Karteikarten
Performance Indicators - Acctg 2
Karten in diesem Stapel (8)
- 1The Margin (Profit / Sales Ratio) What does this measure? Equation? (How to calculate?)1. Useful when comparing similar activities (compare years, segments, peer group). 2. Assesses risk exposure (good buffer/safety measurement)
3. EBIT / Sales - 2RONA (Return on Net Assets) What is this? How to measure?For each pound invested over past years, how many pence of profit generated this year? Good to use instead of P/S when comparing dissimilar companies. Compares diverse investments
EBIT/ (Equity + Non-Current Borrowing) - 3ROE (Return on Equity) How is this measured? Equation?For each pound of equity invested, how many pence of profit generated? Measures profit after interest on equity alone.
PAE / Equity - 4TSR (Total Shareholder Return)For each pound I invest in a share at the beginning of the year, how many pence am I better off by the end?
Measures the company performance and the stock market expectations and sentiment. RONA can be high, but share price could go down due to negative market conditions, which makes the TSR much lower than the RONA.
Some companies benchmark TSR against a peer group to “wash out” general movements in market sentiment.
% rise/fall in share price + div/shareprice % - 5Impact of Increase Non-Current Borrowing?1. Cost of INTEREST goes up, which brings down PAE & DIVIDEND amount
2. Amount of EQUITY goes down since you subtract NON-CURRENT BORROWING from NET ASSETS
3. ROE goes up since your EQUITY goes down - 6Impact of Increased Trade Credit (i.e. delay fulfilling vendor payments)?1. PAYABLES goes up, which decreases NET ASSETS & EQUITY
2. RONA & ROE increase, since your NET ASSETS & EQUITY are lower - 7What is TIE (Times Interest Earned)? How to Calculate? Limitations?Shows how much a company earns in relation to how much it has to pay in interest.
EBIT / Interest
• A business can withstand temporary interest hits if it has significant cash balances
• EBIT may be depressed because of non cash charges in the income statement (i.e. depreciation)
• Interest component of a operating lease finance may be hidden
• Safe level of TIE depends on the environment - 8What is the RBO? How to calculate?RBA (Retirement Benefit Assets) –
RBL (Retirement Benefit Liabilities)
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- Karteikarten am Performance Indicators - Acctg 2, erstellt von Georgia Tan am 10/12/2015.
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- Georgia Tan
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