EPS ANALYSIS

Most widely used technique for determining debt, stock, or a combination of the two is the best alternative for raising capital to implement strategies
  1. Can the company obtain the needed capital via stock or debt?
  2. Would common stock, bank debt, corporate bonds, or some combination be better to raise needed capital?
  3. What Would the firm's projected EPS values be, given securement of the capital implementation of the strategies?
  • An enterprise should have enough debt in its capital structure to boost its return on investment by applying debt to products and projects earning more than the cost of the debt.
  • Another way to raise capital is to issue corporate bonds, which is analogous to the bank and borrowing money.
The purpose of EPS/EBIT analysis is to determine whether all debt, all stock or combination yields the highest eps values for the firm

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