chapter 9

Question 1

operating performance or financial policies

Answer 1

(net profit margin x assets turnover) x (total assets/beginning common equity x RR)

Question 2

net profit margin

Answer 2

net income/sales

Question 3

assets turnover

Answer 3

sales/total assets

Question 4

financial leverage or equity multiplier

Answer 4

total assets/beginning common equity

Question 5

beginning common equity

Answer 5

common stock + retained earning - added retained earning

Question 6

additional fund needed (AFN)

Answer 6

(TA/NS0)(ΔNS) - (AP-L/NS0)(ΔNS) - (NS1)(NI/NS0)(RR)

Question 7

average sales growth rate

Answer 7

E(g) = (P¹ x g¹) + …

Question 8

sales expected next year

Answer 8

sales this year x (1+growth rate)

Question 9

expected value of sales

Answer 9

E(s) = (P¹ x S¹) + …

Question 10

net profit

Answer 10

sales x net profit margin

Question 11

expected value net profit

Answer 11

= (P¹ x NP¹) + …

Question 12

sustainable growth rate

Answer 12

ROE x RR

Question 13

ROE

Answer 13

net profit/total equity

Question 14

RR

Answer 14

1 - dividend payout ratio

Question 15

dividend payout ratio

Answer 15

cash dividend/net income