Module 1 Flashcards
Components of ROA
Operating profit margin
asset turnover
Components of ROCE
ROA
Common earnings leverage
Financial structure leverage
Short term liquidity types
liquidity ratios
activity ratios
liquidity ratios
current ratio
quick ratio
activity ratos
AR turnover
Inv turnover
AP turnover
Days in _____
365/______
long term solvency types
debt ratios
coverage ratios
debt ratios
long term debt to assets
long term debt to equity
coverage ratios
interest coverage
cash flow coverage
ROA=
NOPAT/AVG assets
NOPAT
NI+(Interest Exp*(1-TR))
Operating profit margin=
NOPAT/sales
Asset turnover=
Sales/ avg assets
ROA =(simple)
operating profit margin * asset turnover
Roa ignores_____
capital structure
nopat is synnonymous with…
EBI
ROCE=
NI - Pref div - interest exp- nonrecurring items
__________________________________
avg common sh equity
avg common sh equity ==> total equity-ps
ROA=
NOPAT/avg assets
common reanings leverage=
NI - pref div/ NOPAT
Financial structure leverage
avg assets/avg common sh equity
common earnings leverage measures
% of NOPAT that goes to common SH. X<=1
financial structure leverage means
measure of the amount of debt in the capital structure
x>=1
return analysis==>
ROA&ROCE& their relationship with the common shareholders
Current ratio=
CA/CL
Quick ratio=
Cash+market securities+Receivables/ CL
AR turnover=
net sales/avg AR
inventory turnover
cgs/avg inventory
AP turnover=
Inventory purchases/ avg AP
purchases=
cgs+EI-BI
cash conversion cycle=
days in inventory+days in AR - days in AP
long term debt to assets=
long term debt / total assets
long term debt to equity=
long term debt/ total equity
interest coverage=
earnings before taxes and interest/ interest expense
cash flow coverage=
cash flow from operating activities/ interest expense
PE ratio
P0/E0=1/r or P0/E0=1/(r - g)
