Chapter 12 Flashcards
How do you calculate Earnings Without Interest Expense?
Net Income + [Interest expense * (1-statutory tax rate)]
How do you calculate Return on Assets
Earnings without interest expense / Average total assets
How do you calculate Return on Financial Leverage (ROFL)
ROE - ROA
How can Return on Assets be disaggregated?
It can be disaggregated in the Profit Margin and Asset Turnover
How do you calculate Profit Margin?
EWI / Sales revenue
How do you calculate Asset Turnover?
Sales revenue / Average total assets
What are the components of the DuPont - model?
- NET profit margin
- Asset turnover
- Financial leverage
How do you calculate NET profit margin?
Net income / Sales
How do you calculate financial leverage?
Average total assets / Average total equity
How do you calculate Accounts receivables turnover?
Sales revenue / Average accounts receivables
How do you calculate Inventory turover?
COGS / Average inventory
How do you calculate PP&E turnover?
revenue / average PP&E
How do you calculate Cash flow to Current liabilities?
CF from operations/average current liabilities
What are the most important liquidity measures?
- Current ratio
- Quick ratio
- OCF to current liabilities
How do you calculate Return on Net operating assets?
Net operating profit after taxes / Average net operating assets
