EBIT - EPS Analysis Archives - RBL Academy

EBIT - EPS Analysis notes with solved problems Financial Breakeven EBIT Financial Management study material with illustrations on Financial break-even EBIT, Financial Leverage & EBIT - EPS Solved Questions Financial leverage has a favorable impact on the EPS only if the ROI is more than the cost of debt. It will rather have an unfavorable effect if the ROI is less than the cost of debt. That is why financial leverage is also called the twin edged sword. It turns out that if the firms after tax borrowing cost, which has denoted as Kd, is less than after tax ROI then increase in financial leverage, holding EBIT constant, will always increase the EPS. A reduction in financial leverage reduces the EPS. If kd, is greater than the ROI then the opposite will occur. These relationships, in fact, follow directly from the accounting relationships and always hold good

EBIT - EPS Analysis

EBIT – EPS Analysis

Financial Management study material with illustrations on Financial break-even EBIT, Financial Leverage & EBIT – EPS Solved Questions

By admin, 3 yearsJune 4, 2022 ago