BEC Ratios (Profitability Ratios) Flashcards
Gross Margin
gross profit / net sales
Operating Profit Margin
operating profit / net sales
Free Cash Flow
net operating profit after taxes (NOPAT) + depreciation + amortization - capital expenditures - net increase in working capital
Residual Income
operating profit - imputed interest on investment
Interest on Investment
invested capital x required rate of return
Economic Value Added
net operating profit after taxes (NOPAT) - (invested capital x WACC)
Cost of Financing
(total assets - total liabilities) x WACC
Economic Rate of Return on Common Stock (Total Return)
(dividends + change in price) / beginning price
Return on Investment (based on assets)
net income / total assets or avg invested capital
Return on Assets
net income / avg total assets
Return on Equity
net income / avg stockholders’ equity
Common Stockholders’ Equity
S/E - preferred stock liquidation value
Capital Turnover
sales / invested capital
