BU121 Lecture Notes - Asset, Tax Shield, Net Profit
Document Summary
Measure how efficiently a company controls its expenses and assets. Accounting-based measures of profitability is a standard place to examine a company"s value. Gross profit margin (cogs measures variable costs) (net sales cogs) The other 66 is your variable cost to . Profit within that year divided by net sales. The higher means you earn more money on your sales. Nopat (net operating profit after tax) only for comparison. Compares 2 companies before the interest has been paid out. Allows you to compare companies who have different financing options e. g. one using debt vs. one using equity. Removes the interest benefit (to see what it was like without the tax shield) Determines how well you are using your assets. How your assets positively affect your sales. Should be greater in what i am paying in interest to be able to benefit from leverage. How much of your assets you use to earn an operating profit.