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27 Cards in this Set
- Front
- Back
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Return on Equity (ROE) |
Return on Assets × Financial Leverage |
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Two components of ROE |
1. Return on assets 2. Financial leverage |
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Working capital turnover ratios |
1. Accounts receivable turnover 2. Inventory turnover 3. accounts payable turnover |
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Times interest earned (Coverage measure) |
Earnings before interest and tax (EBIT) ÷ interest expense , gross |
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2 components of return on assets |
1. Profitability 2. Productivity |
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Total liabilities to equity (Solvency measure) |
Total liabilities ÷ total equity |
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Profit margin (PM) |
Net income ÷ Sales |
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Days sales outstanding |
365 ÷ accounts receivable turnover |
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PPE turnover |
Sales ÷ Avg PPE |
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Days inventory outstanding |
365 ÷ inventory turnover |
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Gross Profit margin |
Gross profit÷ Sales |
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Asset turnover |
Sales ÷ avg total assets |
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Turnover |
Income statement item ÷ average balance sheet item |
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Financial Leverage |
Average total assets ÷ average stockholders equity |
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Days payable outstanding |
365 ÷ accounts payable turnover |
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Accounts Payable turnover |
COGS ÷ average accounts payable |
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Return on Assets (ROA) |
Net Income ÷ Avg Total assets |
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Ratios of financial leverage |
1. Total liability to equity 2. Times interest earned |
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Ratios of productivity |
1. Accounts receivable turnover 2. Inventory turnover 3. Accounts payable turnover 4. Cash conversion cycle 5. PPE turnover |
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Ratios of profitability |
1. Gross profit margin 2. Operating expense margin 3. Profit margin |
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Dupont disaggrgation of ROE |
PM × AT × FL |
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Accounts receivable turnover |
Sales ÷ average accounts receivable |
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Operating expense margin |
Operating expense ÷ Sales |
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Adjusted ROA |
[Net Income + (Net interest expense × [1- Statutory tax])] ÷ average total assets |
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Cash conversion cycle |
DSO + DIO - DPO |
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Inventory turnover |
COGS ÷ average inventory |
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Disaggregation of ROA |
PM × AT |
