Handout #1

Handout #1 - DUPONT RO E = P r ofit M a rgin x Total A s s...

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Engineering 111 TA: Michael Tu ( michaelt@seas.ucla.edu ) OH: 5-6 PM Wednesday (4 th Floor Computer Lab). Or by appointment. Chapters 1 Corporations, sole proprietorships, partnerships are business models. Each possess their own traits: Corporation Partnership Limited liability double taxation unlimited lifespan Unlimited liability, single taxation of partners, limited lifespan Businesses have stockholders (own the company) and agents (work for the company). The agency problem is when there is a conflict of interest between agents/principals Agency problems are solved by linking agents/principals with incentives such as stocks Primary and Secondary Markets = primary is where securities are initially issued by firm, afterwords stocks trading occurs on secondary market. Chapter 2 and 3 Making and Sample Income Statement/Balance Sheet
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Unformatted text preview: DUPONT RO E = P r ofit M a rgin x Total A s s et Turnove r x E quity M ultiplier. A Sample Balance Sheet Assets Liabilities Cash 10Accounts Payable 10 Accounts Receivable 40Long Term Debt 10 Inventory 20 Patents/Intellectual Property 5 Total Liabilities 20 Equity Common Stock 50 Preferred Stock 5 Total Equity 55 Total Assets 75 Total Equity +Liabilities 75 Ratio Name Ratio Relationships Current Current Assets/Current Liabilities Debt/Equity Total Debt/Total Equity Total Asset Turnover Sales/Total Assets Profit Margin Net Income/Sales Equity Margin/Multiplier Total Assets/Total Equity Return on Equity Net Income/Total Equity A Sample Income Statement Sales 100 Operating Expenses 20 Earnings Before Interest and Taxes 80 Interest 10 Taxes 20 Net Income 50...
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