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    Strategic Management - EPS and EBIT Analysis

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    Haris Khan
    This document analyzes three techniques - issuing only common stock, only debt, or a 50/50 combination - to raise 1 billion rupees for a company. It compares the earnings per share that would result from each technique under both good and bad economic conditions. Key metrics like EBIT, interest, taxes, earnings after tax, number of shares, and EPS are defined and calculated for each scenario to determine which technique would provide the highest EPS.

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    Strategic Management - EPS and EBIT Analysis

    Uploaded by

    Haris Khan
    68 views6 pages
    This document analyzes three techniques - issuing only common stock, only debt, or a 50/50 combination - to raise 1 billion rupees for a company. It compares the earnings per share that would result from each technique under both good and bad economic conditions. Key metrics like EBIT, interest, taxes, earnings after tax, number of shares, and EPS are defined and calculated for each scenario to determine which technique would provide the highest EPS.

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    Strategic Management - EPS and EBIT Analysis.xlsx

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    Strategic Management - EPS and EBIT Analysis.xlsx

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    This document analyzes three techniques - issuing only common stock, only debt, or a 50/50 combination - to raise 1 billion rupees for a company. It compares the earnings per share that would result from each technique under both good and bad economic conditions. Key metrics like EBIT, interest, taxes, earnings after tax, number of shares, and EPS are defined and calculated for each scenario to determine which technique would provide the highest EPS.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    68 views6 pages

    Strategic Management - EPS and EBIT Analysis

    Uploaded by

    Haris Khan
    This document analyzes three techniques - issuing only common stock, only debt, or a 50/50 combination - to raise 1 billion rupees for a company. It compares the earnings per share that would result from each technique under both good and bad economic conditions. Key metrics like EBIT, interest, taxes, earnings after tax, number of shares, and EPS are defined and calculated for each scenario to determine which technique would provide the highest EPS.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    You are on page 1of 6

    EPS / EBIT An

    Data:
    Amount Needed 1,000,000,000
    Interest Rate 5%
    Tax rate 38%
    Stock price Rs. 25 per share
    # of shares outstanding 60,000,000

    We will analyse three techniques (All Common Stocks, All Depts and 50/50 Dept Stock Combo) and choose one which has t

    Variables are:

    EBIT Earning Before Interest and Tax


    Interest This is Interest rate
    EBT Earning Before Tax
    Taxes This is Tax rate
    EAT Earning After Tax
    # shares Number of shares
    EPS Earning Per Share

    All Common Stocks


    Bad Economy
    EBIT 100,000,000
    Interest 0
    EBT 100,000,000
    Taxes 38,000,000
    EAT 62,000,000
    # shares 100,000,000
    EPS 0.62

    All Depts
    Bad Economy
    EBIT 100,000,000
    Interest 50,000,000
    EBT 50,000,000
    Taxes 19,000,000
    EAT 31,000,000
    # shares 60,000,000
    EPS 0.52

    50/50 Dept Stock Combo


    Bad Economy
    EBIT 100,000,000
    Interest 25,000,000
    EBT 75,000,000
    Taxes 28,500,000
    EAT 46,500,000
    # shares 80,000,000
    EPS 0.58
    EPS / EBIT Analysis

    1 Billion Rupees OR 1 Arab OR 100 Cr. Amount Needed

    60 Million OR 6 Cr. Shares # of shares outstanding

    50/50 Dept Stock Combo) and choose one which has the highest EPS. These variables will be used to analyse. They are:

    All Common Stocks

    All Depts

    50/50 Dept Stock Combo

    We will also compare data with Good Economy and Bad Economy

    All Common Stocks


    Good Economy
    500,000,000 1,000,000,000
    0 0
    500,000,000 1,000,000,000
    190,000,000 380,000,000
    310,000,000 620,000,000
    100,000,000 100,000,000
    3.1 6.2

    All Depts
    Good Economy
    500,000,000 1,000,000,000
    50,000,000 50,000,000
    450,000,000 950,000,000
    171,000,000 361,000,000
    279,000,000 589,000,000
    60,000,000 60,000,000
    4.65 9.82

    50/50 Dept Stock Combo


    Good Economy
    500,000,000 1,000,000,000
    25,000,000 25,000,000
    475,000,000 975,000,000
    180,500,000 370,500,000
    294,500,000 604,500,000
    80,000,000 80,000,000
    3.68 7.56
    This is the amount which is required, in order to expand the
    business.

    This is the number of shares that has been issued to all the
    internal and other stakeholders of the firm.

    will be used to analyse. They are:

    In this technique we are going to issue shares in order to gain


    money.
    In this technique we are going to get money from other bank in
    order to gain money for expanding business.
    In this technique we are going to mix 50 50 data from each
    technique above to use both techniques combo.

    also compare data with Good Economy and Bad Economy.

    <-------- No Interest because it is not a bank


    <-------- EBIT - Interest
    <-------- EBT x Tax
    <-------- EBT -Taxes
    <-------- Amount Needed / Stock Price + Outstanding Sh.
    <-------- EAT / Number of shares

    <-------- Interest because it is bank (Amount needed / In.)


    <-------- EBIT - Interest
    <-------- EBT x Tax
    <-------- EBT -Taxes
    <-------- Number of shares outstanding
    <-------- EAT / Number of shares
    <-------- 50% of Bank Interest from All Depts
    <-------- EBIT - Interest
    <-------- EBT x Tax
    <-------- EBT -Taxes
    <-------- Amount Needed / Stock Price/2+Outstandinf Sh.
    <-------- EAT / Number of shares

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