Stock Analysis on Net

Time Warner Inc. (NYSE:TWX)

This company has been moved to the archive! The financial data has not been updated since April 26, 2018.

Financial Reporting Quality: Aggregate Accruals

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Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Time Warner Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Operating Assets
Total assets 69,209 65,966 63,848 63,259 67,994
Less: Cash and equivalents 2,621 1,539 2,155 2,618 1,862
Operating assets 66,588 64,427 61,693 60,641 66,132
Operating Liabilities
Total liabilities 40,798 41,600 40,200 38,783 38,090
Less: Debt due within one year 5,450 1,947 198 1,118 66
Less: Long-term debt, excluding due within one year 18,294 22,392 23,594 21,376 20,099
Operating liabilities 17,054 17,261 16,408 16,289 17,925
 
Net operating assets1 49,534 47,166 45,285 44,352 48,207
Balance-sheet-based aggregate accruals2 2,368 1,881 933 (3,855)
Financial Ratio
Balance-sheet-based accruals ratio3 4.90% 4.07% 2.08% -8.33%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Alphabet Inc.
Comcast Corp.
Meta Platforms Inc.
Netflix 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
Net operating assets = Operating assets – Operating liabilities
= 66,58817,054 = 49,534

2 2017 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2017 – Net operating assets2016
= 49,53447,166 = 2,368

3 2017 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,368 ÷ [(49,534 + 47,166) ÷ 2] = 4.90%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Time Warner Inc. deteriorated earnings quality from 2016 to 2017.

Cash-Flow-Statement-Based Accruals Ratio

Time Warner Inc., cash flow statement computation of aggregate accruals

US$ in millions

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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
Less: Cash provided by operations 5,094 4,683 3,851 3,681 3,716
Less: Cash (used) provided by investing activities (996) (1,360) (993) 1,383 (910)
Cash-flow-statement-based aggregate accruals 1,149 603 975 (1,237) 885
Financial Ratio
Cash-flow-statement-based accruals ratio1 2.38% 1.30% 2.18% -2.67%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Alphabet Inc.
Comcast Corp.
Meta Platforms Inc.
Netflix 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-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,149 ÷ [(49,534 + 47,166) ÷ 2] = 2.38%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Time Warner Inc. deteriorated earnings quality from 2016 to 2017.