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How Du pont system break down return on stockholder's equity?
RoE = (net profits/pretax burden)*(Pretax burden/EBIT)(*EBIT/Sales)*(Sales/Asset)*(Asset/Equity) (ie) Tax Burden*Intrest Burden*Return on Sales*Asset Turn Over*leverage
How does an accountant use spreadsheet?
For recording financial statements, comparing previous years profit/losses, assets liabilties, owners equity etc. The use of bar graphs and pie charts to display profits/expenses/sales can ease in decision making for the management.
An increase in sales and profits generates the necessary cash required for economic growth?
An increase in sales and profits does not necessarily mean an economy will grow. The economy will only grow if the sales and profits are substantial in size.
Is revenue an asset liability or owner's equity?
sales revenue is owner's equity
Is sales an asset account?
Sales is generally considered "Revenue" or "Income" and therefore are an Owners Equity Account. Sales affect Retained Earnings and Retained Earnings affects Owners Equity.
How can the relationship between sales and profits be written?
The relationship between sales and profits can be expressed through the profit margin formula, which is (Profit / Sales) x 100. This formula shows what percentage of sales results in profit. A higher profit margin indicates that a company is more efficient at converting sales into profit.
Is sales revenue owners equity?
yes
Why is debt a cheaper form of finance than equity?
This can be easily explain using financial theory. Debt financing is cheaper than equity will hold true only when; 1) your company wiil be taxed on any profits 2) your company will make profits 3) Interest paid on debt financing is tax deductable 4) your company will reach at least the same sales figure with or without debt This is because the benefit of "Tax Sheild" which arised from the fact that government allows interest paid on debt financing to be tax deductable. For example, if your company makes 1 million in profit, if you have debt, you can use interest paid on debt to lower your taxable profit. Therefore, the government will calculate your tax from 1million less interest paid on debt not the full 1million. Saving from paying lower tax will eventually be resulted back into shareholders' pocket. To understand that debt is cheaper financing than equity, you must not look at the ending profit because your net profit will be lower than not having debt BUT the cash flows to shareholders and debt holder will be higher as a result from the transfer of tax saving.
What is the potential relationship between gross sales and profits?
The potential relationship between gross sales and profits is that as gross sales increase, there is a possibility for profits to increase. However, it is important to note that gross sales alone do not determine profitability. Other factors such as expenses, cost of goods sold, and operational efficiency also play a role in determining the level of profits.
What is annual turn over of Toyota?
Answer:Annual sales for (fiscal) 2010, excluding financing products amounts to $190.5 billion. Sales including financing products is $203.7 billion.
When would one use creative financing?
Creative Financing would mostly be used by bankers or sales associates who are trying to get financing for an individual who would not be eligible for the more common forms of financing.
When cash is received from sales what do it do to owner's equity?
This depends on when the cash was received. If the cash was received at the time of sale, then the owner's equity will increase. This is because revenue (and subsequently owner's equity) is increased at the time it is earned. If, on the other hand, the cash is received as a result of a collection on Accounts Receivable from a previous sale, this will have no affect on owner's equity. This is because the revenue was recognized as soon as the receivable was recorded (i.e., the revenue was earned).
