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Time Warner ROC %

: 13.14% (As of Mar. 2018)
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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Time Warner's annualized return on capital (ROC %) for the quarter that ended in Mar. 2018 was 13.14%.

As of today (2020-07-12), Time Warner's WACC % is 0.00%. Time Warner's ROC % is 0.00% (calculated using TTM income statement data). Time Warner earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Time Warner ROC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Time Warner Annual Data
Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17
ROC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.26 8.85 8.85 10.11 11.79

Time Warner Quarterly Data
Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18
ROC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 10.78 7.98 10.95 30.11 13.14

Time Warner ROC % Calculation

Time Warner's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2017 is calculated as:

ROC % (A: Dec. 2017 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2016 ) + Invested Capital (A: Dec. 2017 ))/ count )
=7989 * ( 1 - 11.79% )/( (58239 + 61343)/ 2 )
=7047.0969/59791
=11.79 %

where

Time Warner's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2018 is calculated as:

ROC % (Q: Mar. 2018 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2017 ) + Invested Capital (Q: Mar. 2018 ))/ count )
=7336 * ( 1 - -8.74% )/( (61343 + 60113)/ 2 )
=7977.1664/60728
=13.14 %

where

Note: The Operating Income data used here is four times the quarterly (Mar. 2018) data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Time Warner  (NYSE:TWX) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Time Warner's WACC % is 0.00%. Time Warner's ROC % is 0.00% (calculated using TTM income statement data). Time Warner earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


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