Rogers 2014 Annual Report Download - page 86

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MANAGEMENT’S DISCUSSION AND ANALYSIS
CAPITAL INTENSITY
Capital intensity allows us to compare the level of our additions to
property, plant and equipment to that of other companies within the
same industry. Our additions to property, plant and equipment
expenditures exclude purchases of spectrum licences. We calculate
capital intensity by dividing additions to property, plant and equipment
by operating revenue. For Wireless, capital intensity is calculated using
total network revenue. We use it to evaluate the performance of our
assets and when making decisions about the capital expenditures. We
believe that certain investors and analysts use capital intensity to
measure the performance of asset purchases and construction in
relation to revenue.
DIVIDEND PAYOUT RATIOS
We calculate the dividend payout ratio by dividing dividends declared
for the year by net income for the year. We use dividends as a
percentage of free cash flow to conduct analysis and assist with
determining the dividends we should pay. We calculate dividends as a
percentage of cash flow as dividends declared for the year divided by
free cash flow for the year.
Years ended December 31
(In millions of dollars, except ratios) 2014 2013
Dividend payout ratio
Dividends for the year 942 896
Divided by: net income 1,341 1,669
Dividend payout ratio 70% 54%
Dividend payout ratio of free cash flow
Dividends for the year 942 896
Divided by: free cash flow 11,437 1,548
Dividend payout ratio of free cash flow 66% 58%
1Free cash flow is a non-GAAP measure and should not be considered as a substitute
or alternative for GAAP measures. It is not a defined term under IFRS, and does not
have a standard meaning, so may not be a reliable way to compare us to other
companies. See “Non-GAAP Measures” for information about this measure,
including how we calculate it.
RETURN ON ASSETS
We use return on assets to measure our efficiency in using our assets to
generate net income. We calculate return on assets by dividing net
incomefortheyearbytotalassetsasatyearend.
Years ended December 31
(In millions of dollars, except ratios) 2014 2013
Return on assets
Net income 1,341 1,669
Divided by: total assets 26,522 23,601
Return on assets 5.1% 7.1%
82 ROGERS COMMUNICATIONS INC. 2014 ANNUAL REPORT