Profitability Analysis

Profitability Analysis - Profitability Analysis Return on...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Profitability Analysis
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Return on Equity Return on equity (ROE) is computed as: Dupont analysis breaks it into three components:
Background image of page 2
Dupont Analysis Profit margin is the amount of profit that the company earns from each dollar of sales. Asset turnover is a productivity measure that reflects the volume of sales that a company generates from each dollar invested in assets. Financial leverage measures the degree to which the company finances its assets with debt rather than equity.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Margin vs. Turnover
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Return on Assets ROA measures the returns to all assets regardless of how they were financed
Background image of page 6
Return on Net Operating Assets 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
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Operating Items in the Income Statement
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 17

Profitability Analysis - Profitability Analysis Return on...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online