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| Book Value IS Not really ‘?????’ |
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| Book Value Reflects historical value of '????????????' only |
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| With Modified Book Value You Obtain ‘??????????’ |
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| With Modified Book Value You Create “????????” balance sheet |
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When Creating “adjusted” balance sheets you 1. & 2. |
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1.Write up/down assets
2.Record other side in equity |
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| Modified Book Value Still doesn’t reflect '????? !!!!!!!!' value |
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Modified Book Value : A company is more than a collection of things:it is '? !!! ?? !!!!!!! 'which uses the things to create value |
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Return On Invested Capital ACRONYM ROIC is always calculated as a percentage. Invested capital can be in buildings, projects, machinery, other companies etc. One downside of ROIC is that it tells nothing about where the return is being generated. For example, it does not specify whether it is from continuing operations or from a one-time event, such as a gain from foreign currency transactions. |
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Term
| Return On Invested Capital - ROIC |
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Definition
A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. The return on invested capital measure gives a sense of how well a company is using its money to generate returns. Comparing a company's ???? with its cost of capital (WACC) reveals whether invested capital was used effectively. |
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| Times Interest Earned - TIE |
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| A metric used to measure a company's ability to meet its debt obligations. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy. |
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?????? gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales. When looking at ??????? to determine the quality of a company, it is best to look at the change in ???????? over time and to compare the company's yearly or quarterly figures to those of its competitors. If a company's ??????? is increasing, it is earning more per dollar of sales. The higher , the better.
For example, if a company has an ?????????? of 12%, this means that it makes $0.12 (before interest and taxes) for every dollar of sales. Often, nonrecurring cash flows, such as cash paid out in a lawsuit settlement, are excluded from the operating margin calculation because they don't represent a company's true operating performance. |
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| A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested. |
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Return On Equity acroynm Also known as "return on net worth" (RONW). The ROE is useful for comparing the profitability of a company to that of other firms in the same industry. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.
There are several variations on the formula that investors may use:
1. Investors wishing to see the return on common equity may modify the formula above by subtracting preferred dividends from net income and subtracting preferred equity from shareholders' equity, giving the following: return on common equity (ROCE) = net income - preferred dividends / common equity.
2. Return on equity may also be calculated by dividing net income by average shareholders' equity. Average shareholders' equity is calculated by adding the shareholders' equity at the beginning of a period to the shareholders' equity at period's end and dividing the result by two.
3. Investors may also calculate the change in ROE for a period by first using the shareholders' equity figure from the beginning of a period as a denominator to determine the beginning ROE. Then, the end-of-period shareholders' equity can be used as the denominator to determine the ending ROE. Calculating both beginning and ending ROEs allows an investor to determine the change in profitability over the period. |
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Return On Invested Capital - ROIC CALCULATION |
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Definition
The general equation is as follows:
[image] NET INCOME - DIVIDENDS DIVIDED BY TOTAL CAPITAL |
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