Percent of sales method
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Starts with sales forecast and expresses COGS, operating expenses,
interest expense, & taxes as a % of projected sales
Long-term debt and common stock UNCHANGED
,Cash and profit are NOT directly related...
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Inventory held on balance sheet and accounting records use over time
Expected balue
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Future cash flows
Operating profit model
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Measures the % of each sales dollar remaining after all costs and expenses
(other than interest, taxes, and preferred stock dividends) are deducted
Cash sources
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Asset decreases & liability and SE increases
, Time value of money (TVM)
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The largest determinant is persistence of wealth
DuPont model
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ROE
The objective of finance
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Maximize profit
Financial leverage multiplier (FLM)
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Measures the firm's ability to make contractual interest payments
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Starts with sales forecast and expresses COGS, operating expenses,
interest expense, & taxes as a % of projected sales
Long-term debt and common stock UNCHANGED
,Cash and profit are NOT directly related...
Give this one a try later!
Inventory held on balance sheet and accounting records use over time
Expected balue
Give this one a try later!
Future cash flows
Operating profit model
Give this one a try later!
Measures the % of each sales dollar remaining after all costs and expenses
(other than interest, taxes, and preferred stock dividends) are deducted
Cash sources
Give this one a try later!
Asset decreases & liability and SE increases
, Time value of money (TVM)
Give this one a try later!
The largest determinant is persistence of wealth
DuPont model
Give this one a try later!
ROE
The objective of finance
Give this one a try later!
Maximize profit
Financial leverage multiplier (FLM)
Give this one a try later!
Measures the firm's ability to make contractual interest payments
