Intrinsic value of Time Warner - TWX

Previous Close

$94.70

  Intrinsic Value

$165.28

stock screener

  Rating & Target

str. buy

+75%

Previous close

$94.70

 
Intrinsic value

$165.28

 
Up/down potential

+75%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TWX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Time Warner (TWX) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.27
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  29,318
  31,077
  32,911
  34,823
  36,818
  38,900
  41,075
  43,347
  45,722
  48,204
  50,801
  53,519
  56,363
  59,340
  62,458
  65,723
  69,145
  72,730
  76,488
  80,427
  84,557
  88,888
  93,430
  98,193
  103,190
  108,432
  113,931
  119,701
  125,756
  132,110
  138,777
Variable operating expenses, $m
 
  13,259
  13,877
  14,522
  15,195
  15,898
  16,631
  17,398
  18,199
  19,037
  19,913
  18,054
  19,013
  20,018
  21,070
  22,171
  23,325
  24,535
  25,803
  27,131
  28,525
  29,986
  31,518
  33,125
  34,810
  36,578
  38,434
  40,380
  42,423
  44,566
  46,815
Fixed operating expenses, $m
 
  9,577
  9,816
  10,061
  10,313
  10,571
  10,835
  11,106
  11,384
  11,668
  11,960
  12,259
  12,565
  12,879
  13,201
  13,531
  13,870
  14,216
  14,572
  14,936
  15,310
  15,692
  16,085
  16,487
  16,899
  17,321
  17,754
  18,198
  18,653
  19,120
  19,598
Total operating expenses, $m
  21,771
  22,836
  23,693
  24,583
  25,508
  26,469
  27,466
  28,504
  29,583
  30,705
  31,873
  30,313
  31,578
  32,897
  34,271
  35,702
  37,195
  38,751
  40,375
  42,067
  43,835
  45,678
  47,603
  49,612
  51,709
  53,899
  56,188
  58,578
  61,076
  63,686
  66,413
Operating income, $m
  7,547
  8,242
  9,217
  10,239
  11,309
  12,432
  13,608
  14,843
  16,139
  17,500
  18,929
  23,206
  24,784
  26,443
  28,187
  30,021
  31,950
  33,979
  36,114
  38,360
  40,723
  43,210
  45,827
  48,582
  51,481
  54,532
  57,743
  61,123
  64,680
  68,424
  72,364
EBITDA, $m
  8,216
  11,386
  12,383
  13,427
  14,522
  15,668
  16,871
  18,133
  19,457
  20,847
  22,307
  23,841
  25,453
  27,147
  28,928
  30,801
  32,770
  34,842
  37,021
  39,314
  41,726
  44,265
  46,936
  49,747
  52,705
  55,819
  59,095
  62,543
  66,172
  69,992
  74,011
Interest expense (income), $m
  1,391
  1,322
  1,461
  1,606
  1,758
  1,916
  2,081
  2,254
  2,434
  2,622
  2,819
  3,025
  3,240
  3,466
  3,702
  3,949
  4,208
  4,479
  4,764
  5,062
  5,374
  5,701
  6,045
  6,405
  6,783
  7,179
  7,594
  8,030
  8,488
  8,968
  9,472
Earnings before tax, $m
  5,195
  6,919
  7,756
  8,633
  9,551
  10,515
  11,527
  12,589
  13,705
  14,878
  16,110
  20,181
  21,543
  22,977
  24,485
  26,072
  27,742
  29,499
  31,350
  33,298
  35,349
  37,509
  39,783
  42,177
  44,698
  47,353
  50,149
  53,092
  56,192
  59,456
  62,893
Tax expense, $m
  1,281
  1,868
  2,094
  2,331
  2,579
  2,839
  3,112
  3,399
  3,700
  4,017
  4,350
  5,449
  5,817
  6,204
  6,611
  7,039
  7,490
  7,965
  8,464
  8,990
  9,544
  10,127
  10,741
  11,388
  12,068
  12,785
  13,540
  14,335
  15,172
  16,053
  16,981
Net income, $m
  3,926
  5,051
  5,662
  6,302
  6,973
  7,676
  8,415
  9,190
  10,005
  10,861
  11,760
  14,732
  15,727
  16,773
  17,874
  19,032
  20,251
  21,535
  22,885
  24,308
  25,805
  27,381
  29,041
  30,789
  32,630
  34,568
  36,608
  38,757
  41,020
  43,403
  45,912

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,539
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  65,966
  68,301
  72,331
  76,533
  80,918
  85,495
  90,274
  95,268
  100,487
  105,944
  111,652
  117,623
  123,874
  130,417
  137,270
  144,447
  151,967
  159,847
  168,106
  176,763
  185,840
  195,358
  205,340
  215,809
  226,791
  238,311
  250,398
  263,080
  276,387
  290,351
  305,005
Adjusted assets (=assets-cash), $m
  64,427
  68,301
  72,331
  76,533
  80,918
  85,495
  90,274
  95,268
  100,487
  105,944
  111,652
  117,623
  123,874
  130,417
  137,270
  144,447
  151,967
  159,847
  168,106
  176,763
  185,840
  195,358
  205,340
  215,809
  226,791
  238,311
  250,398
  263,080
  276,387
  290,351
  305,005
Revenue / Adjusted assets
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
Average production assets, $m
  10,436
  11,063
  11,716
  12,397
  13,107
  13,848
  14,623
  15,432
  16,277
  17,161
  18,085
  19,053
  20,065
  21,125
  22,235
  23,398
  24,616
  25,892
  27,230
  28,632
  30,102
  31,644
  33,261
  34,957
  36,736
  38,602
  40,559
  42,614
  44,769
  47,031
  49,405
Working capital, $m
  3,782
  4,444
  4,706
  4,980
  5,265
  5,563
  5,874
  6,199
  6,538
  6,893
  7,265
  7,653
  8,060
  8,486
  8,931
  9,398
  9,888
  10,400
  10,938
  11,501
  12,092
  12,711
  13,360
  14,042
  14,756
  15,506
  16,292
  17,117
  17,983
  18,892
  19,845
Total debt, $m
  24,339
  25,191
  27,698
  30,312
  33,039
  35,886
  38,859
  41,965
  45,211
  48,605
  52,155
  55,870
  59,757
  63,828
  68,090
  72,554
  77,231
  82,133
  87,270
  92,655
  98,301
  104,221
  110,429
  116,941
  123,772
  130,938
  138,456
  146,344
  154,621
  163,306
  172,421
Total liabilities, $m
  41,631
  42,483
  44,990
  47,604
  50,331
  53,178
  56,151
  59,257
  62,503
  65,897
  69,447
  73,162
  77,049
  81,120
  85,382
  89,846
  94,523
  99,425
  104,562
  109,947
  115,593
  121,513
  127,721
  134,233
  141,064
  148,230
  155,748
  163,636
  171,913
  180,598
  189,713
Total equity, $m
  24,335
  25,818
  27,341
  28,930
  30,587
  32,317
  34,124
  36,011
  37,984
  40,047
  42,204
  44,462
  46,824
  49,298
  51,888
  54,601
  57,444
  60,422
  63,544
  66,817
  70,248
  73,845
  77,619
  81,576
  85,727
  90,082
  94,650
  99,444
  104,474
  109,753
  115,292
Total liabilities and equity, $m
  65,966
  68,301
  72,331
  76,534
  80,918
  85,495
  90,275
  95,268
  100,487
  105,944
  111,651
  117,624
  123,873
  130,418
  137,270
  144,447
  151,967
  159,847
  168,106
  176,764
  185,841
  195,358
  205,340
  215,809
  226,791
  238,312
  250,398
  263,080
  276,387
  290,351
  305,005
Debt-to-equity ratio
  1.000
  0.980
  1.010
  1.050
  1.080
  1.110
  1.140
  1.170
  1.190
  1.210
  1.240
  1.260
  1.280
  1.290
  1.310
  1.330
  1.340
  1.360
  1.370
  1.390
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
Adjusted equity ratio
  0.354
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,926
  5,051
  5,662
  6,302
  6,973
  7,676
  8,415
  9,190
  10,005
  10,861
  11,760
  14,732
  15,727
  16,773
  17,874
  19,032
  20,251
  21,535
  22,885
  24,308
  25,805
  27,381
  29,041
  30,789
  32,630
  34,568
  36,608
  38,757
  41,020
  43,403
  45,912
Depreciation, amort., depletion, $m
  669
  3,144
  3,166
  3,188
  3,212
  3,237
  3,263
  3,290
  3,318
  3,347
  3,378
  635
  669
  704
  741
  780
  821
  863
  908
  954
  1,003
  1,055
  1,109
  1,165
  1,225
  1,287
  1,352
  1,420
  1,492
  1,568
  1,647
Funds from operations, $m
  -5,315
  8,195
  8,828
  9,490
  10,185
  10,913
  11,677
  12,480
  13,322
  14,208
  15,138
  15,367
  16,396
  17,477
  18,615
  19,812
  21,072
  22,398
  23,793
  25,262
  26,808
  28,436
  30,150
  31,954
  33,854
  35,854
  37,960
  40,178
  42,513
  44,971
  47,558
Change in working capital, $m
  -9,981
  252
  262
  273
  285
  298
  311
  325
  340
  355
  371
  389
  407
  426
  446
  467
  489
  513
  537
  563
  591
  619
  649
  681
  715
  750
  786
  825
  866
  909
  953
Cash from operations, $m
  4,666
  7,944
  8,566
  9,217
  9,899
  10,615
  11,366
  12,155
  12,983
  13,853
  14,767
  14,978
  15,989
  17,051
  18,169
  19,345
  20,583
  21,885
  23,256
  24,699
  26,218
  27,817
  29,500
  31,273
  33,140
  35,105
  37,174
  39,353
  41,647
  44,062
  46,605
Maintenance CAPEX, $m
  0
  -348
  -369
  -391
  -413
  -437
  -462
  -487
  -514
  -543
  -572
  -603
  -635
  -669
  -704
  -741
  -780
  -821
  -863
  -908
  -954
  -1,003
  -1,055
  -1,109
  -1,165
  -1,225
  -1,287
  -1,352
  -1,420
  -1,492
  -1,568
New CAPEX, $m
  -432
  -627
  -653
  -681
  -710
  -741
  -774
  -809
  -845
  -884
  -925
  -967
  -1,012
  -1,060
  -1,110
  -1,163
  -1,218
  -1,276
  -1,338
  -1,402
  -1,470
  -1,542
  -1,617
  -1,696
  -1,779
  -1,866
  -1,958
  -2,054
  -2,155
  -2,262
  -2,374
Cash from investing activities, $m
  -1,360
  -975
  -1,022
  -1,072
  -1,123
  -1,178
  -1,236
  -1,296
  -1,359
  -1,427
  -1,497
  -1,570
  -1,647
  -1,729
  -1,814
  -1,904
  -1,998
  -2,097
  -2,201
  -2,310
  -2,424
  -2,545
  -2,672
  -2,805
  -2,944
  -3,091
  -3,245
  -3,406
  -3,575
  -3,754
  -3,942
Free cash flow, $m
  3,306
  6,968
  7,544
  8,145
  8,776
  9,437
  10,131
  10,859
  11,623
  12,426
  13,270
  13,408
  14,341
  15,323
  16,355
  17,441
  18,585
  19,788
  21,055
  22,389
  23,793
  25,272
  26,829
  28,469
  30,196
  32,014
  33,930
  35,947
  38,071
  40,308
  42,664
Issuance/(repayment) of debt, $m
  512
  2,391
  2,507
  2,614
  2,727
  2,847
  2,973
  3,106
  3,246
  3,394
  3,550
  3,715
  3,888
  4,070
  4,262
  4,464
  4,677
  4,901
  5,137
  5,385
  5,646
  5,920
  6,209
  6,512
  6,831
  7,166
  7,518
  7,888
  8,277
  8,686
  9,115
Issuance/(repurchase) of shares, $m
  -2,150
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,653
  2,391
  2,507
  2,614
  2,727
  2,847
  2,973
  3,106
  3,246
  3,394
  3,550
  3,715
  3,888
  4,070
  4,262
  4,464
  4,677
  4,901
  5,137
  5,385
  5,646
  5,920
  6,209
  6,512
  6,831
  7,166
  7,518
  7,888
  8,277
  8,686
  9,115
Total cash flow (excl. dividends), $m
  653
  9,360
  10,051
  10,759
  11,503
  12,284
  13,103
  13,965
  14,869
  15,821
  16,821
  17,123
  18,229
  19,393
  20,617
  21,906
  23,262
  24,689
  26,192
  27,774
  29,439
  31,192
  33,037
  34,981
  37,026
  39,180
  41,447
  43,835
  46,348
  48,993
  51,779
Retained Cash Flow (-), $m
  -716
  -1,483
  -1,523
  -1,589
  -1,657
  -1,730
  -1,807
  -1,888
  -1,973
  -2,063
  -2,157
  -2,257
  -2,363
  -2,473
  -2,590
  -2,713
  -2,842
  -2,979
  -3,122
  -3,273
  -3,431
  -3,598
  -3,773
  -3,957
  -4,151
  -4,355
  -4,569
  -4,794
  -5,030
  -5,278
  -5,539
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,877
  8,527
  9,171
  9,846
  10,554
  11,297
  12,077
  12,897
  13,758
  14,663
  14,865
  15,866
  16,919
  18,027
  19,193
  20,419
  21,711
  23,070
  24,501
  26,008
  27,594
  29,264
  31,023
  32,875
  34,825
  36,879
  39,041
  41,318
  43,715
  46,239
Discount rate, %
 
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
 
  7,502
  7,698
  7,807
  7,861
  7,858
  7,794
  7,670
  7,486
  7,244
  6,947
  6,282
  5,927
  5,532
  5,106
  4,658
  4,196
  3,731
  3,273
  2,829
  2,408
  2,017
  1,661
  1,343
  1,066
  829
  632
  471
  343
  243
  169
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Time Warner Inc. is a media and entertainment company. The Company operates through three segments: Turner, which consists of cable networks and digital media properties; Home Box Office, which consists of premium pay television and over the top (OTT) services and premium pay, basic tier television and OTT services internationally, and Warner Bros., which consists of television, feature film, home video, and videogame production and distribution. It also holds interests in companies that operate broadcast networks. The Company holds interest in Central European Media Enterprises Ltd. (CME), which is a broadcasting company that operates television networks in Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia and The CW broadcast network (The CW), which includes a lineup of advertising-supported original programming, such as The 100, Arrow, Crazy Ex-Girlfriend, DC's Legends of Tomorrow, The Flash, Frequency, iZombie, Jane the Virgin and No Tomorrow.

FINANCIAL RATIOS  of  Time Warner (TWX)

Valuation Ratios
P/E Ratio 18.6
Price to Sales 2.5
Price to Book 3
Price to Tangible Book
Price to Cash Flow 15.7
Price to Free Cash Flow 17.3
Growth Rates
Sales Growth Rate 4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.1%
Cap. Spend. - 3 Yr. Gr. Rate -5.3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 92%
Total Debt to Equity 100%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 7.5%
Return On Total Capital 8.2%
Ret/ On T. Cap. - 3 Yr. Avg. 8.1%
Return On Equity 16.4%
Return On Equity - 3 Yr. Avg. 15.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 44.4%
Gross Margin - 3 Yr. Avg. 43%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 25.1%
Operating Margin 25.7%
Oper. Margin - 3 Yr. Avg. 24%
Pre-Tax Margin 17.7%
Pre-Tax Margin - 3 Yr. Avg. 18.1%
Net Profit Margin 13.4%
Net Profit Margin - 3 Yr. Avg. 13.7%
Effective Tax Rate 24.7%
Eff/ Tax Rate - 3 Yr. Avg. 23.9%
Payout Ratio 32.3%

TWX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TWX stock intrinsic value calculation we used $29318 million for the last fiscal year's total revenue generated by Time Warner. The default revenue input number comes from 2016 income statement of Time Warner. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TWX stock valuation model: a) initial revenue growth rate of 6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5%, whose default value for TWX is calculated based on our internal credit rating of Time Warner, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Time Warner.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TWX stock the variable cost ratio is equal to 43.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9343 million in the base year in the intrinsic value calculation for TWX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Time Warner.

Corporate tax rate of 27% is the nominal tax rate for Time Warner. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TWX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TWX are equal to 35.6%.

Life of production assets of 57 years is the average useful life of capital assets used in Time Warner operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TWX is equal to 14.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $24335 million for Time Warner - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 779.819 million for Time Warner is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Time Warner at the current share price and the inputted number of shares is $73.8 billion.

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COMPANY NEWS

▶ [$$] Time to Consider Time Warner   [Feb-24-18 12:01AM  Barrons.com]
▶ Can Showtime Survive as a Stand-Alone Product?   [Feb-23-18 07:06PM  Motley Fool]
▶ AT&T Chances Of Winning Time Warner Seen Less Than A Coin Flip   [04:26PM  Investor's Business Daily]
▶ [$$] Judge Will Decide Two Media Merger Cases in One   [12:12AM  The Wall Street Journal]
▶ [$$] Judge Will Decide Two Media Merger Cases in One   [10:05AM  The Wall Street Journal]
▶ AT&T denied access to White House correspondence on Time Warner merger   [Feb-21-18 03:59PM  American City Business Journals]
▶ AT&T denied request to see internal communications from White House   [12:40PM  American City Business Journals]
▶ [$$] Judge Denies AT&T Access to Government Discussions on Time Warner   [Feb-20-18 11:33PM  The Wall Street Journal]
▶ [$$] Judge Is Asked to Disallow Trump Bias Claims in AT&Ts Merger Defense   [Feb-16-18 11:56PM  The Wall Street Journal]
▶ AT&T CEO Randall Stephenson talks Time Warner merger, 5G and net neutrality   [Feb-15-18 06:42PM  American City Business Journals]
▶ [$$] AT&T Targets DOJ Antitrust Chief in Time Warner Fight   [12:40AM  The Wall Street Journal]
▶ Better Buy: CenturyLink, Inc. vs. AT&T   [Feb-14-18 07:34PM  Motley Fool]
▶ [$$] AT&T Targets DOJ Antitrust Chief in Time Warner Fight   [04:20PM  The Wall Street Journal]
▶ CNN to eliminate dozens of positions   [Feb-13-18 04:00PM  American City Business Journals]
▶ Telecom Mergers Await Outcome Of AT&T's Dispute With Justice   [12:11PM  Investor's Business Daily]
▶ AT&T Divestitures Could Lower Time Warner Leverage   [Feb-09-18 06:45PM  TheStreet.com]
▶ Apple launches new live news app   [02:10PM  Yahoo Finance Video]
▶ AT&T chief 'feels good' about Time Warner trial proceedings   [12:35PM  American City Business Journals]
▶ [$$] Buying GM, Time Warner, AMD; Selling GE, AT&T   [Feb-08-18 03:18PM  Barrons.com]
Financial statements of TWX
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