Bav Ratios

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Submitted By neetixyz
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Ratios 1. ROE = net income/ shareholder’s equity 2. ROE = ROA * financial leverage 3. ROE = (net income/ assets) * financial leverage 4. ROE = ROA* assets/shareholder’s equity 5. ROE = (net income/assets)*(assets/shareholder’s equity) 6. ROE = (NOPAT/equity) – (net interest expense after tax/equity) 7. ROE = (NOPAT/net assets)*(net assets )-( net interest expense after tax/net debt)* (net debt/ equity) 8. ROE =(NOPAT/net assets)*(1+ net debt/equity)-( net interest expense after tax/net debt) )* (net debt/ equity) 9. ROE = operating ROA + (operating ROA- effective interest rate after tax) * (net financial leverage) 10. ROE = operating ROA + spread * net financial leverage 11. Financial leverage = assets/shareholder’s equity 12. ROA = net income/ assets 13. ROA= (net income/ sales)*(sales/ assets) 14. ROA = net profit margin * (sales / assets) 15. ROA =(net income/ sales)*asset turnover 16. Net interest expense after tax = (interest expense-interest income)*(1-tax rate) 17. Net operating profit after tax = net income+ net interest expense after tax 18. Operating working capital = (current asset- cash and marketable equities)-(current liabilities-short term debt and current portion of long term debt) 19. Net long term assets=total long term assets- non interest bearing long term liabilities 20. Net debt = total interest bearing liabilities – cash and marketable securities 21. Net assets = operating working capital + net long term assets 22. Net capital = net debt +shareholder’s equity 23. Net capital = net debt +ROE*net income 24. Spread = operating ROA- effective interest rate after tax 25. Operating ROA = (NOPAT / sales)*(sales/net assets) 26. Operating ROA = NOPAT / net assets 27. After tax factor = 1- tax rate 28. Gross profit margin = (sales –cost…...

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...The Use of Ratio Analysis Ratio analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis to judge the performance of the company. Analyzing ratios is used to evaluate a company's present performance and its possible future performance. In a fact, interpretation of different accounting ratio lets the researcher fully understand the financial condition and performance of a business concern. Ratio itself is the comparison of one figure to another relevant figure. (http://www.investopedia.com/terms/r/ratioanalysis.asp) There are many ratios that you can use to analyze the financial health of a business. In this paper I will discuss four financial performance areas that I think are worth analyzing: Liquidity, profitability, solvency, and efficiency. I will discuss the strengths and weaknesses of using these ratios. First of all, Liquidity is the ability of the firm to convert assets into cash. It is also called marketability or short-term solvency. The liquidity of a business firm is usually of particular interest to its short-term creditors since the liquidity of the firm measures its ability to pay those creditors. Several financial ratios measure the......

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