Excercise II

Question 1

Debt to total capital

Answer 1

= total debt (current+Long-term) / total capital (debt + equity)

Question 2

Dent to Equity

Answer 2

= total debt/ total equity

Question 3

EBIT (I)

Answer 3

Net sales
- costs of goods sold
= gross profit
- selling, general & administrative
- R&D
+/- other income/ expenses
= EBITDA (earnings before interest, taxes, depr. & amortization)
- depreciation & amortization (D&A)
= EBIT

Question 4

EBIT (II)

Answer 4

Net profit
+ income taxes
= EBT (earnings before taxes)
+ Interest & other financial expense
- Interest & other financial income
= EBIT

Question 5

Times interest earned

Answer 5

= EBIT/ Interest Expense

Question 6

Total Capital

Answer 6

= Short-term debt (current liabilities-> commercial papers + term-debt)
+ long-term debt (non-current liabilities-> term-debt)
= total Debt
+ total equity
= total capital

Question 7

Capital Expenditure Ratio

Answer 7

= Cash from operations/ Capital Expenditures*

• payments for the aquisition of PP&E (!)

Question 8

Cash flow from operations to Debt

Answer 8

= CFO / Total Debt

Question 9

Gross margin

Answer 9

= gross profit/ sales

Question 10

Margin before interest & Tax

Answer 10

= EBIT / Sales

Question 11

Profit Margin

Answer 11

= net income/ sales

Question 12

Operating margin

Answer 12

= Operating income / sales

Question 13

Return on Assistant pre-Interest & pre-tax

Answer 13

ROA (pretax) = EBIT/ Average total assets

Question 14

ROA after-tax

Answer 14

= (net income+aftertax interest costs)/ Average total assets

Question 15

Return on total Capital pre-tax

Answer 15

ROTC = EBIT/ average(total debt + stockholder‘s equity)

Total debt = short+long Term debt (commercial paper.+ term Debt)

Question 16

Return on equity (after-tax)

Answer 16

ROE = net income/ Average stockholder‘s equity

Question 17

ROE pretax

Answer 17

= pretax income/ Average stockholder‘s equity