Ask Question
BusinessBusiness
31 May, 10:39

The primary weakness of EBIT-EPS analysis is that A. it double counts the cost of debt financing. B. it applies only to firms with large amounts of debt in their capital structure. C. it may only be used by firms that are profitable this year. D. it ignores the implicit cost of debt financing.

+5
Answers (1)
  1. 31 May, 10:52
    0
    Answer: Option B

    Explanation: EBIT - EPS analysis refers to the analysis in which the potential investors of an organisation judge that organisation on the basis of its ability ot bear operating expense and the amount of revenue they shared with the investors in the past.

    EBIT - EPS analysis takes all kinds of expenses into consideration but do not evaluate the implicit cost of taking debt. This analysis do not consider the increase in value of equity due to the issuance of debt as shareholders will now have to bear a higher risk.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The primary weakness of EBIT-EPS analysis is that A. it double counts the cost of debt financing. B. it applies only to firms with large ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Give an account of how the digital age has affected lawmaking in the united states. question 5 options: spell check
Answers (1)
A Japanese company has a bond outstanding that sells for 90 percent of its ¥100,000 par value. The bond has a coupon rate of 5.7 percent paid annually and matures in 19 years.
Answers (1)
Unexpected inflation causes the demand for money to and the interest rate to
Answers (1)
3. Name two different market structures. Describe how and why they each have a different competitive situation.
Answers (1)
A company fails to record one storeroom full of inventory in its year-end inventory records. as a result, this will cause:
Answers (1)
New Questions in Business
Now consider a strangle using the same call with a strike price of $100 and a different put with a strike price of $95. Both have the same expiration date.
Answers (1)
Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its costs of equity is 15 percent, and the cost of debt is 8 Percent. The relevant tax rate is 35 percent.
Answers (1)
That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified through a (n) a. balance sheet b. trial balance c. chart of accounts d. income statement
Answers (1)
Coronado Shoes Fool Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case.
Answers (1)
Suppose during 2014 that Federal Express reported the following information (in millions) : net sales of $35,497 and net income of $98.
Answers (2)
Home » Business » The primary weakness of EBIT-EPS analysis is that A. it double counts the cost of debt financing. B. it applies only to firms with large amounts of debt in their capital structure. C. it may only be used by firms that are profitable this year. D.
Sign Up Forgot Password?