How to crack Financial Case
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This document discusses how to analyze a finance case study and calculate break-even point. It begins by explaining what a break-even point is - the quantity where there is no profit or loss. It then shows how to calculate break-even quantity and price using contribution margin and fixed costs. The document also discusses ratio analysis techniques like DuPont analysis and the relationships between return on equity, return on investment, and financial leverage.
How to crack Financial Case
- 2. How To Analyze Finance Case Study
- 3. Check Firm is in BEP situation Or not 1 BEP- NO profit No Loss Situation 2 That means Contribution=Fixed Cost In income Statement
- 4. Income Statement Sales(Q) Q*P - Variable cost(V) Q*V Contribution QP-QV=Q(P-V) -Fixed Cost(F) -F Q(P-V)-F -Interest EBT -Tax EBIT PAT
- 5. BEP Calculation Q(P-V)-F=0 Q(BEP Qty)=F/P-V =fixed cost/Contribution Q(BEP PRICE)=FIXED COST/PV*100 =PV=CPNTRIBUTION/PRICE
- 6. RATIO ANALYSIS Du Pont ANALYSIS
- 7. DU PONT ANALYSIS DuPont analysis is a method of performance measurement that was started by the DuPontCorporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value to produce a higher return on equity (ROE). It is also known as DuPont identity
- 8. ROE=PAT/Equity Marketing Efficiency= Sales/Asset Net Profit Margin=Pat/Sales Asset Leverage= Asset/Equity=1+D/E Effect of operating leverage=PBIT/Sales % Effect of financial leverage=PBT/PBIT Effect Of tax=PAT/PBT
- 9. RELATION B/W ROE AND ROI ROE=PAT/PBT*PBT/PBIT*PBIT/SALES*SALES/TOTAL ASSET*ASSET/EQUITY ROI= PAT/PBT*PBT/PBIT*PBIT/SALES*SALES/TOTAL ASSET ROE=ROI*ASSET/EQUITY =ROE=ROI(1+D/E)
- 10. THANKS