Unformatted text preview: C. Debt management 1. Debt ratio = D/A = (D/E) / (1 + D/E) = 1 – 1/Equity multiplier D/E = (D/A) / (1-D/A) 2. Times-interest-earned (TIE) = EBIT/Interest expense D. Profitability 1. Operating margin = EBIT/Sales 2. Profit margin = Net income/Sales 3. Basic earning power = EBIT/Total asset 4. ROA = Profit margin x Total assets turnover = (Net income/Sales) x (Sales/TA) = Net income/Total assets 5. ROE = ROA x Equity multiplier = Profit margin x Total assets turnover x Equity multiplier = (Net income/Sales) x (Sales/TA) X (TA/Equity) = Net income/Total common equity E. Market value 1. P/E = Price/Earnings per share 2. M/B = Market price/Book value per share III. Money Value 1. FV = PV (1 + I) N = PV (1 + I NOR /M) M 2. PV = FV / (1 + I) N 3. EFF% = (1 + I/M) M-1...
View Full Document
This note was uploaded on 09/25/2011 for the course BMGT 220 taught by Professor Bulmash during the Spring '08 term at Maryland.
- Spring '08
- Fixed Assets