Finance On-Line Curriculum
Strategic Analysis: Return on Equity
Strategic Analysis is designed for managers and business professionals in any company. Building on the skills first developed in the Operational Analysis course, this course looks at using financial ratios on a larger, company-wide scope. It provides an understanding of the nature and impact of financial and operational business decisions on corporate performance - in essence, where the company is and how it got there. Extrapolations can be then be made from this to determine must be done to move the company forward in the future.
Financial Fundamentals and Operational Analysis
After this course the student should be able to:
- Identify the components of Profitability, Asset Turnover and RONA.
- Define Return on Equity (ROE).
- Define Leverage.
- Explain the Relationship between ROE and RONA.
- Describe the impact of interest rates on leverage, and the effects of positive and negative leverage on ROE.
- Compare the degree of financial risk in companies.
- Describe the impact of level of profits and market share on the dividends versus retained profits decision.
- Define retention ratio .
- Define sustainable growth.
- Apply the sustainable growth concept to company figures and make recommendations as to how objectives might be achieved.
- Identify the deficiencies of traditional costing methods.
- Define cost drivers and their uses.
- Identify and give examples of the three major application areas for ABC.
- Identify some of the difficulties that might arise in a move to product reporting.
- Identify the ways in which ABC differs from traditional costing.
- Define shareholder value.
- Define weighted average cost of capital (WACC).
- Calculate Shareholder Value Added.
- Identify the components of the free cash flow method of calculating shareholder value.
This course is designed for managers, prospective managers, and anyone else within an organization involved in making business decisions.