Question

Calculate EPS if EBIT is Rs. 4,50,000, interest is Rs. 50,000, Tax @ 50% & No. of Equity shares is 1,00,000. ORs. 1.50 O Rs. 1.65 O Rs. 2 ņ O RS. 1.45​

Answer 1

Answer:

To calculate the level of EBIT where EPS remains stable, simply input the debt interest, current EPS and updated shares outstanding values and solve for EBIT: ($10.50 x 20,000) + 0 ÷ (1 - 0.3) + $500 = $300,500. Under this financing plan, the company must more than double its earnings to maintain a stable EPS.