Growth Measure Flashcards

1
Q

Earning Per Share Growth

A

Rentention Ratio X ROE

Retention Ratio = % of net income retained by the company = 1 – Payout ratio

Return on Equity = Net Income/ Book Value of Equity

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2
Q

Equity reinvestment Rate

A

(Net Cap Ex + Change in non-cash WC – Change in Debt)/ (Net Income)

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3
Q

Non-cash ROE

A

Net Income from non-cash assets/(Book value of equity – Cash)

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4
Q

Net Income from non-cash assets growth

A

Equity Reinvestment Rate X Non-Cash ROE

Equity reinvestment Rate = (Net Cap Ex + Change in non-cash WC – Change in Debt)/ (Net Income)

Non-cash ROE = Net Income from non-cash assets/ (Book value of equity – Cash)

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5
Q

Operating Income growth

A

Reinvestment rate x ROIC

Reinvestment Rate = (Net Cap Ex + Change in non-cash WC)/ EBIT(1-T)

Return on Capital or ROIC = EBIT(1-T)/ (Book value of equity + Book value of debt – Cash)

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6
Q

Operating Income Growth when Return on Capital is Changing

A

ROC t+1 * Reinvestment rate +(ROC t+1 – ROCt) /ROCt

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7
Q
A

(Capital expenditure −Depreciation +Δ Noncash WC)
/[EBIT(1 −Tax rate)]

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