Chapter_04 - 4-14-1Click to edit Master subtitle...

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Unformatted text preview: 4-14-1Click to edit Master subtitle styleCHAPTER 4nRatio AnalysisnDu Pont systemnEffects of improving ratiosnLimitations of ratio analysisnQualitative factors4-2Balance Sheet: Assets CashA/RInventoriesTotal CAGross FALess: Dep.20057,282632,1601,287,3601,926,8021,202,950263,160939,7902,866,5922006E85,632878,0001,716,4802,680,1121,197,160380,120817,0403,497,1524-3Balance sheet: Liabilities and EquityAccts payableNotes payableAccrualsTotal CLLong-term debtCommon stockRetained earnings 2005524,160 636,808 489,6001,650,568723,432460,000 32,592 492,5922,866,592 2006E436,800 300,000 408,0001,144,800400,0001,721,176 231,1761,952,3523,497,1524-4Income statementSalesCOGSOther expensesEBITDADepr. & Amort.EBITInterest Exp.EBT 20056,034,0005,528,000 519,988 (13,988) 116,960 (130,948) 136,012 (266,960) (106,784) (160,176) 2006E7,035,600 5,875,992 550,000609,608 116,960492,648 70,008422,640 169,056 253,5844-5Other dataNo. of sharesEPSDPSStock priceLease pmts2006E250,000$1.014$0.220$12.17$40,0002005100,000-$1.602$0.110$2.25$40,0004-6Why are ratios useful?nRatios standardize numbers and facilitate comparisons.nRatios are used to highlight weaknesses and strengths.nRatio comparisons should be made through time and with competitorsnTrend analysis4-7What are the five major categories of ratios, and what questions do they nLiquidity: Can we make required payments?nAsset management: right amount of assets vs. sales?nDebt management: Right mix of debt and equity?nProfitability: Do sales prices exceed unit costs, and are sales high enough as reflected in PM, ROE, and ROA?...
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Chapter_04 - 4-14-1Click to edit Master subtitle...

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