Principles of Corporate Finance

Topics Covered w Executive Paper Corporation w Financial Ratios w The DuPont System w Financial Planning w Growth and External F ...

Executive Paper Executive Paper Balance Sheet 1998 Dec 1999 Dec diff Assets Current AssetsCash & Securities 100.0 110.0 10.0 ...

Executive Paper 1998 Dec 1999 Dec diff Liabilities and Equity Current LiabilitiesDebt due in 1 year 96.6 100.0 3.4 PayableTotal ...

Executive Paper Executive Paper - Other Data 1998 1999 Estimated repalcement cost of assets 1110 1231 Market value of equity 598 ...

Executive Paper Executive Paper Income Statement (1999) $ millions Revenues 2,200.00 Costs 1,980.00 DepreciationEBIT 166.7053.30 ...

Executive Paper Executive Paper Sources and Uses of Funds (1999) Sources: $ millions Net Income 76.00 Depreciation 53.30 Operati ...

Leverage Ratios Long term debt ratio = long term long term debt debt+ equity Debt equity ratio = long term debtequity+ value of ...

Leverage Ratios Total debt ratio = total liabilitiestotal assets Times interest earned = interest paymentsEBIT Cash cover age ra ...

Liquidity Ratios Net working capital to total assets ratio = Net working capital Total assets Current ratio = current licurrent ...

Liquidity Ratios Cash ratio = cash +current limarketableabilities securities Quick ratio = cash + marketablecurrent li securitie ...

Efficiency Ratios Asset turnover ratio = Average toSalestal assets NWCturnover = average net working sales capital ...

Efficiency Ratios Days' sales in inventory = cost of goaverage inods soldventory/ 365 Inventory turnover ratio = cost of goavera ...

Profitability Ratios Return on assets = average toEBIT -tal assetstax Net profit margin = EBITsales- tax Return on equity = earn ...

Profitability Ratios Plowback ratio = earningsearnings- dividends = 1 - payout ratio Payout ratio = dividendsearnings Growth in ...

Market Value Ratios Forecasted PE ratio = aveEPSP^0 r^1 - g 1 = DivEPS^1 x 1 PE Ratio = earnings pstock pricer sharee Dividend y ...

Market Value Ratios Market to book ratio = book valuestock pric per sharee Price per share = P 0 = rDiv- g^1 Tobins Q = estimate ...

The DuPont System w A breakdown of ROE and ROA into component ratios: ROA = EBITassets- taxes ROE = earnings available fequityor ...

The DuPont System ROA = sales assets x EBIT - taxes sales ...

The DuPont System ROA = sales assets x EBIT - taxes sales asset turnover profit margin ...

The DuPont System ROE = equityassets x assetssales x EBITsales- taxes x EBITEBIT- taxes- taxes- interest ...