I remeber I saw some question which use Equity(t), but I think it really should be last year end equity, is it? Thanks作者: giorgio10 时间: 2011-7-13 16:48
When in doubt, refer to CFA text Volume 2 (ratios are presented justbefore the readings begin). I think ROE was defined as NI(t) divided by AVERAGE ROE in t (end and beginning values in t)作者: Analyze_This 时间: 2011-7-13 16:48
Well, residual income is defined as NI(t) - r*BV(t-1) = (ROE - r)*BV(t-1)
So for residual income, it has to be Equity(t-1).
For the DuPont model Financial Leverage is defined as (Average Assets)/(Average Equity).
That means the ROE suggested by the DuPont model uses average equity to determine ROE.
It probably just depends on what they ask, and what they give you. I suspect the question will make it obvious which one to use. Obviously if it doesn't give you enough info to calc average equity, just use (t-1).作者: smuggycfa 时间: 2011-7-13 16:48
ROE = ni/avg equity
ive never seen it as ni/last years equity
Sometimes they use ni/ending equity
Use last years equity for RI models. cost of equity * last years book value = equity charge.作者: economicz 时间: 2011-7-13 16:48
In equity, when calculate RI, it actually use previous year ending to get this year's earning (NI), it implys to use Equity(t-1).
in FSA, the answer of some question Equity(t) and NI (t) to get ROE.....
revisor Wrote:
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> When in doubt, refer to CFA text Volume 2 (ratios
> are presented justbefore the readings begin). I
> think ROE was defined as NI(t) divided by AVERAGE
> ROE in t (end and beginning values in t)
