Week 3 Notes for Fundamentals of Disease
Week 3 Notes for Fundamentals of Disease FIN 305
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This 2 page Class Notes was uploaded by Alia Coughlan on Friday September 9, 2016. The Class Notes belongs to FIN 305 at Colorado State University taught by John D. Hopkins in Fall 2016. Since its upload, it has received 7 views. For similar materials see Fundamentals of Finance in Business at Colorado State University.
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Date Created: 09/09/16
Week 3 Notes for FIN 305 Fundamentals of Finance 9/05 Labor Day – No Class 9/07 Continuation of Chapter 5 – Analysis of Financial Statements EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) Measures the amount of cash thrown off from the operations of the company Trend Analysis Compares performance from period to period & across a number of periods *Less debt means less financial risk Industry Comparisons Compares performance with industry average & with closest competitor *Book Value is not equal to the liquidation value *Going Concern Value = when a company’s market value is greater than their liquidation value *Worth More Dead than Alive = when a company’s liquation value is greater than their market value Du Pont Equation ROA = NPM x TAT ROA = Return on Assets NPM = Net Profit Margin TAT = Total Asset Turnover 9/09 Return on Assets A firm with a low TAT needs a high NPM to have a good ROA A firm with a high TAT can have a low NPM and still have a good ROA *Whatever one is higher, either TAT or NPM, is the one that is effecting ROA Modified Du Pont Equation ROE = NPM x TAT x EM ROE = Return on Equity NPM = Net Profit Margin TAT = Total Asset Turnover EM = Equity Multiplied *The bigger the EM, the bigger return on equity *ROE = ROA x EM Want a high ROE because that money is coming back to you Equity Multiplied As debt increases Equity decreases Equity multiplier increases ROE increases
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