Time Warner Inc. (NYSE:TWX)

The financial data demonstrates several notable trends over the five-year period under review.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values show a slight decline from 2013 to 2015, decreasing from 5150 million USD to 4751 million USD. Following 2015, there is a gradual improvement in NOPAT, reaching 5040 million USD by the end of 2017. This indicates some recovery in operating profitability after a dip during the middle years.

Cost of Capital

The cost of capital remains relatively stable throughout the period, fluctuating narrowly between 10.77% and 11.44%. The lowest value appears in 2015, coinciding with the lowest NOPAT, while the highest value is seen in 2016. Overall, there is no clear upward or downward trend, suggesting consistent capital costs across these years.

Invested Capital

Invested capital shows a decreasing trend from 2013 to 2014, falling from 56,262 million USD to 52,455 million USD. This is followed by a steady increase each year afterward, reaching 57,150 million USD by the end of 2017. The initial drop may reflect divestitures or asset reductions, while the subsequent growth suggests renewed capital deployment or acquisitions.

Economic Profit

Economic profit remains negative throughout the period, indicating that returns do not exceed the cost of capital during these years. The losses decrease somewhat from -1,227 million USD in 2013 to -789 million USD in 2014, but then deteriorate again, reaching -1,472 million USD by 2017. This worsening in economic profit despite the recovery in NOPAT and growth in invested capital suggests challenges in generating value above the cost of capital.

In summary, while operational profitability showed signs of recovery after 2015, the economic profit metric reveals sustained value destruction over the entire period. The steady cost of capital alongside the increasing invested capital implies growing capital commitments without corresponding returns exceeding required thresholds. These factors combined highlight potential concerns regarding capital efficiency and value creation.

Net Income Attributable to Time Warner Inc. Shareholders

A consistent upward trend in net income is observable over the five-year period. Starting at $3,691 million in 2013, net income increased marginally each year, reaching $3,927 million in 2016. A notable rise occurred in 2017, with net income sharply increasing to $5,247 million, indicating a significant enhancement in profitability in that year.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a relatively stable but slightly fluctuating pattern. From $5,150 million in 2013, it increased slightly to $5,167 million in 2014, followed by a decline to $4,751 million in 2015. The figure then recovered somewhat in 2016 and 2017, reaching $5,040 million by the end of 2017. Overall, NOPAT remained within a narrow range, suggesting moderate operational profit stability with some variation over the years.

Comparative Observations

While net income demonstrated a robust growth trajectory, especially in the final year, NOPAT displayed greater stability but without a clear upward trend. The divergence between the increasing net income and relatively stable NOPAT in the last year might indicate changes in non-operating factors such as financing activities, tax adjustments, or other income components contributing positively to net income.

Current and Deferred Income Taxes on Income from Continuing Operations

The amount of current and deferred income taxes provided on income from continuing operations exhibited a fluctuating trend over the five-year period. In 2013, the value was 1,749 million US dollars, which decreased significantly to 785 million in 2014. It then increased again to 1,651 million in 2015, followed by a decline to 1,281 million in 2016. By the end of 2017, this measure further dropped to 701 million US dollars, marking the lowest point in the observed range. Overall, the data suggest variability with no clear upward or downward long-term trend, but a general reduction from the starting value.

Cash Operating Taxes

Cash operating taxes showed a more consistent upward trend compared to the income taxes provided on continuing operations. Starting at 1,442 million US dollars in 2013, there was a notable increase to 1,048 million in 2014, which appears to be a decline; however, the following years reversed this pattern with values rising to 1,757 million in 2015 and then slightly decreasing to 1,465 million in 2016. The amount surged substantially in 2017 to 2,078 million US dollars, representing the highest value within the period. This trend indicates growing cash tax liabilities over time, with some minor fluctuations in the middle years.

Comparison Insights

Comparing both tax-related measures reveals divergent patterns: while current and deferred income taxes showed a volatile yet generally declining trend, cash operating taxes tended to increase, especially markedly in the final year. This divergence may indicate changes in tax accounting, timing differences, or shifts in taxable income and cash tax payment obligations across the reporting years.

Total Reported Debt & Leases

The total reported debt and leases exhibited a generally increasing trend from 2013 to 2016, rising from $21,765 million to $25,355 million. However, in 2017, there was a slight decrease to $24,720 million. This indicates an overall growth in debt commitments over the period, with a minor reduction in the final year.

Total Time Warner Inc. Shareholders’ Equity

Shareholders’ equity showed a declining trend from 2013 through 2015, decreasing from $29,904 million to $23,619 million. In 2016, the equity slightly increased to $24,335 million and further rebounded more significantly in 2017 to $28,375 million. This pattern suggests a period of equity contraction followed by recovery toward the end of the analyzed timeframe.

Invested Capital

Invested capital declined from $56,262 million in 2013 to $52,455 million in 2014, followed by a modest increase in subsequent years, reaching $57,150 million in 2017. The leveling and eventual rise in invested capital imply a stabilization and renewed investment activities after an initial drop.

Overall Observations

Over the five-year period, the company’s financial structure demonstrated changes characterized by an initial increase in debt and decrease in equity and invested capital, followed by a stabilization and partial recovery. The reduction in shareholders’ equity between 2013 and 2015 could be indicative of challenges faced, while the subsequent increases in equity and invested capital suggest restored confidence and investment. The relatively stable debt levels near the end of the period highlight a controlled leverage approach.

Economic Profit

The economic profit demonstrates a consistently negative trend over the five-year period, indicating persistent value destruction. Although the loss decreased from -1227 million USD in 2013 to -789 million USD in 2014, it increased again to -976 million USD in 2015. Subsequently, the economic loss deepened further in 2016 and 2017, reaching -1472 million USD. This pattern suggests that the company struggled to generate returns above its cost of capital during this timeframe.

Invested Capital

Invested capital exhibited a fluctuating but generally increasing trend. It declined from 56262 million USD in 2013 to 52455 million USD in 2014, then gradually increased over the following years to reach 57150 million USD by the end of 2017. This implies that the company either invested additional resources or revalued its capital base upward, potentially to support business operations or growth initiatives.

Economic Spread Ratio

The economic spread ratio, representing the difference between return on invested capital and cost of capital, remained negative throughout the period. It improved slightly from -2.18% in 2013 to -1.5% in 2014, then worsened steadily each year to -2.57% by the end of 2017. This indicates the company consistently earned returns below its capital costs, with the shortfall widening in recent years.

Insights

The combination of increasing invested capital and deepening negative economic profit alongside a consistently negative economic spread ratio points to challenges in generating adequate returns on investments. Despite a temporary improvement in 2014, the overall trajectory indicates deteriorating value creation, which may warrant attention to operational efficiency, investment strategy, or cost structure to improve financial performance going forward.

Adjusted Revenues

Adjusted revenues exhibited a fluctuating but generally upward trend over the five-year period. Starting at 29,738 million USD in 2013, revenues decreased in 2014 to 27,360 million USD. Thereafter, a gradual recovery ensued, progressing through 28,192 million USD in 2015 and 29,400 million USD in 2016, culminating in the highest figure of 31,400 million USD in 2017. This pattern suggests a phase of volatility followed by steady growth.

Economic Profit

The economic profit remained negative throughout the period, indicating consistent economic losses. The loss narrowed from -1,227 million USD in 2013 to -789 million USD in 2014, representing an improvement. However, this positive trajectory reversed slightly in 2015 with economic profit declining to -976 million USD, followed by a deterioration in 2016 and 2017, where losses deepened to -1,344 million USD and -1,472 million USD respectively. The data reflects challenges in translating revenues into sustainable economic gains.

Economic Profit Margin

This margin correspondingly stayed negative, reflecting the economic profit outcomes relative to revenues. The margin improved from -4.12% in 2013 to -2.88% in 2014, indicating a better proportion of economic profit to revenues. Nonetheless, subsequent years saw a reversal, with margin worsening to -3.46% in 2015 and further declining to -4.57% and -4.69% in 2016 and 2017 respectively. This trend shows diminishing efficiency in generating economic profit from revenue over time.

Overall Analysis

The financial data present a mixed performance profile characterized by growth in adjusted revenues juxtaposed with persistent and deepening economic losses over the later years. The initial improvement in economic profit and margin seen in 2014 was not sustained, with the company facing increasing challenges in profitability despite revenue gains. This indicates potential issues in cost management, capital efficiency, or competitive pressures impacting underlying economic returns.