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Financial Accounting for MBAs 2024 best Study Questions and 100% Verified Answers
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Financial Accounting for MBAs 2024best Study Questions and 100% Verified
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Sammy Sylvan
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, Financial Accounting for MBAs 2024
best Study Questions and 100% Verified
Answers
Return on Equity (ROE) - answer NI/ASE Measures the return the company has earned
on the book value of the stockholder's investment. (15% or higher is good).
Return on Assets (ROA) - answer NI/ATA Measures the productivity of the company's
assets in generating sales and then bring as much of each sales dollar to the bottom
line (NI). The higher the better IA is 6.1%.
Financial Leverage (FL) - answer ATA/ASE Measures the degree a company finances
its assets with debt vs. equity. The higher the number the riskier as they are financing
their assets/operations with debt. IA was 2.66.
Disaggregated ROE - answer Return on Assets x Financial Leverage
Disaggregated ROA - answer Profit Margin x Asset Turnover
Profit Margin (PM) - answer NI/Sales measures what the company earns on each sales
dollar. The higher the better and increase GPM or reduce operating expenses. %.
Measures Profitability.
Asset Turnover (AT) - answer S/ATA the sales level generated from each $ invested in
assets. Increase AT by increasing Sales while keeping Assets the same or reducing
assets without reducing sales.
ROA Profitability - answer Gross Profit Margin, Operating Expense Margin and Profit
Margin
ROA Productivity - answer Accounts Receivable Turnover, Inventory Turnover,
Accounts Payable Turnover, Cash Conversion Cycle and PPE Turnover
Financial Leverage Breakout - answer Total Liabilities to Equity and Times Interest
Earned
Gross Profit Margin (GPM) - answer GP/S Measures how much it costs to make a
product and selling price of the item. The higher the GPM the better. IA is 43.4%.
Measures profitability.
Operating Expense Margin (OEM) - answer SG&A Expense/S measures general
operating costs for each sales dollar. IA is 16.3% Measures profitability.
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