017. The fluctuations indicate variable tax impacts on cash flows, with a general downward trend in the effective cash tax burden toward the end of the period.
- Return on Invested Capital (ROIC)
- Return on invested capital experienced some volatility but remained within a narrow range. Starting at 9.15% in 2013, it peaked at 9.85% in 2014, then fell to 8.94% in 2015. The level stabilized slightly with 8.99% in 2016 before a small decrease to 8.82% in 2017. The trend shows a slight diminution in the efficiency of capital returns, though remaining close to 9% overall.
Operating Profit Margin (OPM)
Time Warner Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2017 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT exhibited fluctuations over the five-year period. It declined from 6,591 million US dollars in 2013 to 6,216 million in 2014, followed by a recovery to 6,508 million in 2015. In 2016, it slightly decreased again to 6,409 million, before rising significantly to 7,118 million in 2017. This indicates some variability but an overall upward trend towards the end of the period.
- Adjusted Revenues
- Adjusted revenues showed a decline from 29,738 million US dollars in 2013 to 27,360 million in 2014. Thereafter, a gradual recovery was observed with revenues reaching 28,192 million in 2015 and increasing further to 29,400 million in 2016. The upward momentum continued in 2017, with revenues attaining 31,400 million. The data reflects a rebound and growth in revenues after the initial drop in 2014.
- Operating Profit Margin (OPM)
- The operating profit margin percentage remained relatively stable throughout the period. It increased slightly from 22.16% in 2013 to peak at 23.08% in 2015, then declined to 21.8% in 2016, before rising again to 22.67% in 2017. This pattern shows minor fluctuations but a generally steady margin level, indicating consistent operational efficiency.
Turnover of Capital (TO)
Time Warner Inc., TO calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
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).
1 Invested capital. See details »
2 2017 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues exhibit a fluctuating trend over the observed period. Initially, there is a decline from 29,738 million US dollars in 2013 to 27,360 million US dollars in 2014. Following this decrease, revenues gradually recover, rising to 28,192 million US dollars in 2015 and continuing an upward trajectory to 29,400 million US dollars in 2016. By 2017, revenues reach their highest level in the period at 31,400 million US dollars, indicating a positive growth trend after the initial dip.
- Invested Capital
- Invested capital shows a decreasing trend during the initial portion of the timeframe, dropping from 56,262 million US dollars in 2013 to 52,455 million US dollars in 2014. From 2014 onwards, the invested capital gradually increases year-over-year, reaching 53,163 million US dollars in 2015, 54,961 million US dollars in 2016, and culminating at 57,150 million US dollars in 2017. This reflects a recovery and subsequent expansion in capital investment after the decline in 2014.
- Turnover of Capital (TO)
- The turnover of capital ratio remains relatively stable throughout the period under review. Beginning at 0.53 in 2013, it slightly decreases to 0.52 in 2014 before returning to 0.53 for both 2015 and 2016. In 2017, there is a modest increase to 0.55. This stability suggests consistent efficiency in utilizing the invested capital to generate revenue, with a slight improvement in the most recent year.
- Overall Insights
- The data reveals an initial contraction in both adjusted revenues and invested capital in 2014, followed by a recovery and growth phase. Adjusted revenues ultimately exceed their 2013 level by 2017, indicating successful revenue expansion. Invested capital mirrors this pattern, with a dip and subsequent increase, ending higher in 2017 than in 2013. The turnover of capital ratio’s stability across these years suggests steady utilization efficiency of the invested capital, with a slight boost in 2017 that aligns with improved revenue. These trends collectively suggest a period of readjustment followed by strategic investments that supported revenue growth and maintained capital efficiency.
Effective Cash Tax Rate (CTR)
Time Warner Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2017 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibit fluctuations over the five-year period. Initially, there is a decrease from 1,442 million US$ in 2013 to 1,048 million US$ in 2014. Subsequently, the amount rises significantly to 1,757 million US$ in 2015, followed by a slight decline to 1,465 million US$ in 2016. In 2017, the cash operating taxes experience a pronounced increase, reaching 2,078 million US$. This indicates variability in tax payments, with a notable surge in the final year.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows a generally stable pattern with minor fluctuations. Starting at 6,591 million US$ in 2013, it declines slightly to 6,216 million US$ in 2014. The profit then recovers to 6,508 million US$ in 2015, followed by a marginal decrease to 6,409 million US$ in 2016. In 2017, there is a definitive increase to 7,118 million US$. Overall, NOPBT remains relatively consistent with an upward movement in the last year.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate shows considerable variability throughout the period. It begins at 21.87% in 2013 and declines to a low of 16.87% in 2014. The rate then spikes to 27% in 2015, decreases to 22.86% the following year, and climbs again to the highest point of 29.2% in 2017. These fluctuations suggest changing tax impacts relative to operating profits, with a generally increasing trend towards the end.
- Overall Insights
- The data reflects a relatively stable net operating profit before taxes, with a positive uptick in the most recent year. Cash operating taxes fluctuate more significantly, particularly rising sharply in 2017. Correspondingly, the effective cash tax rate follows a volatile pattern, ultimately increasing during the period. The linkage between the increases in both cash taxes and the tax rate in 2017 suggests higher tax expenses relative to operating profits in that year, impacting the overall tax burden borne by the company.