|ROE =||NI/EBT *||EBT/EBIT *||EBIT/Revenue *||Asset Turnover *||Company Equity Multiplier |
|ROA =||Net Profit Margin *||Asset Turnover |
The company's tax burden is (Net income ÷ Pretax profit). This is the proportion of the company's profits retained after paying income taxes. [NI/EBT]
The company's interest burden is (Pretax income ÷ EBIT). This will be 1.00 for a firm with no debt or financial leverage. [EBT/EBIT]
The company's operating income margin or return on sales (ROS) is (EBIT ÷ Revenue). This is the operating income per dollar of sales. [EBIT/Revenue]
The company's asset turnover (ATO) is (Revenue ÷ Average Total Assets).
The company's equity multiplier is (Average Total Assets ÷ Average Total Equity). This is a measure of financial leverage.
ROE = (Profit margin)*(Asset turnover)*(Equity multiplier) = (Net profit/Sales)*(Sales/Average Total Assets)*(Average Total Assets/Average Equity) = (Net Profit/Equity)
-0.816910569105691 = -1.064406779661017 * 0.6460443471119628 * 1.1879674796747968
Profitability (measured by profit margin)
Asset efficiency (measured by asset turnover)
Financial leverage (measured by equity multiplier)