RMA Sample Common-Size BS

RMA Sample Common-Size BS - Ratios Measures how profitable...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
RMA Sample Common-Size BS 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
RMA Sample Common-Size IS 2
Background image of page 2
RMA Sample Ratios 3
Background image of page 3

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

View Full DocumentRight Arrow Icon
More on Ratios Appendix 4
Background image of page 4
Liquidity Ratios Measures the firm’s ability to pay bills in the short-term. Important to short-term creditors (e.g. banks, suppliers). Current Ratio = Current Assets ÷ Current Liabilities Quick Ratio = Current Assets - Inventory ÷ Current Liabilities 5
Background image of page 5

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

View Full DocumentRight Arrow Icon
Leverage Ratios Measures the firm’s ability to pay long-term obligations. Important to long-term creditors (e.g. banks, bondholders). Total Debt Ratio = Total Debt ÷ Total Assets Debt-Equity Ratio = Total Debt ÷ Total Equity 6
Background image of page 6
Turnover Ratios Measures how efficiently the firm is using assets to generate revenues. Inventory Turnover = Cost of Goods Sold ÷ Inventory Days Inventory = 365 Days ÷ Inventory Turnover 7
Background image of page 7

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

View Full DocumentRight Arrow Icon
Profitability
Background image of page 8
Background image of page 9

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

View Full DocumentRight Arrow Icon
Background image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Ratios Measures how profitable are the activities of the firm. Profit Margin = Net Income Sales Return on Assets (ROA) = Net Income Total Assets 8 Market Value Ratios Measures market value indices for publicly traded companies. Important to the investment community and credit markets Earnings Per Share (EPS) = Net Income Shares Outstanding 9 ROE and Du Pont Analysis The difference between ROA and ROE is the use of financial leverage. ROE can be decomposed into its component parts to identify sources of strengths and weaknesses, as follows: 10 Tax Burden Interest Burden Profit Margin Asset Turnover Leverage...
View Full Document

Page1 / 10

RMA Sample Common-Size BS - Ratios Measures how profitable...

This preview shows document pages 1 - 10. Sign up to view the full document.

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