Time Warner Cable Inc. (NYSE:TWC)

The analysis of the provided financial data reveals several notable trends and patterns over the five-year period ending in 2015.

Net operating profit after taxes (NOPAT)

NOPAT shows some volatility throughout the period. It increased from 3,328 million USD in 2011 to a peak of 3,807 million USD in 2012, followed by a decline to 3,388 million USD in 2013. It rose again in 2014 to 3,745 million USD but then decreased to 3,391 million USD in 2015. Overall, the trend does not show consistent growth and illustrates fluctuations year-over-year.

Cost of capital

The cost of capital exhibits a general upward trend. Starting at 8.86% in 2011, it decreased to 8.48% in 2012 but then increased steadily to 10.22% and 10.06% in 2013 and 2014 respectively, before reaching its highest point at 11.08% in 2015. This increase indicates a rising required return on investments or potentially higher perceived risk over this period.

Invested capital

Invested capital remained relatively stable over the timeframe, fluctuating modestly between 44,327 million USD and 46,124 million USD. The value decreased slightly from 44,961 million USD in 2011 to 44,327 million USD in 2013, then experienced a small rebound, ending at 45,332 million USD in 2015. The relative stability suggests that the company maintained a consistent asset base or capital investment level.

Economic profit

Economic profit was consistently negative in all years, indicating that the company did not generate returns above its cost of capital. The economic loss was smallest in 2012 at -103 million USD and worsened significantly in 2013 (-1,143 million USD). Although there was some improvement in 2014 (-774 million USD), economic profit deteriorated sharply again in 2015 to -1,631 million USD. The pattern of increasing negative economic profit alongside a rising cost of capital suggests challenges in generating value beyond the invested capital's required returns.

In summary, net operating profit after taxes presented a fluctuating pattern without consistent increase, while the cost of capital trended upward, raising financial demands on performance. Invested capital remained relatively stable, but economic profit stayed negative and worsened significantly in later years, indicating persistent difficulties in creating shareholder value above the company’s cost of capital.

Net income attributable to TWC shareholders

The net income showed an upward trend from 2011 to 2012, increasing from $1665 million to $2155 million. However, in 2013 a decline occurred to $1954 million, followed by a slight recovery in 2014 to $2031 million. The year 2015 saw another decrease to $1844 million, indicating a general volatility with a peak in 2012 and subsequent fluctuations.

Net operating profit after taxes (NOPAT)

NOPAT increased from $3328 million in 2011 to $3807 million in 2012, mirroring the peak found in net income for the same year. In 2013, NOPAT declined to $3388 million but rose again in 2014 to $3745 million, approaching the 2012 level. By 2015, NOPAT decreased to $3391 million, showing the same fluctuating pattern observed in net income, with 2012 and 2014 as relatively stronger years.

Overall financial performance trends

Both net income and NOPAT exhibited similar cyclical patterns over the five-year period. The highest values were observed in the early part of the timeframe (specifically 2012), followed by periods of decline and partial recovery. This suggests fluctuations in profitability and operating efficiency, potentially reflecting changes in operational effectiveness, market conditions, or other external factors influencing financial outcomes.

The financial data indicates fluctuations in the income tax provision and cash operating taxes of the company over the five-year period ending December 31, 2015.

Income Tax Provision

The income tax provision demonstrates an overall upward trend from 2011 through 2014, increasing from 795 million US dollars in 2011 to a peak of 1,217 million in 2014. However, in 2015, there is a slight decline to 1,144 million US dollars. This suggests rising taxable earnings or adjustments in tax liabilities during the initial years followed by a moderate reduction in the last year.

Cash Operating Taxes

Cash operating taxes present a more variable pattern. Beginning at 705 million US dollars in 2011, the amount rises sharply to 1,194 million in 2012 and continues to increase to 1,281 million in 2013. Subsequently, it decreases to 973 million in 2014 before partially rebounding to 1,057 million in 2015. This fluctuation may reflect changes in the company's actual cash outflows for taxes, potentially influenced by alterations in tax payment timing, tax credits, or tax planning strategies.

Overall, while the income tax provision generally increased over the period with a minor decline at the end, the cash operating taxes followed a less consistent path, showing considerable volatility. The divergence between the income tax provision and cash operating taxes in certain years may indicate differences between accounting for tax expenses and actual cash paid, affecting cash flow management and tax planning effectiveness.

Total reported debt & leases

The reported debt and leases demonstrate a consistent declining trend over the observed period. Starting at 27,138 million USD at the end of 2011, the debt slightly increased to 27,378 million USD in 2012, then steadily decreased each year thereafter, reaching 23,183 million USD by the end of 2015. This indicates a reduction in the company's leverage or obligations related to debt and lease commitments over five years.

Total shareholders’ equity

Shareholders’ equity shows some fluctuations but a general upward trend across the period. Initially, the equity value decreased from 7,530 million USD in 2011 to 6,943 million USD in 2013. Afterward, the equity figures improved significantly, increasing to 8,013 million USD in 2014 and further to 8,995 million USD by the end of 2015. This growth suggests strengthening of the company's net asset position or profitability retention over time.

Invested capital

Invested capital remained relatively stable throughout the period, with minor fluctuations. It started at 44,961 million USD in 2011, peaked at 46,124 million USD in 2012, then decreased to 44,327 million USD in 2013. It showed slight increases in subsequent years, ending at 45,332 million USD in 2015. This stability reflects consistency in the company's overall capital base employed in operations.

Economic Profit

The economic profit exhibits significant volatility over the observed periods. Starting from a negative value of -656 million US dollars in 2011, it declines further to -103 million in 2012, suggesting an improvement toward positive economic value. However, this trend reverses sharply in 2013, with a substantial drop to -1143 million. This negative trend continues, albeit with some fluctuation, reaching -774 million in 2014 and then worsening to -1631 million in 2015. Overall, economic profit demonstrates a persistent net loss with heightened negative values, indicating recurring economic losses over the years.

Invested Capital

Invested capital remains relatively stable throughout the period. It starts at 44,961 million US dollars in 2011 and shows a slight upward trend to 46,124 million in 2012. Following this peak, it decreases moderately to 44,327 million in 2013, hovers around similar values in 2014 at 44,929 million, and finally edges up slightly to 45,332 million in 2015. This stability suggests a consistent investment base without significant expansion or contraction.

Economic Spread Ratio

The economic spread ratio, which indicates the difference between the return on invested capital and the cost of capital, remains negative throughout the period, implying that the company consistently earned returns below its cost of capital. The ratio improves slightly from -1.46% in 2011 to -0.22% in 2012, indicating reduced losses in economic returns. However, this improvement is short-lived as the spread worsens markedly to -2.58% in 2013. Subsequent years show fluctuations but maintain a negative direction, with -1.72% in 2014 and a deepening negative spread of -3.6% in 2015. This trend underscores ongoing challenges in generating sufficient returns over the cost of capital.

Adjusted Revenue

The adjusted revenue has shown a consistent upward trend over the five-year period. Starting at 19,681 million USD at the end of 2011, it increased steadily each year to reach 23,723 million USD by the end of 2015. This indicates a positive growth trajectory in the company's top-line performance.

Economic Profit

The economic profit figures exhibit significant volatility and consistently negative values throughout the period, indicating that the company has been generating economic losses annually. The economic profit worsened notably in 2013 and 2015, with sharp declines to -1,143 million USD and -1,631 million USD respectively, compared to smaller losses in other years. The pattern suggests challenges in achieving profitability beyond the cost of capital despite increasing revenues.

Economic Profit Margin

The economic profit margin follows a trend consistent with economic profit, showing negative margins in all years analyzed. The margin was lowest (closest to zero) at -0.48% in 2012 but deteriorated in other years, reaching -6.88% by 2015. The increasing negative margin aligns with the growing magnitude of economic loss relative to revenue, underscoring difficulties in converting higher revenues into economic profit.

Overall Insights

Despite the company's steady growth in adjusted revenue, there are underlying issues with profitability and value creation as evidenced by persistent negative economic profit and worsening economic profit margins over the period. The expanding revenue base has not translated into economic gains, indicating that costs or capital charges have grown disproportionately, impacting overall economic performance negatively.