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Time Warner Piotroski F-Score

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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Time Warner has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Time Warner Piotroski F-Score 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
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.00 5.00 8.00 8.00 5.00

Time Warner Quarterly Data
Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18
Piotroski F-Score 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 7.00 7.00 6.00 5.00 5.00

How is the Piotroski F-Score calculated?

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

This Year (Mar18) TTM:Last Year (Mar17) TTM:
Net Income was 1062 + 1372 + 1389 + 1643 = $5,466 Mil.
Cash Flow from Operations was 992 + 1494 + 1132 + 1316 = $4,934 Mil.
Revenue was 7330 + 7595 + 8611 + 7996 = $31,532 Mil.
Gross Profit was 3125 + 3667 + 3430 + 3279 = $13,501 Mil.
Average Total Assets from the begining of this year (Mar17)
to the end of this year (Mar18) was
(65649 + 66096 + 68343 + 69209 + 68997) / 5 = $67658.8 Mil.
Total Assets at the begining of this year (Mar17) was $65,649 Mil.
Long-Term Debt & Capital Lease Obligation was $18,331 Mil.
Total Current Assets was $15,138 Mil.
Total Current Liabilities was $12,945 Mil.
Net Income was 952 + 1467 + 293 + 1424 = $4,136 Mil.

Revenue was 6952 + 7167 + 7891 + 7735 = $29,745 Mil.
Gross Profit was 3112 + 3294 + 3233 + 3403 = $13,042 Mil.
Average Total Assets from the begining of last year (Mar16)
to the end of last year (Mar17) was
(63254 + 64127 + 65764 + 65966 + 65649) / 5 = $64952 Mil.
Total Assets at the begining of last year (Mar16) was $63,254 Mil.
Long-Term Debt & Capital Lease Obligation was $22,402 Mil.
Total Current Assets was $12,908 Mil.
Total Current Liabilities was $8,162 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

Profitability

Question 1. 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's current Net Income (TTM) was 5,466. ==> Positive ==> Score 1.

Question 2. 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's current Cash Flow from Operations (TTM) was 4,934. ==> Positive ==> Score 1.

Question 3. 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 (Mar17)
=5466/65649
=0.08326098

ROA (Last Year)=Net Income/Total Assets (Mar16)
=4136/63254
=0.06538717

Time Warner's return on assets of this year was 0.08326098. Time Warner's return on assets of last year was 0.06538717. ==> This year is higher. ==> Score 1.

Question 4. 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's current Net Income (TTM) was 5,466. Time Warner's current Cash Flow from Operations (TTM) was 4,934. ==> 4,934 <= 5,466 ==> CFROA <= ROA ==> Score 0.

Funding

Question 5. Change in Gearing or Leverage

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

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Mar18)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Mar17 to Mar18
=18331/67658.8
=0.27093298

Gearing (Last Year: Mar17)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Mar16 to Mar17
=22402/64952
=0.34490085

Time Warner's gearing of this year was 0.27093298. Time Warner's gearing of last year was 0.34490085. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Mar18)=Total Current Assets/Total Current Liabilities
=15138/12945
=1.16940904

Current Ratio (Last Year: Mar17)=Total Current Assets/Total Current Liabilities
=12908/8162
=1.58147513

Time Warner's current ratio of this year was 1.16940904. Time Warner's current ratio of last year was 1.58147513. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

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

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

Time Warner's number of shares in issue this year was 792. Time Warner's number of shares in issue last year was 789.3. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. 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: TTM)=Gross Profit/Revenue
=13501/31532
=0.42816821

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=13042/29745
=0.43846025

Time Warner's gross margin of this year was 0.42816821. Time Warner's gross margin of last year was 0.43846025. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year 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 (Mar17)
=31532/65649
=0.48031196

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Mar16)
=29745/63254
=0.47024694

Time Warner's asset turnover of this year was 0.48031196. Time Warner's asset turnover of last year was 0.47024694. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+0+1+0+0+0+1
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Time Warner has an F-score of 5 indicating the company's financial situation is typical for a stable company.

Time Warner  (NYSE:TWX) Piotroski F-Score 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.


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