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Definition
| = interest bearing debt + equity |
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Term
Return On Equity - ROE calculation |
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Definition
Calculated as:
[image] Net income divided by Shareholders Equity |
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Term
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Definition
| Also referred to as "interest coverage ratio" and "fixed-charged coverage". Ensuring interest payments to debt holders and preventing bankruptcy depends mainly on a company's ability to sustain earnings. However, a high ratio can indicate that a company has an undesirable lack of debt or is paying down too much debt with earnings that could be used for other projects. The rationale is that a company would yield greater returns by investing its earnings into other projects and borrowing at a lower cost of capital than what it is currently paying for its current debt to meet its debt obligations.
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Term
Times Interest Earned - TIE CALCULATED |
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Definition
____EBIT or EBITDA___ INTEREST CHARGES OR SIMPLY Operating Income _____________________________________
Annual Interest Expense |
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Term
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Definition
| A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations. |
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Term
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Definition
REVENUE-COST OF GOOD
_____________________________x 100
REVENUE GROSS PROFIT DIVIDED BY SALES TIMES 100 |
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Term
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Definition
A ratio used to measure a company's pricing strategy and operating efficiency. It is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy ??????? is required for a company to be able to pay for its fixed costs, such as interest on debt. |
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Term
Operating Margin Calculated |
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Definition
OPERATING INCOME __________________________ X 100
NET SALES OPERATING INCOME DIVIDED BY SALES TIMES 100 |
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Term
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Definition
| 1. Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses. |
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Term
FINANCIAL LEVERAGE OR
Leverage Ratio CALCULATED |
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Definition
Debt to Equity Ratio = Short Term Debt + Long Term Debt Total Shareholders Equity [image][image] [image] TOTAL DEBT DIVIDED BY TOTAL ASSETS
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Term
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Definition
| Long-term debt Long-term debt + Total equity |
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Term
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Definition
| Operating Earnings Interest expense |
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Term
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Definition
| Net Income
Total equity %
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Term
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Definition
| Gross Profit _________________% Sales |
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Term
| Operating margin TEST PREP |
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Definition
| Operating Earnings _________________% Sales |
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Term
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Definition
Unlevered Beta BU = BL / [1 + D/E * (1-t)] OR ONE MINUS TAX RATE TIMES LEVERAGE PLUS ONE DIVIDED BY LEVERED BETA
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Term
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Definition
Levered Beta BL = BU * [1 + D/E * (1-t)] OR ONE MINUS TAX RATE TIMES LEVERAGE PLUS ONE MULTIPLIED BY UNLEVERED BETA |
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Term
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Definition
Weighted Average Cost Of Capital [image] Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate |
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Term
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Definition
IF NOT AVAILABLE FIGURE: LEVERAGE COMPARISON &/OR TIE COMPARISON |
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Term
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Definition
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Term
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Definition
| RISK PREMIUM*INDUSTRY BETA + BOND RATE |
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Definition
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Term
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Definition
Equity
Minority Interest
Controlling Interest
Assets
In effect a controlling interest?
Whose management is being valued?
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Definition
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Definition
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Definition
SALES * (1+ESTIMATED SALES GROWTH ) |
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