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Time Warner Inc. (TWX)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Time Warner Inc., EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income attributable to Time Warner Inc. shareholders 5,247  3,926  3,833  3,827  3,691 
Add: Net income attributable to noncontrolling interest (3) (1) (1) – –
Less: Discontinued operations, net of tax – 11  37  (67) 137 
Add: Income tax expense 701  1,281  1,651  785  1,749 
Earnings before tax (EBT) 5,945  5,195  5,446  4,679  5,303 
Add: Interest expense 1,214  1,388  1,382  1,353  1,283 
Earnings before interest and tax (EBIT) 7,159  6,583  6,828  6,032  6,586 
Add: Depreciation and amortization 694  669  681  733  886 
Add: Amortization of film and television costs 9,162  8,324  8,030  8,040  7,262 
Earnings before interest, tax, depreciation and amortization (EBITDA) 17,015  15,576  15,539  14,805  14,734 
Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Time Warner Inc.'s EBITDA increased from 2015 to 2016 and from 2016 to 2017.

Enterprise Value to EBITDA Ratio, Current

Time Warner Inc., current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 98,394 
Earnings before interest, tax, depreciation and amortization (EBITDA) 17,015 
Ratio
EV/EBITDA 5.78
Benchmarks
EV/EBITDA, Competitors
Charter Communications Inc. 10.03
Comcast Corp. 7.97
Twenty-First Century Fox Inc. 15.40
Walt Disney Co. 11.26
EV/EBITDA, Sector
Media 9.98
EV/EBITDA, Industry
Consumer Services 14.91

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.

Enterprise Value to EBITDA Ratio, Historical

Time Warner Inc., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 94,719  97,959  74,309  88,328  76,049 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 17,015  15,576  15,539  14,805  14,734 
Ratio
EV/EBITDA3 5.57 6.29 4.78 5.97 5.16
Benchmarks
EV/EBITDA, Competitors
Charter Communications Inc. 11.59 15.42 17.36 13.35 10.35
Comcast Corp. 9.19 8.89 7.96 8.47 8.83
Twenty-First Century Fox Inc. 10.29 10.98 6.10 12.66 8.01
Walt Disney Co. 10.55 9.92 12.94 11.26 11.08
EV/EBITDA, Sector
Media 10.18 10.49 9.55 10.28 9.31
EV/EBITDA, Industry
Consumer Services 13.17 11.89 11.41 11.20 10.78

1 See Details »

2 See Details »

2017 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 94,719 ÷ 17,015 = 5.57

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Time Warner Inc.'s EV/EBITDA ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017.