Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2006
- Current Ratio since 2006
- Debt to Equity since 2006
- Total Asset Turnover since 2006
- Price to Operating Profit (P/OP) since 2006
- Analysis of Debt
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Economic Profit
Time Warner Cable Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2015 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited fluctuations over the observed periods. 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. Subsequently, it rose again to 3,745 million USD in 2014 before decreasing to 3,391 million USD in 2015. Overall, this indicates an inconsistent trend with no clear sustained growth or decline.
- Cost of Capital
- The cost of capital showed a generally upward trajectory throughout the period. Starting at 8.86% in 2011, it decreased slightly to 8.47% in 2012 but then climbed steadily to reach 11.07% by the end of 2015. This increasing trend suggests rising financing costs or perceived risk over the years.
- Invested Capital
- Invested capital remained relatively stable across the timeframe, with minor fluctuations. It started at 44,961 million USD in 2011, saw a small increase to 46,124 million USD in 2012, fell to 44,327 million USD in 2013, and then stabilized around 44,929 million USD in 2014 and 45,332 million USD in 2015. The variations were modest, indicating consistent capital investment levels.
- Economic Profit
- The economic profit was consistently negative throughout all periods, indicating the company did not generate returns above its cost of capital. The losses narrowed significantly from -655 million USD in 2011 to -101 million USD in 2012, suggesting an improvement. However, a sharp deterioration occurred in 2013, with economic profit declining to -1,141 million USD. While there was some recovery in 2014 to -772 million USD, it worsened again markedly to -1,628 million USD in 2015. This pattern points to ongoing challenges in creating shareholder value beyond capital costs.
Net Operating Profit after Taxes (NOPAT)
Time Warner Cable Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue and subscriber-related liabilities.
4 Addition of increase (decrease) in restructuring reserves.
5 Addition of increase (decrease) in equity equivalents to net income attributable to TWC shareholders.
6 2015 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2015 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 35.00% =
8 Addition of after taxes interest expense to net income attributable to TWC shareholders.
- 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 $3391 million, showing the same fluctuating pattern observed in net income, with 2012 and 2014 as relatively stronger years.
- Overall financial performance trends
- Both net income and NOPAT exhibited similar cyclical patterns over the five-year period. The highest values were observed in the early part of the timeframe (specifically 2012), followed by periods of decline and partial recovery. This suggests fluctuations in profitability and operating efficiency, potentially reflecting changes in operational effectiveness, market conditions, or other external factors influencing financial outcomes.
Cash Operating Taxes
Time Warner Cable Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
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.
Invested Capital
Time Warner Cable Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue and subscriber-related liabilities.
5 Addition of restructuring reserves.
6 Addition of equity equivalents to total TWC shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
- 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.
Cost of Capital
Time Warner Cable Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2015-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2014-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2013-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2012-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2011-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Time Warner Cable Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2015 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data presents a clear pattern of ongoing economic challenges over the analyzed period. Economic profit consistently exhibits negative values, indicating losses each year. Notably, the economic profit sharply decreases in 2013 and again reaches a significant low in 2015.
- Economic Profit
- The economic profit trends downward overall, starting from a negative value of -655 million US dollars in 2011, slightly improving in 2012 to -101 million US dollars, but then sharply declining to -1141 million US dollars in 2013. A modest recovery occurs in 2014 to -772 million US dollars, followed by a steep deterioration in 2015 to -1628 million US dollars. This pattern suggests that the company struggled to generate returns above its cost of capital during the entire timeframe, with worsening performance in the last reported year.
- Invested Capital
- The invested capital remains relatively stable throughout the period, ranging from approximately 44.3 billion to 46.1 billion US dollars. The slight fluctuations indicate that the company maintained a fairly consistent level of invested resources without significant expansion or reduction.
- Economic Spread Ratio
- The economic spread ratio remains negative each year, confirming that return on invested capital is below the cost of capital. The ratio starts at -1.46% in 2011, temporarily improves close to zero at -0.22% in 2012, and then deteriorates significantly in subsequent years, reaching -3.59% in 2015. This declining trend underscores increasing inefficiency in generating value from the invested capital.
Overall, the analysis reveals persistent economic losses alongside stable invested capital, reflecting inefficiencies in asset utilization and a failure to achieve profitability above capital costs. The worsening economic spread in later years further signals rising financial pressure and challenges in the company’s operations or capital allocation strategies.
Economic Profit Margin
Time Warner Cable Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue and subscriber-related liabilities | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Economic profit. See details »
2 2015 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial analysis reveals several notable trends over the five-year period from 2011 to 2015.
- Adjusted Revenue
- The adjusted revenue exhibits a consistent upward trajectory, increasing steadily each year. Beginning at approximately 19.7 billion USD in 2011, the figure rises annually to reach about 23.7 billion USD in 2015. This represents a total growth of roughly 20% over the analyzed period, indicating sustained expansion in the company’s core business activities.
- Economic Profit
- The economic profit shows persistent negative values throughout the timeframe, suggesting that the company did not generate economic value above its cost of capital at any point. Although there is a temporary improvement in 2012, where the negative economic profit narrows significantly to -101 million USD from -655 million USD in 2011, the trend reverses thereafter, with economic profit declining sharply in 2013 and reaching an even lower point of -1.628 billion USD in 2015. This deteriorating trend post-2012 signals increasing economic losses despite rising revenues.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, mirrors the pattern observed in economic profit. Initially, the margin improves markedly in 2012, narrowing to -0.47% from -3.33% in 2011, indicating better operational efficiency or capital utilization during that year. However, subsequently, the margin worsens significantly, reaching -6.86% in 2015. This decline suggests that while revenues were growing, the costs or required returns were increasing disproportionately, resulting in more negative returns relative to revenue.
Overall, the analysis points to strong revenue growth that was insufficient to generate positive economic profit. The temporary improvement in 2012 across economic profit and margin metrics was not maintained, with a clear downward trend in economic profitability evident through 2015. These patterns highlight challenges in translating revenue gains into sustainable economic value creation during the period under review.