represents the difference between a company's assets and liabilities. If all of the company's assets were liquidated and used to pay off debts, the shareholder's equity is the amount that would be left over. In the case of an acquisition, it is the value of company sales minus any ...
Gross profit :This is the profit the company makes calculated as revenue less the cost of producing the product that is sold or the service that was given to the client. Gross profit ratio :This ratio shows the relationship between gross profit and revenue used in the gross profit calculation...
Company equity is an essential metric when determining the return being generated versus the total amount invested by equity investors. For example, ratios likereturn on equity (ROE), which is the result of a company's net income divided by shareholders' equity, are used to measure how well a...
b) What is the difference between amortization and depreciation? How to calculate return on assets (ROA)? Explain what ROA measures. Explain the computation of the weighted average cost of capital. Analyze ROA and ROE and how each one fits into Profitability Ratios. Define the following: Gross...
Many investors use the return on equity (ROE) ratio to determine a company's capacity to generate money from its owners' equity or assets. Companies issue stock to raise funds and then invest it back into the business. The amount that would be returned to shareholders if a company's assets...
What does the rate of return on total assets measure, and how is it calculated? Analyze ROA and ROE and how each one fits into Profitability Ratios. Describe how the value of any asset is determined. How do we use the asset turnover ratio to evaluate business performance? What is t...
The calculation of equity is a company's total assets minus its total liabilities, and it's used in several key financial ratios such as ROE. Home equity is the value of a homeowner's property (net of debt) and is another way the term equity is used. ...
Explain how ROE varies with the profitability ratio, asset turnover ratio, and debt ratio. What is the significance of this relationship? If the current ratio is 2.5 to one and current liabilities are $12,000, inventory is $9,000, what is the quick ratio?
How may the gross profit percentage for the prior year be modified to provide a better estimate of the inventory value? Explain what is the difference between gross margin and contribution margin. What is the difference between ...
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