Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
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Liquidity Ratios (Summary)
Time Warner Inc., liquidity ratios
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
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).
- Current Ratio
- The current ratio shows a general decline over the five-year period. Starting at 1.53 in 2013, it slightly decreased to 1.43 in 2014 but then increased to 1.56 in 2015. After 2015, the ratio steadily declined to 1.39 in 2016 and further dropped to 1.08 by 2017. This trend indicates a gradual reduction in the company's short-term liquidity, approaching a ratio closer to 1, which may suggest tighter current asset coverage against current liabilities.
- Quick Ratio
- The quick ratio follows a similar pattern to the current ratio but remains consistently lower. In 2013, it was 1.16 and experienced a slight decline to 1.12 in 2014 before peaking at 1.20 in 2015. Afterward, it decreased to 1.06 in 2016 and notably declined to 0.85 by 2017. This trend indicates decreasing liquidity in more liquid assets, excluding inventories, which may signal reduced ability to meet short-term obligations without relying on inventory sales.
- Cash Ratio
- The cash ratio exhibits modest fluctuations with an overall trend of a decline followed by a slight recovery. It started at 0.22 in 2013, rose to 0.28 in 2014, and slightly decreased to 0.27 in 2015. Subsequently, it dropped significantly to 0.16 in 2016 before experiencing a small increase to 0.19 in 2017. The cash ratio's movement suggests variation in the company's most liquid assets relative to current liabilities, with a notable decrease in 2016 that was partially recovered in 2017.
Current Ratio
Time Warner Inc., current ratio 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) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| 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 2017 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets demonstrate a fluctuating trend with an overall increase over the observed period. Starting from US$12,844 million in 2013, there was a slight increase in 2014 to US$13,180 million, followed by a decrease to US$12,513 million in 2015. Subsequently, current assets rose again to US$13,485 million in 2016 and showed a significant increase to US$15,219 million in 2017.
- Current Liabilities
- Current liabilities exhibit variability over the years, with an overall increasing tendency. The value increased from US$8,383 million in 2013 to US$9,204 million in 2014, then decreased to US$8,002 million in 2015. Afterward, liabilities increased substantially to US$9,703 million in 2016 and escalated sharply to US$14,077 million in 2017.
- Current Ratio
- The current ratio displays a declining trend during the period under review. Starting at 1.53 in 2013, it slightly decreased to 1.43 in 2014, increased to 1.56 in 2015, but then declined again to 1.39 in 2016 and significantly dropped to 1.08 in 2017. This trend indicates a progressive reduction in short-term liquidity relative to current liabilities, particularly the marked decrease in the final year suggests a weakened ability to cover short-term obligations with short-term assets.
- Summary of Trends
- Overall, while current assets have grown moderately with some fluctuations, current liabilities have increased more sharply, particularly between 2016 and 2017. This divergence has exerted pressure on the current ratio, causing it to decline over the period and signaling potential liquidity concerns by the end of 2017. The lower current ratio in 2017 may warrant further investigation into the company's working capital management and short-term financial health.
Quick Ratio
Time Warner Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | ||||||
| Receivables, less allowances | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| 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 2017 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Analysis of Total Quick Assets
- The total quick assets fluctuated over the five-year period, starting at $9,730 million in 2013 and showing a slight increase to $10,338 million in 2014. There was a decline to $9,566 million in 2015, followed by a recovery to $10,238 million in 2016, and then a more substantial increase to $12,022 million in 2017. This indicates an overall growth trend in liquid assets, with a notable rise in the final year.
- Analysis of Current Liabilities
- Current liabilities exhibited variability throughout the period. Beginning at $8,383 million in 2013, liabilities increased to $9,204 million in 2014 before decreasing to $8,002 million in 2015. However, a sharp increase occurred in 2016, with liabilities reaching $9,703 million, and this was followed by a significant surge to $14,077 million in 2017. This pattern suggests growing short-term obligations, particularly significant in the last year.
- Analysis of Quick Ratio
- The quick ratio displayed a downward trend across the observed timeframe. Initially, the ratio was 1.16 in 2013, slightly reducing to 1.12 in 2014, then rising temporarily to 1.20 in 2015. Following this peak, there was a decline to 1.06 in 2016 and a more pronounced decrease to 0.85 in 2017. A quick ratio below 1 implies that current liabilities exceed quick assets, signaling potential liquidity concerns towards the end of the period.
- Overall Insights
- While total quick assets experienced moderate growth, the significant increase in current liabilities, especially in 2017, has led to a deterioration in the quick ratio. The declining liquidity ratio points to increasing short-term financial pressure, which may require closer attention to manage solvency and working capital efficiency in the future.
Cash Ratio
Time Warner Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| 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 2017 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited some fluctuations over the five-year period. Beginning at $1,862 million in 2013, the cash assets increased notably to $2,618 million in 2014. However, this was followed by a decline to $2,155 million in 2015 and a further drop to $1,539 million in 2016. In 2017, there was a recovery, with cash assets rising again to $2,621 million, almost reaching the peak observed in 2014.
- Current Liabilities
- Current liabilities showed a generally increasing trend with some variability. Starting at $8,383 million in 2013, current liabilities increased to $9,204 million in 2014. A decrease occurred in 2015, bringing the figure down to $8,002 million. Subsequently, liabilities rose sharply to $9,703 million in 2016 and significantly increased further to $14,077 million by the end of 2017. This represents a substantial growth in short-term obligations over the period.
- Cash Ratio
- The cash ratio fluctuated within a relatively narrow range but showed a downward trend overall. It started at 0.22 in 2013, increased to a peak of 0.28 in 2014, and slightly declined to 0.27 in 2015. Afterward, the ratio decreased more markedly to 0.16 in 2016 and then increased slightly to 0.19 in 2017. Despite the recovery in 2017, the cash ratio remained below the earlier high points, indicating comparatively reduced liquidity in covering current liabilities with cash and cash equivalents.
- Overall Analysis
- The data reveals that while the company maintained significant cash assets, these assets oscillated without a clear upward or downward long-term trend. In contrast, current liabilities increased substantially, especially in the latter years, which contributed to the decline in the cash ratio. The decreasing cash ratio suggests a weakening short-term liquidity position, as cash reserves relative to current liabilities shrank over time. The sharp rise in current liabilities by 2017 could indicate increased short-term obligations or financing needs, which may require careful monitoring to ensure continued financial stability.