Principles of Managerial Finance
60 PART 1 Introduction to Managerial Finance fixed-payment coverage ratio Measures the firm’s ability to meet all fixed-payment ...
CHAPTER 2 Financial Statements and Analysis 61 common-size income statement An income statement in which each item is expressed ...
62 PART 1 Introduction to Managerial Finance TABLE 2.7 Bartlett Company Common-Size Income Statements For the years ended Decemb ...
CHAPTER 2 Financial Statements and Analysis 63 In Practice Specialized financial analysis tools can help companies achieve sig- ...
64 PART 1 Introduction to Managerial Finance net profit margin Measures the percentage of each sales dollar remaining after all ...
CHAPTER 2 Financial Statements and Analysis 65 return on common equity (ROE) Measures the return earned on the common stockholde ...
66 PART 1 Introduction to Managerial Finance price/earnings (P/E) ratio Measures the amount that investors are willing to pay fo ...
CHAPTER 2 Financial Statements and Analysis 67 LG6 The formula for the market/book ratio is Market/book (M/B) ratio Substitutin ...
68 TABLE 2.8 Summary of Bartlett Company Ratios (2001–2003, Including 2003 Industry Averages) Evaluation d Industry Cross- Time- ...
Evaluation d Industry Cross- Time- Year average sectional series Ratio Formula 2001 a 2002 b 2003 b 2003 c 2003 2001–2003 Overal ...
70 PART 1 Introduction to Managerial Finance Liquidity The overall liquidity of the firm seems to exhibit a reasonably stable tr ...
CHAPTER 2 Financial Statements and Analysis 71 DuPont formula Multiplies the firm’s net profit marginby itstotal asset turnover ...
72 PART 1 Introduction to Managerial Finance FIGURE 2.2 DuPont System of Analysis The DuPont system of analysis with application ...
CHAPTER 2 Financial Statements and Analysis 73 financial leverage multiplier (FLM) The ratio of the firm’s total assets to its c ...
74 PART 1 Introduction to Managerial Finance SUMMARY FOCUS ON VALUE Financial managers review and analyze the firm’s financial s ...
CHAPTER 2 Financial Statements and Analysis 75 Ratio Too high Too low Current ratio Inventory turnover Times interest earned ...
76 PART 1 Introduction to Managerial Finance LG3 LG4 LG5 LG1 ST 2–2 Balance sheet completion using ratios Complete the 2003 bala ...
CHAPTER 2 Financial Statements and Analysis 77 LG1 2–2 Financial statement account identification Mark each of the accounts list ...
78 PART 1 Introduction to Managerial Finance LG1 b. In column (2), indicate whether the account is a current asset (CA), current ...
CHAPTER 2 Financial Statements and Analysis 79 LG1 LG1 the office space rented (a tax-deductible expense) were $1,350per month.D ...
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