BASIC EARNINGS POWER Definition

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BASIC EARNINGS POWER (BEP) is useful for comparing firms in different tax situations and with different degrees of financial leverage. This ratio is often used as a measure of the effectiveness of operations. Basic Earning Power measures the basic profitability of Assets because it excludes consideration of interest and tax. This ratio should be examined in conjunction with turnover ratios to help pinpoint potential problems regarding asset management. Formula: EBIT / Total Assets

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UST BENCHMARK RATE is the yield to maturity (calculated in accordance with standard market practice) corresponding to the bid-side price for the relevant UST Bond.

GROSS RECEIPTS is the total amount received prior to the deduction of any allowances, discounts, credits, etc.

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