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Time Warner Inc (NYSE:TWX)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Time Warner Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

TWX' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 8

3
8

During the past 13 years, the highest Piotroski F-Score of Time Warner Inc was 8. The lowest was 3. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 983 + 1183 + 771 + 720 = $3,657 Mil.
Cash Flow from Operations was 883 + 1187 + 915 + 729 = $3,714 Mil.
Revenue was 8565 + 6856 + 7435 + 6939 = $29,795 Mil.
Gross Profit was 3789 + 3373 + 3214 + 3189 = $13,565 Mil.
Total Assets at the begining of this year (Dec12) was $68,089 Mil.
Total Assets was $67,994 Mil.
Long-Term Debt was $20,099 Mil.
Total Current Assets was $12,844 Mil.
Total Current Liabilities was $8,383 Mil.
Net Income was 1112 + 822 + 413 + 583 = $2,930 Mil.

Revenue was 8164 + 6842 + 6744 + 6979 = $28,729 Mil.
Gross Profit was 3728 + 3185 + 2879 + 3003 = $12,795 Mil.
Total Assets at the begining of last year (Dec11) was $67,801 Mil.
Total Assets was $68,089 Mil.
Long-Term Debt was $19,122 Mil.
Total Current Assets was $13,264 Mil.
Total Current Liabilities was $9,799 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Time Warner Inc's current net income was 3,657. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Time Warner Inc's current cash flow from operations was 3,714. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Dec12)
=3657/68089
=0.05370912

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=2930/67801
=0.0432147

Time Warner Inc's return on assets of this year was 0.05370912. Time Warner Inc's return on assets of last year was 0.0432147. ==> This year is higher. ==> Score 1.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Time Warner Inc's current net income was 3,657. Time Warner Inc's current cash flow from operations was 3,714. ==> 3,714 > 3,657 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=20099/67994
=0.29559961

Gearing (Last Year)=Long-Term Debt/Total Assets
=19122/68089
=0.28083831

Time Warner Inc's gearing of this year was 0.29559961. Time Warner Inc's gearing of last year was 0.28083831. ==> Last year is lower ==> Score 0.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=12844/8383
=1.5321484

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=13264/9799
=1.35360751

Time Warner Inc's current ratio of this year was 1.5321484. Time Warner Inc's current ratio of last year was 1.35360751. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Time Warner Inc's number of shares in issue this year was 924.3. Time Warner Inc's number of shares in issue last year was 967. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=13565/29795
=0.45527773

Gross Margin (Last Year)=Gross Profit/Revenue
=12795/28729
=0.44536879

Time Warner Inc's gross margin of this year was 0.45527773. Time Warner Inc's gross margin of last year was 0.44536879. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Dec12)
=29795/68089
=0.43758904

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=28729/67801
=0.42372531

Time Warner Inc's asset turnover of this year was 0.43758904. Time Warner Inc's asset turnover of last year was 0.42372531. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+1+1+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Time Warner Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Time Warner Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111011111
Q2 1111111111
Q3 1010011101
Q4 1111111111
Q5 1100100010
Q6 1101111001
Q7 0011101111
Q8 1110111011
Q9 0110011101
F-score 7775678668

Time Warner Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1110001111
Q4 1111111111
Q5 0000010100
Q6 0000001111
Q7 1111111111
Q8 0001011111
Q9 1111000111
F-score 6666467988
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