Module 4 - Module 4 Module 4 Analyzing and Analyzing and...

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Unformatted text preview: Module 4 Module 4 Analyzing and Analyzing and Interpreting Interpreting Financial Statements Financial Statements Analysis Structure Analysis Structure Return on Equity Return on Equity Return on equity (ROE) is computed as: Return on equity (ROE) is computed as: Operating Return (RNOA) Operating Return (RNOA) The income statement reflects operating activities through revenues, costs of goods sold (COGS), and other expenses. Operating assets typically include cash, receivables, inventories, prepaid expenses, property, plant and equipment (PPE), and capitalized lease assets, and exclude short-term and long-term investments in marketable securities. Operating Items in the Income Statement Operating Items in the Income Statement General Mills’ Operating Items General Mills’ Operating Items Tax on Operating Profit Tax on Operating Profit For General Mills: Net Operating Assets (NOA) Net Operating Assets (NOA) For For Genera Genera lMills lMills General Mills’ NOA General Mills’ NOA General Mills’ RNOA and ROE General Mills’ RNOA and ROE Key Definitions Key Definitions Disaggregation of RNOA Disaggregation of RNOA Net Operating Profit Margin Net Operating Profit Margin (NOPM) (NOPM) Net operating profit margin (NOPM) reveals how much operating profit the company earns from each sales dollar. NOPM is affected by the level of gross profit the level of operating expenses the level of competition and the company’s willingness and ability to control costs. General Mills’ NOPM General Mills’ NOPM This result means that for each dollar of sales at General Mills, the company earns just over 11.4¢ profit after all operating expenses and tax....
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This note was uploaded on 11/08/2010 for the course ACC 5056 taught by Professor J.goslinga during the Spring '10 term at University of Florida.

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Module 4 - Module 4 Module 4 Analyzing and Analyzing and...

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