NOPAT/Sales ratio is an amplitude of profit per margin, whereas Sales/Invested capital is a measure of capital efficiency. The sales cancel out, and the NOPAT/Invested Capital is left, which is the ROIC. When a firm acquires a high ROIC due to a high NOPAT margin, the competitive analysis...
Why do we have to add back depreciation tax shields in capital budgeting? What is the net profit margin for Nike? How do you calculate inventory conversion period? As it would be shown on a comparative income statement, what is the change in percentage for net income? Calculate the average...
Identify and explain the formula for finding the NOPAT breakeven revenues. Relate this to breakeven in terms of EBIT. Why are Business Managers using the Cost-Volume-Profit Analysis? How is net profit margin computed and interpreted? How can we identify multibagger stock, only using th...
We begin by breaking down ROIC into its prime components – NOPAT Margin and Invested Capital Turnover – so we can provide more targeted advice. I. NOPAT Margin: Cost Management Could Be Improved The focus on acquisitions appears to have hurt Oracle’s ability to manage its expenses. Norma...
Calculate the degree of financial leverage in base Year 1. b. If earnings before interest and tax increase by 10% in Yea Assume a firm increases its revenue by $100 while increasing its cost of goods sold by $85. How much additional t...
(e.g. NOPAT/WACC not WACC-g) after the forecast horizon. Rather than trying to capture all the future growth in cash flows in a static time frame (e.g. five years), our models calculate the value attributable to shareholders over 100 forecast periods. For more details, see our webinar...
What does operating margin tell you about the organization and how would you calculate this ratio? Cost-volume-profit analysis can be used to estimate the firm's operating profits at different levels of what? Explain the possible causes of the trends in the following data: Year 1 Year 2...
The gross profit and operating profit is calculated before the net profit, they are the initial step to calculate the net profit. The net profit is reported on the income statement of financial statements.Answer and Explanation: The gross profit is earning after deducting the cost of goods so...
In this scenario, Spotify successfully pushes out the record labels and takes ownership of all its content. Its revenue and user growth over the next decade are the same as the consolidation scenario, but it now has the ability to earn a long-term NOPAT margin of 16%, on par with a suc...
How do you calculate Net increase in cash and Cash end of the year for the statement of cash flows? Explain the difference between net income and net income available to the common. Which definition of income is used in earnings-per-share calcul...