110 likes | 249 Views
Module 4: simple analysis and parsimonious forecasting. International Business Machines Corporation frank huang. Return on Enterprise Operations . Enterprise profit margin reveals how much operating profit the firm earns from each sales dollar.
E N D
Module 4:simple analysis and parsimonious forecasting International Business Machines Corporation frank huang
Enterpriseprofitmarginrevealshowmuchoperatingprofitthefirmearnsfromeachsalesdollar.Enterpriseprofitmarginrevealshowmuchoperatingprofitthefirmearnsfromeachsalesdollar.
Forecast EPAT via forecasts of EPM ForeachdollarofIBMsalesduring2010to2012,thefirmearnedroughly12.9centsprofitafterallenterpriseexpensesandtaxes.
Forecast EPAT via forecasts of “EPMfromsales” • Excludetheimpairmentcharge,discontinuedoperations,financialstatementtranslation,andgains/losesoncashflowhedges • Hopetogainsmootherresults
Forecast NEA via forecasts of EATO • Enterpriseassetturnovermeasurestheproductivityofthefirm’senterpriseassets. • Revealsthelevelofsalesthefirmrealizesfromeachdollarinvestedinenterpriseassets. • Foreachdollarofenterpriseassetsemployed,IBMgeneratedanaverageof$14.11insales.
Assumptions for parsimonious forecasting • Sales growth rate 1.13% • Enterprise profit margin (EPM) 15.1% • Enterprise asset turnover (EATO) 14.11