CP

Profit Margin on Sales The profit margin on sales,calculated by dividing net income by sales, gives the profit per dollar of sal ...

Basic Earning Power (BEP) The basic earning power (BEP) ratiois calculated by dividing earnings before inter- est and taxes (EBI ...

Stockholders invest to get a return on their money, and this ratio tells how well they are doing in an accounting sense. MicroDr ...

The calculation for cash flow per share was shown in Chapter 9, but just to refresh your memory, cash flow per share is calculat ...

388 CHAPTER 10 Analysis of Financial Statements TABLE 10-1 MicroDrive Inc.: Summary of Financial Ratios (Millions of Dollars) In ...

Trend Analysis, Common Size Analysis, and Percent Change Analysis 389 Describe three ratios that relate a firm’s stock price to ...

390 CHAPTER 10 Analysis of Financial Statements Table 10-2 contains MicroDrive’s 2001 and 2002 common size income statements, al ...

include ratio, percentage change, and common size analyses, as well as a Du Pont analysis as described next. How does one do a t ...

Tying the Ratios Together: The Du Pont Chart and Equation Table 10-1 summarized MicroDrive’s ratios, and now Figure 10-2 shows h ...

Tying the Ratios Together: The Du Pont Chart and Equation 393 MicroDrive made 3.8 percent, or 3.8 cents, on each dollar of sales ...

394 CHAPTER 10 Analysis of Financial Statements For MicroDrive, we have The 12.7 percent rate of return could, of course, be cal ...

Comparative Ratios and “Benchmarking” 395 though they are in different industries, because L.L. Bean’s shipping department is on ...

396 CHAPTER 10 Analysis of Financial Statements Uses and Limitations of Ratio Analysis As noted earlier, ratio analysis is used ...

Problems with ROE 397 Different accounting practices can distort comparisons. As noted earlier, inven- tory valuation and depre ...

398 CHAPTER 10 Analysis of Financial Statements ROE may in some cases be inconsistent with increasing shareholder wealth. Chapte ...

Questions 399 these industries will be regulated in the years ahead, and the ability of individual firms to respond to changes i ...

400 CHAPTER 10 Analysis of Financial Statements c.Financial leverage: debt ratio; times-interest-earned (TIE) ratio; coverage ra ...

Problems 401 Problems Ace Industries has current assets equal to $3 million. The company’s current ratio is 1.5, and its quick r ...

402 CHAPTER 10 Analysis of Financial Statements Barry Computer Company: Income Statement for Year Ended December 31, 2002 (In Th ...

Problems 403 Corrigan Corporation: Forecasted Balance Sheet as of December 31, 2003 Cash $ 72,000 Accounts receivable 439,000 In ...