Formulas

Financial Assets Not Netted from Debt

All balance sheet figures are average
131015

Financial Assets Netted from Debt

Net Debt Total capital, Net Net operating assets Net Interest Expense Financial Leverage, Net [FLev,Net] Op Liability Leverage, Net, [OLLev,Net] Assets Turnover, Net [ATO, Net] Profit Margin before Interest & Taxes NOPAT NOPAT Debt - Financial Assets Equity + Net Debt Operating Assets - Operating liabilities Interest Expense - Interest Income Net Debt Equity Operating liabilities Total capital, Net Sales Operating Assets

Financial Leverage [FLEV] Op Liability Leverage Assets Turnover [ATO]

Debt Equity Operating liabilities Total Capital Sales Assets

Margin before Interest & Taxes [MBIT] EBIT (1-tax)

EBIT Sales

OI Sales OI (1-tax) Net Income + Net Inter. Exp. (1-tax)

Net Income + Interest expense (1-tax)

Ratio
ROA ROTC ROE Interest rate After Tax Net Interest Rate EBIT (1-tax) Assets ROOA EBIT (1-tax) Total Capital ROTC Net Net Income Equity Same ROE Interest Expense Debt Interest rate (1-tax) Interest rate, Net Interest Rate, Net After Tax NOPAT Operating Assets NOPAT Total capital, Net NOPAT Total capital, Net Net Interest Expense Net Debt Interest rate, Net (1-tax)

Ratio Disaggregation
ROA [duPont] ROTC ROE MBIT ATO (1-tax) ROA + [ ROA - 0 ] OLLev ROTC + [ ROTC - A Tax Int Rate] FLEV ROOA ROTC Net ROE PM ATO, Net (1-tax) ROOA + [ROOA - 0] OLLev,Net ROTC Net + [ROTC Net - Int Rate,Net AT] FLev,Net

Dupont Analysis
Mar A gin s befo s x re e Inter t est T

ROA =

(1-tax rate)

EBIT Sales Sales Assets

(1-tax rate)

Financial Assets not Considered Separately

ROTC
= NI + (1-tax) Int Exp Equity + Debt NI + (1-tax) Int Exp Equity + Debt + Oper Liab Assets Equity + Debt

ROA
NI Equity NI + (1-tax) Int Exp Equity

ROA

Oper Liab Equity + Debt

ROE

(1-tax) Int Exp Equity

NI + (1-tax) Int Exp Equity + Debt

Equity + Debt Equity 1

(1-tax) Int Exp Debt Debt Equity ]

Debt Equity

ROTC

(1-tax) Int Rate

Debt Equity

ROTC

+[

ROTC

(1-tax) Int Rate]

Equity

Debt

Directly from ROA ROE

= = =

NI Equity NI + (1-tax) Int Exp Equity + Debt + Oper Liab Assets Equity ROA + ROA 0 Equity Oper Liab Equity + Debt

+[

ROA

0 0

0 Equity

Financial Assets Considered Separately

ROTC, Net NI + (1-tax) Net Int Exp
= Net Debt + Equity

NI + (1-tax) Net Int Exp Net Debt + Equity + Oper Liab = Net Debt + Equity + Oper Liab Net Debt + Equity = ROOA +

ROOA

Oper Liab Net Debt + Equity

ROOA

ROE

NI Equity

NI + (1-tax) Net Int Exp Net Debt + Equity (1-tax) Net Int Exp = Net Debt + Equity Equity Equity = ROTC, Net Net Debt + Equity Equity (1-tax) Net Int Exp Net debt Net debt Equity

ROTC, Net (1-tax) Net Int Exp ] Net debt

+[

ROTC, Net

Net debt
Equity

ROOA

Structure w Financial Assets

Operating Liabilities Operating Assets Debt

Balance Sheet

Income Statement
Revenue Operating Expense Operating Income Interest Income Earnings before Interest and Taxes Interest Expense Earnings before Taxes

Financial Assets

Equity Operating Liabilities Operating Liabilities Operating Assets Total Capital

Tax Expense Net Income

Operating Assets

Debt

Debt

Financial Assets

Equity Operating Liabilities

Financial Assets Operating Liabilities Operating Assets Total Capital Net

Equity

Operating Assets

Net Debt Equity Financial Assets Debt

Debt

Financial

Equity

Structure w Financial Assets

Assets

Short-term Payables Short-term debt Long-term Payables Long-term Debt Equity

Assets

Short-term Payables Long-term Payables Short-term debt

No interest paid Interest paid

Interest paid

Assets Long-term Debt

Equity

Short-term Payables Short-term debt Long-term Payables Assets Long-term Debt Equity

Cost/Return Operating Liabilities

Assets Debt

Equity

Cost/Retur 0 Int Exp x(1-t) Net

Cost/Retur

0 Int Exp x(1-t) + Net Income

Cost/Return

Cost/Return

Int

Exp x(1-t) Net Income

Cost/Return 0 Int Exp x(1-t) Net Income Operating Liabilities

Rate 0 After Tax Int Rate ROE

Debt Equity

Cost/Return

Rate

0 Int Exp x(1-t) + Net Income

Operating Liabilities

Capital

ROTC