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FMGT (Five Principles of Finance (Money has time value, There is a risk…
FMGT
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Financial Ratio Analysis
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- Use Dupont framework 2. Prepare Common-size financial statements 3. identify issues
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Profitability Ratios
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Return on equity
Dupont decomposes ROE into net profit margin, total asset turnover, financial leverage
Cash Flow Statement
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Investing Activities
Purchase, sale of non-current assets such as property, plant and equipment
Financing Activities
Change in the firms debt and equity - sale of new shares, repurchase of shares, payment of dividends
CVP analysis
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Selling price - variable costs = contribution margin Breakeven point = $0 profit = CMxunits-Fixed costs
Cash break-even does not include depreciation, Accounting breakeven DOES include depreciation
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