Earthworks Entertainment (Earthworks Entertainment) Operating Income : $-1.68 Mil (TTM As of Jun. 2006)

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What is Earthworks Entertainment Operating Income?

Earthworks Entertainment's Operating Income for the three months ended in Jun. 2006 was $-0.25 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2006 was $-1.68 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Earthworks Entertainment's Operating Income for the three months ended in Jun. 2006 was $-0.25 Mil. Earthworks Entertainment's Revenue for the three months ended in Jun. 2006 was $0.00 Mil. Therefore, Earthworks Entertainment's Operating Margin % for the quarter that ended in Jun. 2006 was %.

Earthworks Entertainment's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Earthworks Entertainment's annualized ROC % for the quarter that ended in Jun. 2006 was -29.86%. Earthworks Entertainment's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2006 was %.

Earthworks Entertainment Operating Income Historical Data

The historical data trend for Earthworks Entertainment's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Earthworks Entertainment Operating Income Chart

Earthworks Entertainment Annual Data

Trend

Sep96

Sep97

Sep98

Sep99

Sep00

Sep01

Sep02

Sep03

Sep04

Sep05

Operating Income

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-2.42

-1.53

-0.70

-1.40

-1.69

Earthworks Entertainment Quarterly Data
	Sep01	Dec01	Mar02	Jun02	Sep02	Dec02	Mar03	Jun03	Sep03	Dec03	Mar04	Jun04	Sep04	Dec04	Mar05	Jun05	Sep05	Dec05	Mar06	Jun06
Operating Income	Get a 7-Day Free Trial															-0.37	-0.66	-0.41	-0.36	-0.25

Earthworks Entertainment Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2006 adds up the quarterly data reported by the company within the most recent 12 months, which was $-1.68 Mil.

Earthworks Entertainment (OTCPK:EWKS) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Earthworks Entertainment's annualized ROC % for the quarter that ended in Jun. 2006 is calculated as:

	ROC % (Q: Jun. 2006 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2006 )	+	Invested Capital (Q: Jun. 2006 ))	/ count )
=	-0.988 * ( 1 - 0% )	/	( (3.282	+	3.336)	/ 2 )
=	-0.988	/	3.309
=	-29.86 %

where

	Invested Capital		(Q: Mar. 2006 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	1.794	-	0.761	-	( 0.003	-	max(0, 2.291	-	0.042	+	0.003	))
=	3.282

	Invested Capital		(Q: Jun. 2006 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	1.777	-	0.978	-	( 0.001	-	max(0, 2.562	-	0.025	+	0.001	))
=	3.336

Note: The Operating Income data used here is four times the quarterly (Jun. 2006) data.

2. Joel Greenblatt's definition of Return on Capital:

Earthworks Entertainment's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2006 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2006 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2006		Q: Jun. 2006
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-0.988	/	( ( (0 + max(-0.744, 0))	+	(0 + max(-0.992, 0)) )	/	2 )
=	-0.988	/	( ( 0	+	0 )	/	2 )
=	-0.988	/	0
=	%

where Working Capital is:

	Working Capital		(Q: Mar. 2006 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	0.039)	-	(0.761	+	0.023	+	-0.0010000000000003)
=	-0.744

	Working Capital		(Q: Jun. 2006 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	0.024)	-	(0.978	+	0.038	+	0)
=	-0.992

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2006) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Earthworks Entertainment's Operating Margin % for the quarter that ended in Jun. 2006 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2006 )	/	Revenue (Q: Jun. 2006 )
	=	-0.247	/	0
	=	%

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Earthworks Entertainment Operating Income Related Terms

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Earthworks Entertainment (Earthworks Entertainment) Business Description

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Address

14001 North Dallas Parkway, Suite 1200, Dallas, TX, USA, 75420

Website

Earthworks Entertainment Inc is engaged in investments and acquisitions in entertainment segments including, animation, direct response marketing, radio networks and mixed martial arts social networks.

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