CFI analysis

Topics: Free cash flow, Cash flow, Operating cash flow Pages: 2 (521 words) Published: February 3, 2014
CFI Analysis
From the years 2008 to 2012, Time Warner had a total gross cash flow of $24691.8. The peak cash profit from the income statement was in 2008 with an amount of $6,251.6. However, in 2009 there was a sharp decrease to $3,090.3 of gross cash flow. This fall in gross cash flow was due primarily to a substantial drop of $2,312.3 in Time Warner’s net operating profit after taxes. This would prove to be the trough of Time Warner’s gross cash flow over this 5 year period; however, since 2009, the gross cash flow has been steadily increasing ultimately hitting $5,018 in 2012. Again, this increase in gross cash flow was caused predominantly by a continuing increase in Time Warner’s net operating profit after taxes. Overall, since 2009, Time Warner has slowly been rebounding its gross cash flow to 2008 levels after a sizeable drop from 2008 to 2009. During this same time period, Time Warner saw a large divestment in gross investment from 2008 to 2012. In 2008, Time Warner actually had divestment of $8,759.3. This large divestment in 2008 was major part in Time Warner’s overall divestment of $7,236.1 of gross investment over this five year period. While in 2009 Time Warner again showed divestment of $2,334.6, this would ultimately be the last divestment in gross investment for Time Warner over this 5 year period. From 2010 to 2012, Time Warner had an average gross investment of $1,285.9. Consequently, from this 5 year period, due to the overall divestment, Time Warner had a theoretical payout rate of 129.3% just from operations. Furthermore, Time Warner over this period was not investing into goodwill and intangible opportunities. Over this time period Time Warner saw a divestment of $11,303 in goodwill and intangibles. Clearly, Time Warner is trying to increase operating margins by cutting costs, which is also seen in the ROIC driver tree. Therefore, even with the sharp decline in 2008 to 2009 in gross free cash flow, Time Warner was still able...
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