Financial_Lecture - Michigan State University, 2004- 1 - M...

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Unformatted text preview: Michigan State University, 2004- 1 - M Michigan State University, 2008- 1 - Click to edit Master subtitle style l Michigan State University, 2008 Supply Chain Impact on Financial Performance Michigan State University, 2004- 2 - M Michigan State University, 2008- 2 - THE BALANCE SHEET Current Assets (cash, accounts receivable, inventory, and other assets in varying states of being converted into cash within the next 12 months). Fixed Assets (equipment, vehicles, machinery, real estate, and other assets used in the operation of the business which are not intended for resale). Current Liabilities (notes payable, accounts payable, income taxes, and other debts owed by the business to be paid within the next 12 months). Long-Term Liabilities (mortgages and other debts owed by the business to be paid beyond the next 12 months). The Owner's claim on the assets of the business--that is, the owner's investment or equity. ASSET S LIABILITIE S NET WORTH (Owner’s Equity) BALANCE SHEET EQUATION: ASSETS = LIABILITIES + NET WORTH Michigan State University, 2004- 3 - M Michigan State University, 2008- 3 - Income Statement SALES REVENUE LESS: COST OF GOODS SOLD = GROSS MARGIN LESS: EXPENSES = NET PROFIT (OR LOSS) BEFORE TAXES LESS: TAXES = NET PROFIT (OR LOSS) AFTER TAXES Michigan State University, 2004- 4 - M Michigan State University, 2008- 4 - Strategic Profit Model Perspective • The Strategic Profit (DuPont) Model Framework • ROA as a Key Measure • Understanding the Composition of ROA – Net Profit Margin – Asset Turnover ROA = Profit / Assets Michigan State University, 2004- 5 - M Michigan State University, 2008- 5 - STRATEGIC PROFIT MODEL PROFIT MARGIN ASSET TURNOVER RETURN ON ASSETS % % TIME S profit net sales net sales total assets ( ) ) ( profit total assets Michigan State University, 2004- 6 - M Michigan State University, 2008- 6 - SALES COST OF GOODS SOLD VARIABLE EXPENSES FIXED EXPENSES GROSS MARGIN TOTAL EXPENSES SALES PROFI T PROFIT MARGIN RETURN ON ASSETS $ $ $ $ $ $ $ $ % % TIME S t profit net sales- +- ÷ ( ) STRATEGIC PROFIT MODEL Michigan State University, 2004...
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This note was uploaded on 08/11/2009 for the course MSC 303 taught by Professor Cooper during the Spring '08 term at Michigan State University.

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Financial_Lecture - Michigan State University, 2004- 1 - M...

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