Financial Measures of Performance Flashcards
ROA
%
Return on Assets = Earnings before intrest/Average total Assets
=Net income + (Interest expense x (1-Tax Rate)/Average Total Assets
Oder: =Profit Margin x Asset Turnover
Profit Margin (Gewinnspanne)
%
=Earnings before interest / Sales revenue
(A 20% profit margin, then, means the company has a net income of $0.20 for each dollar of total revenue earned.)
Asset Turnover
Sales Revenue / Total Assets
(What is ‘Asset Turnover Ratio’
Asset turnover ratio measures the value of a company’s sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.)
APT
Accounts Payable Turnover
=Cost of Goods Sold / Accounts payable
Je höher desto schneller werden supplier bezahlt. Schnell nicht unbedingt gut da Firmen ihre Geschäfte mit dem Geld finanzieren könne) 52 Weeks/ Apt= finanzierte Wochen)
ART
Accounts receivable turnover= Sales Revenue / Accounts Receivable
(How quick money from sales is collected)
INVT
Inventory turnover = Cost of Goods Sold / Inventories
(A low turnover implies weak sales and, therefore, excess inventory. A high ratio implies either strong sales and/or large discounts.)
PPET
Property, Plant and Equipment turnover = Sales Revenue / PP&E
(how able a company is to generate net sales from fixed-asset investments, namely property, plant and equipment (PP&E))
C2C
Cash to Cash cycle = -Weeks Payable [unit: 1/APT] +Weeks Inventory [1/INVT] + Weeks Receivable [1/ART]
=-(52/APT)+ (52/INVT)+(52/ART)
(roughly measures the average amount time from
when cash enters the process as cost to when it returns as collected revenue)
ROE
%
Return on Equity = Net Income / Average shareholders Equity
ROFL
%
Return on Financial Leverage = ROE-ROA
