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Flashcards in Formula Deck (9)
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1
Q

Return on Equity: What is the shareholder profit?

A

ROE=(Profit after taxes)/(Average shareholder equity)

2
Q

Return on Net Assets: How profitable is this company? / How efficient?

A

RONA =(Earnings before interest and taxes)/(Fixed assets+(current assets-current liabilities))

3
Q

Current ratio: Will the company have sufficient cash in the immediate future to meet its short-term liabilities?

A

CR =(Current assets)/(Current liabilities)

4
Q

Debt to Equity ratio: What is the mix of funds on the balance sheet?

A

DE=(Total debt (long term liabilities+current))/(Total equity(Issued capital+capital reservers+revenue reserves) )

5
Q

Debt to Assets ratio: What is the mix of funds on the balance sheet?

A

DA=(Total debt (long term liabilities+current))/(Total assets (fixed assets+current assets) )

6
Q

Price Earnings ratio: determining the value of a share

A

PE=(Share price)/(Earning per share)

7
Q

Earnings per share ratio: How much you ‘earn’ from owning a share

A

EPS=(Profit after tax)/(Number of shares)

8
Q

Net present value: Calculating today’s worth of a return on investment

A

NPV=Rt/(1+i)^t

9
Q

Weight Average Cost of Capital (WACC): A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted

A

(Debt / debt + equity) x cost of debt + (Equity/ debt + equity) x cost of equity