Notes 2-4-08 - High in long-term debt ratio means that the...

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BUS 170 2/4/2008 CH3 Google Yahoo EBIT 100 100 Interest 40 0 Pre-tax income (EBT) 60 100 Taxes (35%) 21 35 Net Income 39 65 Interest is + cash provided by financing 40 0 79 65 Assume that Net Income = Cash Flow CH17 Financial Statements Analysis Leverage Ratios – how heavily the company is in debt. - Use of fixed cost financing (debt, pref. Stocks) - Risk and reward opportunity 1. Long Term Debt Ratio Long term debt / Long term debt + equity (Capital Structure) Proportion of C.S. that is made up of LT-debt (lease obligations, etc.)
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Unformatted text preview: High in long-term debt ratio means that the risk is high because the company is using high laverages. Liquidity Ratios - how easily the company can get its hands on cash. Efficiency Ratios – Measures how productively the firm is using its assets. Profitability Ratios – Measures the firms return on investment – ROA, ROE...
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This note was uploaded on 09/08/2010 for the course BUS 170 at San Jose State.

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