Week 2 notes
Week 2 notes BADM 3501
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This 3 page Class Notes was uploaded by Camille Duarte on Sunday September 13, 2015. The Class Notes belongs to BADM 3501 at George Washington University taught by Mark Klock in Summer 2015. Since its upload, it has received 44 views. For similar materials see Financial Management and Markets in Business Administration at George Washington University.
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Date Created: 09/13/15
BADM 3501 910 09132015 Market Value and Market Value Added Market Capitalization Total market value of equity equal to share price times number of shares outstanding Market capitalization shares x price per share Market Value Added 0 Market capitalization minus book value of equity MVA market capitalization equity MarkettoBook Ratio 0 Ratio of market value of equity to book value of equity Markettobook ratio market value of equity value of equity EVA and Accounting ROR Economic Value Added EVA 0 Net income minus a charge for the cost of capital employed also called residual income 0 Residual Income 0 Net dollar return after deducting the cost of capital EVA residual income after tax operating income cost of capital x total capitalization After tax operating income 1tax rate x interest expense net income 0 Total capitalization long term debt shareholder s equity 0 Return on Capital ROC 0 Net income plus aftertax interest as a percentage of long term capital 0 ROC after tax operating income total capitalization Return on Assets RCA 0 Net income plus aftertax interest as a percentage of total assets 0 RCA after tax operating income total assets 0 Return on Equity ROE 0 Net income as a percentage of shareholders equity 0 ROE net income equity Measuring Ef ciency 0 Asset turnover ratio sales total assets at start of year 0 Asset turnover ratio sales average total 0 Inventory turnover ratio cost of goods sold inventory at start of year 0 Average days in inventory inventory at start of year cost of goods sold 365 Receivables Turnover sales receivables at start of year 0 Average collection period receivables at start of year average daily sales The DuPont System 0 A breakdown of ROE and RCA into component ratios 0 Pro t margin net incomesales Operating pro t margin after tax operating income sales ROA after tax operating income assets ROAsalesassets Xaftertax operating income sales l l Asset Operating turnover profit margin Measuring Financial Leverage Longterm debt ratio long term debt long term debt equity 0 Longterm debtequity ratio long term debtequity Total debt ratio total liabilities total assets 0 Times interest earned EBIT interest payments 0 Cash coverage ratio EBIT depreciation interest payments Asset De b t T Uiriniover BU TEH ROEassetsequity Xsalesassets Xaftertax Operating income sales net income aflertax operating income Leverage Operating Pro t Ratio Margin Measuring Liquidity Net working capital to total assets ratio net working capital total assets 0 Current ratio current assets current liabilities 0 Quick ratio cash marketable securities current liabilities
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