Net interest rate on equity = return on net assets+(return on net assets-after-tax interest rate) × net financial leverage. Since the after-tax interest rate is mainly determined by the capital market, the fundamental way to improve the net interest rate is to improve the profit rate of operating net assets.
Return on equity is one of the core indicators of DuPont system to improve return on equity, which reflects the contribution of business activities to return on equity. Generally speaking, the return on net assets is equal to the after-tax operating profit divided by the average net assets.
Its calculation formula is:
Profit rate on net assets = after-tax operating profit/average net assets
= (after-tax operating profit/operating income) × (operating income/average net assets) = after-tax operating profit rate × net assets turnover rate? ;
Among them, after-tax operating profit = ebit× (1-t) = (total profit+financial expenses )× (1-t), operating net assets = net liabilities+shareholders' equity = operating assets-operating liabilities.
The financial expenses here may need to be adjusted through investment income, financial asset impairment provision and fair value provision.
Interest expense = financial expense-income from changes in fair value-financial income from investment income+impairment loss from financial assets.
Extended data:
Net interest rate on equity is the rate of return on net assets, and net interest rate on equity = net interest rate on assets × equity multiplier.
= net sales rate × asset turnover rate × equity multiplier (DuPont analysis method)
= (after-tax operating profit-after-tax interest)/shareholders' equity
Net interest rate of equity = profit rate of operating net assets+leverage contribution rate
= After-tax operating profit rate × net turnover times of operating assets+operating difference rate × net financial leverage.
Net interest rate on equity = net profit/shareholders' equity
= (net profit/total assets) × (total assets/shareholders' equity)
= net interest rate of assets × equity multiplier
= (net profit/sales revenue) × (sales revenue/total assets )× (total assets/shareholders' equity)
= net sales rate × asset turnover rate × equity multiplier (DuPont analysis method)
Net interest rate on equity = net profit/shareholders' equity
= (after-tax operating profit-after-tax interest)/shareholders' equity
= (after-tax operating net profit/net operating assets) × (net operating assets/shareholders' equity)-(after-tax interest/net liabilities )× (net liabilities/shareholders' equity)
= Net profit rate of after-tax operating assets × [(shareholders' equity+net liabilities)/shareholders' equity]-After-tax interest rate × net financial leverage.
= net profit rate of after-tax operating assets+(net profit rate of after-tax operating assets-after-tax interest rate) × net financial leverage
= operating net assets profit rate+leverage contribution rate
Baidu encyclopedia-net interest rate of equity