RSM332H1 Chapter 4: Chapter 4 Financial Statement Analysis (Ratio summaries)
Document Summary
Return on equity: roe = net income / shareholders" equity. Dupont system (return on assets) net income / total assets * total assets / shareholder equity (leverage ratio) = net income / shareholders" equity = roe (net profit margin) net income / revenues * revenues / total assets (turnover ratio) Roe = net profit margin * turnover ratio * leverage ratio. Leverage: stock ratios: amount of debt outstanding at particular time. Leverage ratio = total assets / shareholder"s equity. Debt ratio = total liabilities / total assets. Debt to equity ratio = debt / shareholders" equity. Times interest earned (tie) = ebit / i. Cash flow to debt ratio = cash flow from operating / debt. Percent of debt that could be paid off in a year using cfo. Efficiency ratios: how efficiently revenue is turned into profit. Degree of total leverage (dtl) = contribution margin (cm) / ebt. Breakeven point = fixed costs / contribution margin.
