Chapter 8 Part 2 notes

Chapter 8 Part 2 notes - CHAPTER8...

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1 CHAPTER 8 Analysis of Financial Statements
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2 ROA  = =                = 7.2%.         NI Total assets   $253.6  $3,517 (More…) Return on Assets (ROA) and Return on Equity (ROE)
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3 ROE  = =                = 12.8%.         NI Common Equity   $253.6  $1,977 (More…) Return on Assets (ROA) and Return on Equity (ROE)
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4              2010E      2009    2008   Ind.    Ind. ROA 7.2% -3.3% 6.0% 9.0% ROE 12.8% -17.1% 13.3% 18.0% Both below average but improving. ROA and ROE vs. Industry  Averages
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5 Effects of Debt on ROA and  ROE ROA is lowered by ____--interest  expense lowers net income, which also  lowers ROA. However, the use of debt lowers equity,  and if equity is lowered more than net  income, ROE would _______.
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6 Price = $12.17. EPS =                     =                = $1.01. P/E =                          =                = 12.        NI Shares out. $253.6 250 Price per share EPS $12.17 $1.01 Calculate and appraise the P/E, P/CF, and M/B ratios.
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7   NI + Depr.  Shares out. CF per share = =                            = $1.49. $253.6 + $120.0 250   Price per share  Cash flow per share    P/CF =           =                 = 8.2. $12.17 $1.49 Market Based Ratios
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8   Com. equity  Shares out. BVPS =
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Chapter 8 Part 2 notes - CHAPTER8...

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