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.
Paying user area
Try for free
Time Warner Cable Inc. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2006
- Price to Operating Profit (P/OP) since 2006
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Time Warner Cable Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Time Warner Cable Inc., economic profit calculation
US$ 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
= – × =
The financial performance from 2011 to 2015 is characterized by a consistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the company's cost of capital throughout the period. While there were intermittent fluctuations in operational profitability, the overall trend shows a widening deficit in economic value added, culminating in a significant decline by the end of 2015.
- Net Operating Profit After Taxes (NOPAT)
- Operational profitability exhibited a volatile pattern without a sustained growth trajectory. NOPAT peaked in 2012 at 3,807 million US$ and reached its lowest point in 2011 at 3,328 million US$. By 2015, the figure retracted to 3,391 million US$, suggesting that operational earnings were unable to scale effectively over the five-year horizon.
- Cost of Capital
- An upward trend in the cost of capital is observed, rising from 9.97% in 2011 to 12.68% in 2015. Despite a slight dip in 2012, the cost of funding the business increased significantly from 2013 onward. This rising threshold increased the minimum return required to achieve a positive economic profit, thereby placing additional pressure on the company's financial viability.
- Invested Capital
- The capital base remained relatively stable, fluctuating within a narrow range between 44,327 million US$ and 46,124 million US$. The lack of significant expansion or contraction in invested capital indicates a stagnant asset base that failed to produce incremental returns to offset the increasing cost of capital.
- Economic Profit Analysis
- Economic profit remained negative for all five years, signifying a continuous destruction of shareholder value. The deficit reached its lowest point in 2015 at -2,356 million US$, a substantial increase from the -580 million US$ deficit observed in 2012. This deterioration is primarily attributed to the divergence between stagnant NOPAT and a rising cost of capital applied to a constant level of invested capital.
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.
An analysis of the financial performance from 2011 to 2015 reveals a consistent failure to generate positive economic value. The company operated with negative economic profit throughout the entire five-year period, indicating that the returns generated were insufficient to cover the cost of the capital employed in operations.
- Economic Profit Trends
- Economic profit exhibited significant volatility and a general downward trajectory. While a partial recovery occurred in 2012, with losses narrowing to 580 million US dollars, this trend reversed sharply. By 2015, economic profit reached its lowest point in the period, declining to negative 2,356 million US dollars.
- Invested Capital Stability
- Invested capital remained relatively stable over the analyzed timeframe, fluctuating within a narrow range between 44,327 million US dollars and 46,124 million US dollars. The lack of significant growth or reduction in the capital base suggests that the deterioration in economic profit was driven by operational performance rather than substantial changes in the scale of investment.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative for all five years, confirming a persistent value-destruction phase. The ratio improved slightly to negative 1.26% in 2012 but deteriorated progressively thereafter, reaching a peak deficit of negative 5.20% by December 31, 2015. This widening negative spread reflects a growing gap between the actual return on capital and the required rate of return.
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.
Between 2011 and 2015, a consistent divergence is observed between revenue growth and economic value creation. While adjusted revenue increased steadily every year, economic profit remained negative throughout the entire period, indicating that the organization failed to generate returns in excess of its cost of capital.
- Economic Profit Trends
- Economic profit remained in negative territory for the duration of the analyzed period. A temporary improvement occurred in 2012, where losses narrowed to 580 million from 1,155 million in 2011. However, this was followed by a significant decline in 2013 to 1,774 million. Despite a moderate recovery in 2014, the period concluded with a peak deficit of 2,356 million in 2015, representing the lowest absolute economic profit across the five years.
- Adjusted Revenue Performance
- A consistent upward trajectory is evident in adjusted revenue, which grew from 19,681 million in 2011 to 23,723 million in 2015. This represents a steady expansion of the top line, though this growth did not correlate with an improvement in economic value added.
- Economic Profit Margin Analysis
- The economic profit margin fluctuated significantly, reflecting the instability of economic profit relative to revenue. The margin reached its most favorable point in 2012 at -2.71%. Subsequently, the margin deteriorated sharply to -8.02% in 2013, recovered slightly to -6.12% in 2014, and reached its lowest point of -9.93% in 2015. The widening negative margin suggests that as the company scaled its revenue, the inefficiency relative to the cost of capital intensified.