Earnings per Share (EPS) are a financial measure that tells about net earnings of a shareholder over a period. In other words, EPS is part of profit distributed to the shareholder. EPS tells whether company can produce net profit for shareholders.It tells about financial health of a company. If EPS ... Read More

SolutionThe solution is explained below −      EBITDA = Np+In+Ta+D+A    EBITDA = 175000+20000+35000+8000       EBITDA= 238000/-Here, Np=Net Profit, In=Interest, Ta=Taxes, D = Depreciation, A= Amortization      EBITDA= OI*+ D+ A    EBITDA = (525000-200000-95000) + 8000       EBITDA = 238000/-Here, OI* = Operating ... Read More

EBITDA means Earnings before interest taxes depreciation and amortizations. EBITDA focus on operating decisions of a business by excluding non-operating decisions.Profitability between companies/industries can analysed by using EBITDA. A positive EBITDA means company is getting profits through its operations and a negative EBITDA means company is not getting profits through ... Read More

Earnings before Interest and Tax (EBIT) tell about profitability of a company. It tells about company’s core operation performance. Companies profit includes incomes, expenses.Sometimes EBIT is the amount which deducts all operating expenses from sales revenue, which is called operating income. EBIT is the amount generated in a particular accounting ... Read More

The word trading means profit earning and equity means owner’s money. In other words, trade of equity means profit is earned through owner’s money. Company will go for trade on equity, when it needs new debt to gain or acquire new assets on which, it can earn high return as ... Read More

The major differences between Earnings per share (EPS) and dilute Earnings per share (D-EPS) are as follows −Earnings per share (EPS)Dilute Earnings per share (D-EPS)Basic earnings per equity share of a company is calculated.Calculates earnings per convertible share of a company.Main purpose is to calculate profitability of a company.Main purpose ... Read More

Rs.Sales (S)1000000Variable cost (VC)375000Fixed cost (FC)95000Debt425000Interest on debt10%Equity capital590000SolutionThe solution is given below −return on investment = EBIT/ (D + E) return on investment = (S – VC – FC)/ (D + E) return on investment = (1000000 – 375000 – 95000)/ (425000 + 590000) return on investment = 530000/ 1015000 return on investment ... Read More

Cost of capital is an alternative investment that an investor can invest to get equal rate of return. In other words, it is the opportunity cost that an investor can invest the same money in another investment which is having similar risk and other characteristics. It plays an important role ... Read More

Importance of financial ratios is as follows −By analysing and inspecting the previous results, ratio analysis can relate between different items.Ratio analysis can be used to prepare budget, can formulate policies and also used to plan future.Ratio analysis tells whether the firm is improving or not.Ratio analysis act as surveyor ... Read More

The major differences between temporary working capital and permanent working capital are as follows −Temporary working capitalIt’s the additional working capital to permanent working capital.Variable working capital.Dependent on variable factors.Sometimes increase/decreases (fluctuates from time to time) in nature.Financed through short term funds.Categorised into seasonal working capital and special working capital.Permanent ... Read More