MGFB10H3 Chapter 4: Chapter 4 Notes
Document Summary
Chapter 4 financial statement analysis and forecasting notes. Return on equity (roe) and the dupont system return on equity (roe) return earned by equity holders on investment in firm; net income divided by shareholders" equity. 4. 3 leverage ratios turnover ratio art of return on assets; revenues divided by total assets. Efr = a s g b pm (1 + g) s. Identify the issues that need to be considered in applying consistent financial analysis. Despite efforts to harmonize accounting standards, important differences in generally accepted accounting principles (gaap) still persist. An additional complication arises because there are no generally accepted financial ratios . Thus, it is important, when looking at ratios generated by another party, to always examine how they are calculated. The return on owner"s equity (roe) ratio is an accounting measure of the return on the owners" investment.
