FIN300 - FINAL EXAM CRIB SHEET - CH 3 WORKING WITH...

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CH. 3: WORKING WITH FINANCIAL STATEMENTS: - ROA = Profit Margin x Total Asset Turnover - ROE = ROA x Equity Multiplier - DuPont Identity: ROE = (Net Income / Sales)(Sales / Assets)(Assets / Equity) - DuPont Identity: ROE = Profit Margin x Total Asset Turnover x Equity Multiplier) - Sustainable growth rate vs internal growth rate. Know how to connect the with Dupont Identity - Internal Growth Rate = the maximum rate at which the firm can grow without any debt or equity financing = growth % when EFN is 0 = (ROA x R) / (1 - ROA x R) (R = Retention Ratio) - Sustainable Growth Rate = the maximum rate at which the company can grow without any additional equity financing. = (ROE x R) / (1 – ROE x R) - Capital intensity ratio = 1/total asset turnover = assets / sales - Equity Multiplier = 1+debt to equity ratio = 1+(total debt / total equity) - Retention Ratio = 1 – Dividend Payout Ratio CH. 4: LONG TERM FINANCIAL PLANNING AND CORPORATE GROWTH: - Pro Forma = next period - Capacity = capacity of fixed assets (only assets change) - Current Sales = Capacity Rate x Full capacity level of sales - Pro Forma Net Fixed Assets = (net fixed assets / full capacity) x projected sales growth CH.6: DISCOUNTED CASH FLOW VALUATION: -

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