Why would it be incorrect to define a profitability ratio as earnings divide invested cap (NI/IC)...
Why would it be incorrect to define a profitability ratio as earnings divide invested cap (NI/IC)
A. Taxes would not be treated correctly B. Earnings should be measured on per-share basis C.there is a mismatch between capital D.earnings include return available
Homework Answers
| For measuring profitability of operations net after-tax earnings generated by the capital invested are always, better measured against the revenues that could be made , by employing that capital---in the form of long-term & current assets. |
| Invested capital includes owners' funds as well as other forms of long-term financing like debts & bonds. |
| As invested capital reflects the capital structure of the company, it may not be a common benchmark to both the owners & the lenders. |
| So, it can be a mismatched or mis-leading metric, serving no single purpose. |
| Hence Answer:c. is the option |
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Why would it be incorrect to define a profitability ratio as
earnings divide invested cap (NI/IC)...
Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the firm is...
Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the firm is at generating a return for investors who have provided capital (bondholders and stockholders). The ROIC calculation answers three questions: How tax efficient is the firm? How effective are the firm’s operations? How intensively does the firm use capital? Comparing the answers to these questions between firms can help you understand why one firm is more profitable than another and where that profitability is coming...
Required information Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the...
Required information Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the firm is at generating a return for investors who have provided capital (bondholders and stockholders). The ROIC calculation answers three questions: How tax efficient is the firm? How effective are the firm’s operations? How intensively does the firm use capital? Comparing the answers to these questions between firms can help you understand why one firm is more profitable than another and where that profitability...
Required information Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the...
Required information Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the firm is at generating a return for investors who have provided capital (bondholders and stockholders). The ROIC calculation answers three questions: How tax efficient is the firm? How effective are the firm’s operations? How intensively does the firm use capital? Comparing the answers to these questions between firms can help you understand why one firm is more profitable than another and where that profitability...
f. Return on Assets Ratio 8. Earnings per share (diluted) 2. Compare the Gross Margin Ratio...
f. Return on Assets Ratio 8. Earnings per share (diluted) 2. Compare the Gross Margin Ratio to the 2017 Canadian Industry average of 45.8% for each company. Which company is closer to the industry average gross margin ratio? Does this correspond to your profitability ratios from 1 above-explain your answer? 3. Find the enterprise value for each company using "yahoo! finance" and ticker symbols RET.TO for Reitmans and ATZ.TO for Aritzia. What should the share price be based on Enterprise...
Return on Invested Capital (ROIC) is a profitability ratio that measures how effective the firm is at generating a retur...
Return on Invested Capital (ROIC) is a profitability ratio that
measures how effective the firm is at generating a return for
investors who have provided capital (bondholders and stockholders).
The ROIC calculation answers three questions: How tax efficient is
the firm? How effective are the firm’s operations? How intensively
does the firm use capital? Comparing the answers to these questions
between firms can help you understand why one firm is more
profitable than another and where that profitability is coming...
Required information Exercise 8 - Calculating and Comparing Return on Invested Capital (ROIC) Apple v. Blackberry...
Required information
Exercise 8 - Calculating and Comparing Return on Invested
Capital (ROIC) Apple v. Blackberry
Return on Invested Capital (ROIC) is a profitability ratio that
measures how effective the firm is at generating a return for
investors who have provided capital (bondholders and stockholders).
The ROIC calculation answers three questions: How tax efficient is
the firm? How effective are the firm’s operations? How intensively
does the firm use capital? Comparing the answers to these questions
between firms can help...
Using the financial ratios provided in Table 4.1 and the financial statement infor- mation presented below...
Using the financial ratios provided in Table 4.1 and the financial statement infor- mation presented below for Costco Wholesale Corporation, calculate the follow ing ratios for Costco for both 2013 and 2014: a. Gross profit margin b. Operating profit margin c. Net profit margin d. Times-interest-earned (or coverage) ratio e. Return on stockholders' equity 1. 1 f. Return on assets g. Debt-to-equity ratio h. Days of inventory . Inventory turnover ratio j. Average collection period Based on these ratios, did...
Here is the text book information, trend needs to be return on investment Calculate one financial...
Here is the text book information, trend needs to be
return on investment
Calculate one financial statement ratio trend within your industry that warrants improvement efforts. Make up your own. Return on Investment LO 2 Explain the importance and show the calculation of return on investment. Imagine that you are presented with two investment alternatives. Each investment will be made for one year, and each investment is equally risky. At the end of the year you will get your original...
5) Prepare An Analysis Of Market Strength by calculating for each company the: a) price/earnings ratio b) dividend yield 6) Once you have completed the first 5 steps, write a 1-2 page analysis of the...
5) Prepare An Analysis Of Market Strength by calculating for
each company the: a) price/earnings ratio b) dividend yield 6) Once
you have completed the first 5 steps, write a 1-2 page analysis of
the Buckle . What is the strengths, weaknesses, etc.? Why would you
invest ot not?
Information for #6 :
2) Prepare a Profitability And Total Asset Management Analysis
by calculating for each company the: a) profit margin b) asset
turnover c) return on assets
A) Profit...
f. Return on Assets Ratio 8. Earnings per share (diluted) 2. Compare the Gross Margin Ratio to the 2017 Canadian Industry average of 45.8% for each company. Which company is closer to the industry average gross margin ratio? Does this correspond to your profitability ratios from 1 above-explain your answer? 3. Find the enterprise value for each company using "yahoo! finance" and ticker symbols RET.TO for Reitmans and ATZ.TO for Aritzia. What should the share price be based on Enterprise...
Return on Invested Capital (ROIC) is a profitability ratio that
measures how effective the firm is at generating a return for
investors who have provided capital (bondholders and stockholders).
The ROIC calculation answers three questions: How tax efficient is
the firm? How effective are the firm’s operations? How intensively
does the firm use capital? Comparing the answers to these questions
between firms can help you understand why one firm is more
profitable than another and where that profitability is coming...
Required information
Exercise 8 - Calculating and Comparing Return on Invested
Capital (ROIC) Apple v. Blackberry
Return on Invested Capital (ROIC) is a profitability ratio that
measures how effective the firm is at generating a return for
investors who have provided capital (bondholders and stockholders).
The ROIC calculation answers three questions: How tax efficient is
the firm? How effective are the firm’s operations? How intensively
does the firm use capital? Comparing the answers to these questions
between firms can help...
Using the financial ratios provided in Table 4.1 and the financial statement infor- mation presented below for Costco Wholesale Corporation, calculate the follow ing ratios for Costco for both 2013 and 2014: a. Gross profit margin b. Operating profit margin c. Net profit margin d. Times-interest-earned (or coverage) ratio e. Return on stockholders' equity 1. 1 f. Return on assets g. Debt-to-equity ratio h. Days of inventory . Inventory turnover ratio j. Average collection period Based on these ratios, did...
Here is the text book information, trend needs to be
return on investment
Calculate one financial statement ratio trend within your industry that warrants improvement efforts. Make up your own. Return on Investment LO 2 Explain the importance and show the calculation of return on investment. Imagine that you are presented with two investment alternatives. Each investment will be made for one year, and each investment is equally risky. At the end of the year you will get your original...
5) Prepare An Analysis Of Market Strength by calculating for
each company the: a) price/earnings ratio b) dividend yield 6) Once
you have completed the first 5 steps, write a 1-2 page analysis of
the Buckle . What is the strengths, weaknesses, etc.? Why would you
invest ot not?
Information for #6 :
2) Prepare a Profitability And Total Asset Management Analysis
by calculating for each company the: a) profit margin b) asset
turnover c) return on assets
A) Profit...
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