Ebit Eps Analysis: Sandeep Kulshrestha
Ebit Eps Analysis: Sandeep Kulshrestha
Ebit Eps Analysis: Sandeep Kulshrestha
Sandeep Kulshrestha
One of the most important decisions in Financial
Management
CAPITAL To understand how much capital should be raised to
expand a business
STRUCTURE -
To understand various sources of capital, the costs
FINANCING involved in raising those sources
DECISIONS To understand how those sources will effect the
earnings available for the company’s crucial investors,
the shareholders
Capital Structure refers to the mix of various
sources of capital in a company’s financing
Every company needs capital to either expand
the business or the acquire another business.
WHAT IS A For example if a company needs to expand its
CAPITAL market to other regions, it would need additional
STRUCTURE capital to create office, hire people, start a new
factory etc. Now, which sources of capital should
a company tap is a decision which needs to be
taken (example: Debt/Equity or Bank Loan)
Equity Shares (also called Stock, Common
Stock and Ordinary Shares)
DIFFERENT
Preference shares (Also called Preferred Stock
SOURCES OF and Preferred Shares
CAPITAL Debentures and Bonds (Individually and
Together known as “Debt”
Interest on Debt is paid first after the profits
are declared
Interest on Debt is a tax-deductible expense
(tax is calculated on income after debenture
interest is paid off)
Some rules Shareholders have the last right over a
company’s income
Shareholders are paid dividend (a part of profit
as a gratitude)
Preference shareholders are paid the dividend
before the equity shareholders are paid
EPS refers to Earnings per Share
The portion of a company's profit allocated to
each outstanding share of common stock.
Earnings per share serves as an indicator of a
What is EPS company's profitability.
Calculated as: