Profit Margin on Sales Net Income Net Sales Return on Assets Net Income Average

Profit margin on sales net income net sales return on

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Profit Margin on Sales = Net Income Net Sales Return on Assets = Net Income Average Total Assets Return on common stkhldrs equity Net Income – Preferred Dividends Average common stkhldrs’ equity Measures overall profitability of assets Measures profitability of owners’ investments = Measures of the degree of success or failure for a given period of time
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Profit Margin on Sales Net Income Net Sales = 16,798 85,320 = 0.1968
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Return on Assets Net Income Average Total Assets = 16,798 (193,694 + 174,472) / 2 = 0.0913
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Return on common stkhldrs equity Net Income – Preferred Dividends Average common stkhldrs’ equity = 16,798 - 0 (71,997 + 80,083) / 2 = .2209
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Measures net income earned on each share of common stock Profitability Ratios Earnings per share = Net Income – Preferred Dividends Weighted-average common shares outstanding Price-earnings ratio = Market price per share Earnings per share Payout Ratio = Cash Dividends Declared Net income Measures the ratio of the market price per share to earnings per share Measures percentage of earnings distributed in the form of cash dividends Measures of the degree of success or failure for a given period of time
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Earnings per share Net Income – Preferred Dividends Weighted-average common shares outstanding =
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Price-earnings ratio Market price per share Earnings per share = 57.20 2.12 = 27.1698 Price on Sept 20, 2016
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11,329 16,798 = 0.6744 Where would you get Cash Dividends Declared? Payout Ratio Cash Dividends Declared Net Income =
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Measures the percentage of total assets provided by creditors Coverage Ratios Debt to assets = Total Liabilities Total Assets Times Interest Earned = Net Income + Interest Exp + Income Tax Exp Interest Exp Cash Debt Coverage Net cash provided by operating activities Average Total Liabilities Measures ability to meet interest payments as they come due Measure the company’s ability to repay its total liabilities in a given year from its operations = Measures of the degree of protection for long-term creditors and investors
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Debt to Assets Total liabilities Total Assets = 121,697 193,694 = 0.6283
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Times Interest Earned Net Income + Interest Exp + Income Tax Exp Interest Exp = 16,798 + 1,243 + 2,953 1,243 = 16.8898 From the notes
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Cash Debt Coverage Net cash provided by operating activities Average Total Liabilities = 0.3084 33,325 (121,697 + 94,389) / 2 =
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Measure the amount each share would receive if the company were liquidated at the amounts reported on the balance sheet Coverage Ratios Book Value per Share = Common Stockholders’ Equity Outstanding Shares Free Cash Flow = Measures the amount of discretionary cash flow Measures of the degree of protection for long-term creditors and investors Net cash provided by operating activities - Capital Expenditures – Cash Dividends Paid
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Book Value per Share Common Stockholders’ Equity Shares Outstanding = 71,997 7,808 = 9.2209
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13,976 = 33,325 – 8,343 – 11,006 Free Cash Flow = Net cash provided by operating activities – Capital Expenditures – Cash Dividends Paid
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Next Time Review the slides from today’s class Read Chapter 22 Accounting Changes and Error Analysis Discussion of the group assignment.
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  • Winter '18
  • jane smith

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