US

Index
 US Index
Isan index, which will guide the
USER to set up A Companys
Financing strategy, whether to :
Maximize Borrowing, or else,
Maximize Equity Financing,
in order to increase the Company
Profitability
 US Index
US Index Formula :
BGP
= ------------------ ( X )
Interest Rate
 BGP Factor
BUSINESS
GENERIC
PROFITABILITY
 B G P Factor

EBIT
BGP = X 100%
TOTAL ASSETS
 US Index
Applications :
If US Index > 1 x,
Maximize Debt Financing

If US Index < 1 x,
Maximize Equity Financing
TOTAL ASSET 100

INTEREST RATE : i 10% pa

LEVERAGE
INCOME 0% 30% 90%
STATEMENT
SALES 100.00 100.00 100.00
COGS 55.00 55.00 55.00
GROSS PROFIT 45.00 45.00 45.00
OVER HEAD 25.00 25.00 25.00
EBIT 20.00 20.00 20.00
INTEREST EXP. - 3.00 9.00
EBT 20.00 17.00 11.00
TAX, 35% 7.00 5.95 3.85
NAT 13.00 11.05 7.15
Ref : EQUITY 100.00 70.00 10.00

ROE 13.00% 15.79% 71.50%

TOTAL ASSET 100

INTEREST RATE : i 15% pa

LEVERAGE
INCOME 0% 30% 90%
STATEMENT
SALES 100.00 100.00 100.00
COGS 55.00 55.00 55.00
GROSS PROFIT 45.00 45.00 45.00
OVER HEAD 25.00 25.00 25.00
EBIT 20.00 20.00 20.00
INTEREST EXP. - 4.50 13.50
EBT 20.00 15.50 6.50
TAX, 35% 7.00 5.43 2.48
NAT 13.00 10.08 4.23
Ref : EQUITY 100.00 70.00 10.00

ROE 13.00% 14.39% 42.25%

TOTAL ASSET 100

INTEREST RATE : i 25% pa

LEVERAGE
INCOME 0% 30% 90%
STATEMENT
SALES 100.00 100.00 100.00
COGS 55.00 55.00 55.00
GROSS PROFIT 45.00 45.00 45.00
OVER HEAD 25.00 25.00 25.00
EBIT 20.00 20.00 20.00
INTEREST EXP. - 7.50 22.50
EBT 20.00 12.50 (2.50)
TAX, 35% 7.00 4.38 0
NAT 13.00 8.13 (2.50)
Ref : EQUITY 100.00 70.00 10.00

ROE 13.00% 11.61% (25.00%)