In the extended (5-way) DuPont equation, the Tax Burden is calculated as:
Explanation
Tax Burden measures how much pretax income is kept after taxes.
Other questions
Which of the following is a specific purpose for which financial ratios are used in financial analysis?
In a vertical common-size income statement, each item is expressed as a percentage of:
Which of the following best describes horizontal common-size analysis?
A limitation of financial ratios is that:
Which graphical tool shows changes in the composition of financial statement items over time, such as components of liabilities?
If a company has annual sales of 500,000 and average receivables of 50,000, what is its receivables turnover?
A processing period (days of inventory on hand) that is too high might indicate:
Calculate the payables turnover given purchases of 800,000 and average trade payables of 100,000.
Which ratio measures the effectiveness of a firm's use of its total assets to create revenue?
If a company has a fixed asset turnover ratio that is significantly lower than the industry norm, it might imply:
Working capital is defined as:
Given: Sales = 1,000,000; Average Working Capital = 200,000. Calculate the working capital turnover.
To calculate the days of inventory on hand, one must multiply 365 by:
If purchases are not directly reported, they can be calculated using:
Using a 365-day year, if the payables turnover ratio is 10, what is the payables payment period?
Which ratio provides the most stringent measure of liquidity by excluding inventories and receivables?
If a company has a current ratio of less than one, it implies:
Given: Cash = 100, Marketable Securities = 50, Receivables = 150, Inventory = 200, Current Liabilities = 400. Calculate the Quick Ratio.
The cash conversion cycle is calculated as:
The defensive interval ratio measures:
Which ratio is a measure of the firm's use of fixed-cost financing sources?
If a firm has Total Debt of 500 and Total Shareholders' Equity of 1,000, what is the Debt-to-Capital ratio?
Which solvency ratio is calculated as Average Total Assets divided by Average Total Equity?
A lower interest coverage ratio indicates:
The Fixed Charge Coverage ratio includes which of the following in the numerator and denominator?
Which profitability ratio is calculated as (Net Income / Revenue)?
Gross profit is defined as:
Return on Assets (ROA) calculated using net income can be misleading because:
Return on Total Capital (ROTC) is the ratio of:
Return on Common Equity differs from Return on Total Equity because:
According to the original three-part DuPont equation, ROE is equal to:
If a company has a Net Profit Margin of 5 percent, Asset Turnover of 1.5, and a Leverage Ratio of 2.0, what is its ROE?
In the extended DuPont model, a lower Interest Burden ratio (EBT/EBIT) implies:
If a company increases its financial leverage while keeping profit margins and asset turnover constant, what will happen to ROE (assuming positive earnings)?
Which of the following is an example of a per-share valuation measure?
Diluted EPS is calculated to reflect:
The retention rate (RR) is defined as:
Calculate the sustainable growth rate (g) for a firm with an ROE of 15 percent and a dividend payout ratio of 40 percent.
The coefficient of variation for a variable is defined as:
Which metric is commonly used in the retail industry?
Capital adequacy typically refers to ratios used in which industry?
According to Altman (2000), a low Z-score indicates:
A business segment must be reported separately if it accounts for more than what percentage of the company's revenues, assets, or income?
Which of the following is NOT a required disclosure for a reportable segment?
To model and forecast earnings, analysts often use common-size income statements to estimate:
Sensitivity analysis in forecasting involves:
Simulation is a technique in which:
Scenario analysis differs from sensitivity analysis because:
When forecasting future net income, if a company has historically had a stable net profit margin, an analyst might: