EFR is calculated with the help of following formula, when other ratios remain constant: Where, A/S = Total assets/Sales L/S = Current liabilities and provisions/Sales ∆S = Expected increase in sales over current year (S-S1) S = Sales of current year S1 = Projected sales of next year D = Dividend payout ratio M = Net profit margin The expected [...]
The following points highlight the top six investment strategies adopted by a firm. The strategies are: 1. Asset Allocation Strategies 2. Constant Proportion 3. Constant Mix 4. Rupee Cost Averaging 5. Value Cost Averaging. 1. Asset Allocation Strategies: Asset allocation refers to the process of allocating the investments between different asset classes. Asset allocation is an investment strategy by systematically [...]
In this article we will discuss about the internal and sustainable growth rates of a firm. Internal Growth Rate (IGR): ICR is the maximum growth rate a firm can achieve without going for external financing. All the financing requirements are met internally from the internal accruals. IGR can be expressed as follows: Where, ROA = Return on assets i.e. (PAT/Total [...]