Viktor Elliots del

Question 1

Expected rate of return

Answer 1

E(R) = Rf + Beta ((RM)-*Rf))

Question 2

Excess Profit (EP)

Answer 2

See picture

Question 3

Return on Assets?

Answer 3

(EBIE / Total Assets) or (EBIT + Financial Income) / Total Assets

Question 4

Cost of Liability?

Answer 4

Interest Expenses / Liabilities (interest-bearing*)

Question 5

Return on Equity ? (Basic)

Answer 5

Earnings before tax / Total Equity

Question 6

ROE (Calculated by using ROA and COL)?

Answer 6

ROE = ROA + (ROA-COL) *(L/E)

Question 7

Equity Ratio and Liability Ratio?

Answer 7

See pic.

Question 8

Leverage effect?

Answer 8

The higher L/E (Liability ratio) the higher leverage effect.

Question 9

In the ROE = ROA + (ROA-COL)*L/E formula, where is the different risks? I.e. Total risk, Business risk and Financial risk?

Answer 9

Question 10

The interest coverage Ratio?

Answer 10

EBIE/IE = ICR

Question 11

The post-tax return on equity (𝑅𝑂𝐸*) ?

Answer 11

NET earnings(profit of the year) / Total Equity

eller

(1-t) * (ROA + (ROA-COL) * (L/E)

Question 12

Adjustments in the balance sheet with 30 % Tax? (Temporary differences)

Answer 12

See Picture:

Question 13

Adjustments in the income statement with 30 % Tax? (Temporary differences)

Answer 13

See Picture: Appropriations = “Anslag”

Question 14

Effective tax-rate?

Answer 14

Income before tax / Tax expenses

Question 15

Adjustments for permanent what to think about?

Answer 15

Effective tax rate when calculation ROE, if you want to have ROA and COL as post-tax as well; then you need to different tax-rates for their multiplikation. See picture. ROA = (1-t1)ROA, COL = (1-t2)COL.

Question 16

Focus on Operating income (EBIT) When?

Answer 16

Focus on operating income when It comes to evaluate and compare performance between units/segments of the company.

Question 17

In depth analysis (ROA)

Answer 17

EBIE/Assets * Sales/Sales —-> EBIE/Assets(Profit Margin) * Sales/Assets(Asset turn-over)

Question 18

Capital/Asset turn-over?

Answer 18

How much sales a company manages to generate with its capital base - or - how much assets needed in order to generate its sales.

Question 19

DuPont in decision making(Profit margin or Capital turn over)?

Answer 19

Increase profit margin = Cut costs and increase sales

Increase capital turn-over = Reduce assets and increase sales.

Question 20

Read only: About Capital Employed and Invested Capital

Answer 20

Read:

Question 21

ROCE: Return on Capital employed - what is the difference from ROA?

Answer 21

You only use the assets the part of balance sheet that is: Assets - non-interest-bearing liabilities (or Equity + financial liabilities) = Capital employed

Question 22

Financial liabilities = ?

Answer 22

Mostly interest-bearing (funds, shares, loans etc)

Question 23

Operating Liabilities = ?

Answer 23

Mostly non-interest bearing liabilities (accounts payable, customer advances, tax liabilities etc)

Question 24

Return on CE formula?

Answer 24

EBIE / CE = ROCE

Question 25

ROIC: Return on invested capital ?

Answer 25

Invested capital (IC) = Assets - NIBL - Liquid assets (CASH) eller (Equity + net debt)

Question 26

Formula for ROIC?

Answer 26

EBIT / Invested capital

Question 27

Working capital?

Answer 27

Current assets - Liquid assets(cash) - NIBL = WC

Question 28

Relationship between the Ratios (ROIC, ROCE, ROA, ROE, ROE*)

Answer 28

ROIC will have the lowest value, then ROCE, then ROA, then ROE and lastly, ROE*.

Question 29

Relationship (Growth, Leverage and DuPont)?

Answer 29

See Picture:

Question 30

Dynamic Financial Model (Based on total assets)

Answer 30

-

Question 31

Dynamic Financial Model - Leverage

Answer 31

See picture:

Question 32

Dynamic financial model - Dividend capacity

Answer 32

See Picture:

Question 33

Dynamic Financial Model -Required Margin

Answer 33

See Picture:

Question 34

Leverage Effect x2

Answer 34

See Picture: