This document discusses key metrics for analyzing the profitability of a company's financial statements, including return on assets, return on equity, price to earnings ratio, dividend yield, and dividend payout ratio. It provides the formulas to calculate each profitability metric and explains they are part of assessing a company's overall financial performance and categories including profitability, liquidity, activity, and debt or leverage.

1. MBU 652
Financial Decision
Making
Performance Measurements
Part 1: Profitability

2. Categories of a Financial
Statement Analysis
 Profitability
 Liquidity
 Activity
 Debt (Leverage)

3. Profitability
 Return on Assets (ROA)
 Return on Equity (ROE)
 Price/Earnings Ratio(P/E Ratio)
 Dividend Yield
 Dividend Pay-Out Ratio

4. Return on Assets (ROA)
ROA = ____Net Income___
Average Total Assets

5. Return on Equity
(ROE)
ROE = ___Net Income___
Average Owners’ Equity

6. Price/Earnings Ratio
(P/E Ratio)
P/E Ratio = Market Price of Common Stock
Earnings Per Share

7. Dividend Yield
Dividend Yield = Annual Dividend per share
Market Price Per Share

8. Dividend Pay-Out Ratio
Dividend = Annual Dividend Per Share
Pay-Out Ratio Earnings Per Share