Principles of Corporate Finance-8e-concise.ppt

* * * * * 4 * 5 * 2 * 3 * 7 * 8 * 9 * 10 * 11 * 19 * 20 * 22 * 22 * 23 * 24 * 25 * 3 * 4 * 5 * 6 * 7 * * 8 * 9 * 8 * 9 * * * * * * * * * * * * * * * * 7 * 8 * 9 * 10 * 11 * 19 * 19 * * 20 * 20 * 20 * 8 * 9 * 10 * 14 * 15 * 16 * 17 * 18 * 19 * 4 * 5 * 6 * 7 * 9 * 8 * * 5 * 8 * 18 * 18 * 18 * 19 * 20 * 21 * 19 * 19 * 19 * 19 * 19 * * * * * * * * * * * * * * * * * * * * * * * * 6 Marketable Securities Microsoft 2003 cash investments Money Market Investments Money Market Investments Short Term Assets $ billion Short term assets held by US non-financial corporations (1st quarter 2004) * 21 * 23 * 17 * 18 * * * * * * * * * * * * * * 12 * 14 * 15 * 16 * 41 * 42 * 45 * 13 * 13 * 14 * 18 Profitability Ratios Market Value Ratios Market Value Ratios Executive Paper Ratios Executive Paper Ratios (continued) The DuPont System A breakdown of ROE and ROA into component ratios The DuPont System asset turnover profit margin The DuPont System leverage ratio asset turnover profit margin debt burden Executive Paper Financial Planning Best case Normal growth Retrenchment Executive Paper Financial Planning Models Executive Paper Financial Planning Models Executive Paper Financial Planning Models Growth and Retained Earnings Executive Paper Growth Chapter 30 Principles of Corporate Finance Eighth Edition Working Capital Management Topics Covered Credit Management Inventory Management Cash Marketable Securities Working Capital Current assets and liabilities for U.S. manufacturing firms (4th qtr. 2003)…$ billions Working Capital Net Working Capital - Current assets minus current liabilities. Often called working capital. Cash Conversion Cycle - Period between firm’s payment for materials and collection on its sales. Carrying Costs - Costs of maintaining current assets, including opportunity cost of capital. Shortage Costs - Costs incurred from shortages in current assets. Terms of Sale Terms of Sale - Credit, discount, and payment terms offered on a sale. Example - 5/10 net 30 5 - per