Financial Indicators

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Financial Indicators

• You learned many ratios for financial statement
  analysis in Acct 310

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DuPont Analysis - external

Review Material Acct 310
See separate MSWord notes file for more details
on formulas
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Example Nordstrom vs TJ Max

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Example DuPont Analysis

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Formula is important, but

• I will give you formula to compute DuPont Ratio
  or other financial ratios in exam.
• You have understand the implication of ratios and
  
• Are able to make conclusion from ratio analysis.

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Internal management purposes
Review Material Acct 310
See separate MSWord notes file for more details
on formulas
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Example ROI Analysis
Assume that Investment Assets Under this
assumption, ROI ROA

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Residual Income

• Income
• (Required rate of return investment)
• Residual income (RI)
• Required rate of return is also called the
  imputed cost of the investment

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Example RI Analysis
Assume that Investment Assets, Required Rate of
Return 10 for both company

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On Nov. 2, Two Companies are
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EVA or Economic Value Added

• A specific type of residual income
• EVA
• After-tax operating income
• WACC (Total Assets Current liabilities)
• Where WACC weighted average cost of capital
• Note (Total assets current liability) is the
  same as (Stockholders Equity long-term debt)
• Registered system of Stern Stewart

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More extensive notes are available

• Extra notes document
• http//www.cbe.uidaho.edu/Acct311