Assignment Review Lecture 7 Current Asset Mgmnt & Financing Analyzing Financial Performance (Gapenski Chapters 16 & 17) The “costs” of assets All assets have costs… Assets are financed by equity and liability: the fundamental accounting equation The concept of an opportunity cost
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Current Asset Mgmnt & Financing
Analyzing Financial Performance
(Gapenski Chapters 16 & 17)
Why would you select each?
Ethical issues with: paying late and taking discount; or with “stretching”
Statement of cash flows – How was cash generated?
Would you expect the ROA to be higher/ lower than the ROE? Why?
Complementary, but capitalization ratios are point in time…
ROE = Total margin x Total asset turnover x Equity multiplier
NI/ Equity = NI/ Rev x Rev/ assets x Assets/ equity
Total margin: expense control
Total asset turnover: asset utilizationEquity multiplier: debt utilization