FINA 4310 – Test Review Sheet – Test 1 – February 21, 2010 Net Working Capital = Current Assets – Current Liabilities Average Age of Assets = Accumulated Depreciation / (Annual) Depreciation Expense (Annual) Depreciation Expense = Depreciable Base / Number of Years Balance Sheet Equation = Assets = Liabilities + SE Operating Cash Flow = (Aftertax EBIT) + (Interest Tax Shield) + Depreciation Changes in Capital Spending = (Aftertax Cost of Acquisition of Fixd Assets) – (Aftertax Revenues from Sale of Fixd Assets) …or….=(Ending Net Fixed Assets) – (Beginning Net Fixed Assets) + Depreciation Return on Equity = Net Income / Equity ….or….(NI/Assets) / ((Assets – Debt) / Assets) Return on Assets = Net Income / Assets DuPont ROE = [(Net Profit Margin)(Total Asset Turnover)(Equity Multiplier)] ….or….(NI/S)(S/A)[1 / (1 – Debt/Assets)] Debt Ratio = Debt / Assets Earnings Available to Common = Net Income – Pref Stock Dividend Gross Profit Margin = Current Ratio = Current Assets / Current Liabilities
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Current Assets, Generally Accepted Accounting Principles, net fixed assets, equity Debt ratio, Total Assets Debt, Total Assets Cost