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A Better Way to Gauge Profitability
EXECUTIVE SUMMARY Return-on-equity (ROE) is the correct profit metric to evaluate the performance of a business. However, the primary emphasis on financial ratio analysis must be on operating performance. The “advanced” version of the DuPont model remedies the original model’s failure to cleanly separate the effects of operating and financing...
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| Exhibit 4: Lease or Buy–Input Range |
| Instructions: You may find information about leasing or purchasing an auto from one of these sites. | | www.carpoint.msn.com www.autogiant.com www.carsdirect.com www.driveoff.com www.leaseguide.com www.carinfo.com www.leasespy.com | | Input variables | | | General information: | | Employee or self-employed (1 or 2)
Monthly payments in year 1
Marginal tax rate
Sales/Use tax
Qualified business use %
Discount rate | 2
12
39%
7.05%
80%
8% | | Purchase information: | | Purchase price, before sales/use taxes
Downpayment
Interest rate, if financed
Number of monthly loan payments | $37,730
$250
8.15%
60 | | Lease information: | | Number of monthly payments
Fair market value
Monthly payment, before sales/use tax
Downpayment
Residual value/Trade-in allowance
Lease termination fee | 60
$37,730
$ 609.67
$250
$10,326.25
$350 | |
