SlideShare uma empresa Scribd logo
1 de 2
Top Down is a levered firm with assets valued at $300,000, has $75,000 of debt issued at 7%
interest, and 5,000 shares of stock outstanding. Suppose that earnings before interest and tax
(EBIT) is $11,000 and that corporate profits are subject to a tax rate of 25%. Which of the
following comes closest to the EPS of Top Down?
a.
$1.31
b.
$1.17
c.
$4.20
d.
$0.00
e.
$0.86
Solution
Answer= e. $0.86
Calculation of EPS( Earning per
share)
Particulars Amount in $
Earnings before interest and tax
(EBIT)
11000.00
Less
Interest on debt @7% on $75000 5250.00
Earning after interest and before tax 5750.00
Less-25% taxes on $5750 1437.50
Profit after taxes 4312.50
Number of share outstanding 5000
Earning per share Profit after taxes/ number of outstanding shares
Earning per share 0.86

Mais conteúdo relacionado

Mais de gtameka

TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docxTRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
gtameka
 
True or False 1- The interstellar medium is composed mostly of gaseous.docx
True or False 1- The interstellar medium is composed mostly of gaseous.docxTrue or False 1- The interstellar medium is composed mostly of gaseous.docx
True or False 1- The interstellar medium is composed mostly of gaseous.docx
gtameka
 
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docxTrue or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
gtameka
 
Trace the evolution of the US police system from the --political-- era.docx
Trace the evolution of the US police system from the --political-- era.docxTrace the evolution of the US police system from the --political-- era.docx
Trace the evolution of the US police system from the --political-- era.docx
gtameka
 
Question 1 Choose all of the following characteristics of Hydrogen bon.docx
Question 1 Choose all of the following characteristics of Hydrogen bon.docxQuestion 1 Choose all of the following characteristics of Hydrogen bon.docx
Question 1 Choose all of the following characteristics of Hydrogen bon.docx
gtameka
 
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docxQ9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
gtameka
 

Mais de gtameka (20)

True or false- Social networking through such services as Facebook- Tw.docx
True or false- Social networking through such services as Facebook- Tw.docxTrue or false- Social networking through such services as Facebook- Tw.docx
True or false- Social networking through such services as Facebook- Tw.docx
 
True or False- In a proprietary system- a commercial vendor opens thei.docx
True or False- In a proprietary system- a commercial vendor opens thei.docxTrue or False- In a proprietary system- a commercial vendor opens thei.docx
True or False- In a proprietary system- a commercial vendor opens thei.docx
 
TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docxTRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
TRUE OR FALSE- 1- N- a nonresident alien individual- was born in Count.docx
 
True or False Explain Why- 1- SIP and RTP are protocols used to allow.docx
True or False Explain Why- 1- SIP and RTP are protocols used to allow.docxTrue or False Explain Why- 1- SIP and RTP are protocols used to allow.docx
True or False Explain Why- 1- SIP and RTP are protocols used to allow.docx
 
True or False 1- The interstellar medium is composed mostly of gaseous.docx
True or False 1- The interstellar medium is composed mostly of gaseous.docxTrue or False 1- The interstellar medium is composed mostly of gaseous.docx
True or False 1- The interstellar medium is composed mostly of gaseous.docx
 
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docxTrue or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
True or False (1 point each) 1- TorF NOs is the only form of nitrogen.docx
 
Transform the E-R diagram into a set of relations- Parking Tickets Ta.docx
Transform the E-R diagram into a set of relations-  Parking Tickets Ta.docxTransform the E-R diagram into a set of relations-  Parking Tickets Ta.docx
Transform the E-R diagram into a set of relations- Parking Tickets Ta.docx
 
Trace the evolution of the US police system from the --political-- era.docx
Trace the evolution of the US police system from the --political-- era.docxTrace the evolution of the US police system from the --political-- era.docx
Trace the evolution of the US police system from the --political-- era.docx
 
Trace the following part of codes step by step- Show exactly what it w.docx
Trace the following part of codes step by step- Show exactly what it w.docxTrace the following part of codes step by step- Show exactly what it w.docx
Trace the following part of codes step by step- Show exactly what it w.docx
 
Training and DevelopmentSolutionThe various skills that are necessary.docx
Training and DevelopmentSolutionThe various skills that are necessary.docxTraining and DevelopmentSolutionThe various skills that are necessary.docx
Training and DevelopmentSolutionThe various skills that are necessary.docx
 
Question 1 This layer of the OSI model is responsible for dialog contr.docx
Question 1 This layer of the OSI model is responsible for dialog contr.docxQuestion 1 This layer of the OSI model is responsible for dialog contr.docx
Question 1 This layer of the OSI model is responsible for dialog contr.docx
 
QUESTION 1 The purpose of an audit is to express an opinion on whether.docx
QUESTION 1 The purpose of an audit is to express an opinion on whether.docxQUESTION 1 The purpose of an audit is to express an opinion on whether.docx
QUESTION 1 The purpose of an audit is to express an opinion on whether.docx
 
Q0)What are the dye moleclecules doing that makes each specta has a di.docx
Q0)What are the dye moleclecules doing that makes each specta has a di.docxQ0)What are the dye moleclecules doing that makes each specta has a di.docx
Q0)What are the dye moleclecules doing that makes each specta has a di.docx
 
PYTHON- Write a recursive function maximum that takes an arbitrarily n.docx
PYTHON- Write a recursive function maximum that takes an arbitrarily n.docxPYTHON- Write a recursive function maximum that takes an arbitrarily n.docx
PYTHON- Write a recursive function maximum that takes an arbitrarily n.docx
 
Provide short answers for the following C++ questions I-O streams- - c.docx
Provide short answers for the following C++ questions I-O streams- - c.docxProvide short answers for the following C++ questions I-O streams- - c.docx
Provide short answers for the following C++ questions I-O streams- - c.docx
 
Provide a systematic (IUPAC) name for each of the following compounds-.docx
Provide a systematic (IUPAC) name for each of the following compounds-.docxProvide a systematic (IUPAC) name for each of the following compounds-.docx
Provide a systematic (IUPAC) name for each of the following compounds-.docx
 
Provide a plan for integrating both AD forests eliminating duplication.docx
Provide a plan for integrating both AD forests eliminating duplication.docxProvide a plan for integrating both AD forests eliminating duplication.docx
Provide a plan for integrating both AD forests eliminating duplication.docx
 
Question 1 Choose all of the following characteristics of Hydrogen bon.docx
Question 1 Choose all of the following characteristics of Hydrogen bon.docxQuestion 1 Choose all of the following characteristics of Hydrogen bon.docx
Question 1 Choose all of the following characteristics of Hydrogen bon.docx
 
Question 1 2 points Save Jane records every activity she participat.docx
Question 1 2 points Save    Jane records every activity she participat.docxQuestion 1 2 points Save    Jane records every activity she participat.docx
Question 1 2 points Save Jane records every activity she participat.docx
 
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docxQ9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
Q9- Alvin Goldman and Richard Posner disagree about the value of the b.docx
 

Último

Último (20)

Beyond_Borders_Understanding_Anime_and_Manga_Fandom_A_Comprehensive_Audience_...
Beyond_Borders_Understanding_Anime_and_Manga_Fandom_A_Comprehensive_Audience_...Beyond_Borders_Understanding_Anime_and_Manga_Fandom_A_Comprehensive_Audience_...
Beyond_Borders_Understanding_Anime_and_Manga_Fandom_A_Comprehensive_Audience_...
 
HMCS Max Bernays Pre-Deployment Brief (May 2024).pptx
HMCS Max Bernays Pre-Deployment Brief (May 2024).pptxHMCS Max Bernays Pre-Deployment Brief (May 2024).pptx
HMCS Max Bernays Pre-Deployment Brief (May 2024).pptx
 
Unit 3 Emotional Intelligence and Spiritual Intelligence.pdf
Unit 3 Emotional Intelligence and Spiritual Intelligence.pdfUnit 3 Emotional Intelligence and Spiritual Intelligence.pdf
Unit 3 Emotional Intelligence and Spiritual Intelligence.pdf
 
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
 
How to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POSHow to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POS
 
ICT role in 21st century education and it's challenges.
ICT role in 21st century education and it's challenges.ICT role in 21st century education and it's challenges.
ICT role in 21st century education and it's challenges.
 
SOC 101 Demonstration of Learning Presentation
SOC 101 Demonstration of Learning PresentationSOC 101 Demonstration of Learning Presentation
SOC 101 Demonstration of Learning Presentation
 
Holdier Curriculum Vitae (April 2024).pdf
Holdier Curriculum Vitae (April 2024).pdfHoldier Curriculum Vitae (April 2024).pdf
Holdier Curriculum Vitae (April 2024).pdf
 
Single or Multiple melodic lines structure
Single or Multiple melodic lines structureSingle or Multiple melodic lines structure
Single or Multiple melodic lines structure
 
NO1 Top Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam Ex...
NO1 Top Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam Ex...NO1 Top Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam Ex...
NO1 Top Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam Ex...
 
Interdisciplinary_Insights_Data_Collection_Methods.pptx
Interdisciplinary_Insights_Data_Collection_Methods.pptxInterdisciplinary_Insights_Data_Collection_Methods.pptx
Interdisciplinary_Insights_Data_Collection_Methods.pptx
 
HMCS Vancouver Pre-Deployment Brief - May 2024 (Web Version).pptx
HMCS Vancouver Pre-Deployment Brief - May 2024 (Web Version).pptxHMCS Vancouver Pre-Deployment Brief - May 2024 (Web Version).pptx
HMCS Vancouver Pre-Deployment Brief - May 2024 (Web Version).pptx
 
Wellbeing inclusion and digital dystopias.pptx
Wellbeing inclusion and digital dystopias.pptxWellbeing inclusion and digital dystopias.pptx
Wellbeing inclusion and digital dystopias.pptx
 
On_Translating_a_Tamil_Poem_by_A_K_Ramanujan.pptx
On_Translating_a_Tamil_Poem_by_A_K_Ramanujan.pptxOn_Translating_a_Tamil_Poem_by_A_K_Ramanujan.pptx
On_Translating_a_Tamil_Poem_by_A_K_Ramanujan.pptx
 
Kodo Millet PPT made by Ghanshyam bairwa college of Agriculture kumher bhara...
Kodo Millet  PPT made by Ghanshyam bairwa college of Agriculture kumher bhara...Kodo Millet  PPT made by Ghanshyam bairwa college of Agriculture kumher bhara...
Kodo Millet PPT made by Ghanshyam bairwa college of Agriculture kumher bhara...
 
ICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptx
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17
 
Jamworks pilot and AI at Jisc (20/03/2024)
Jamworks pilot and AI at Jisc (20/03/2024)Jamworks pilot and AI at Jisc (20/03/2024)
Jamworks pilot and AI at Jisc (20/03/2024)
 
Food safety_Challenges food safety laboratories_.pdf
Food safety_Challenges food safety laboratories_.pdfFood safety_Challenges food safety laboratories_.pdf
Food safety_Challenges food safety laboratories_.pdf
 
Basic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptxBasic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptx
 

Top Down is a levered firm with assets valued at $300-000- has $75-000.docx

  • 1. Top Down is a levered firm with assets valued at $300,000, has $75,000 of debt issued at 7% interest, and 5,000 shares of stock outstanding. Suppose that earnings before interest and tax (EBIT) is $11,000 and that corporate profits are subject to a tax rate of 25%. Which of the following comes closest to the EPS of Top Down? a. $1.31 b. $1.17 c. $4.20 d. $0.00 e. $0.86 Solution Answer= e. $0.86 Calculation of EPS( Earning per share) Particulars Amount in $ Earnings before interest and tax (EBIT) 11000.00 Less
  • 2. Interest on debt @7% on $75000 5250.00 Earning after interest and before tax 5750.00 Less-25% taxes on $5750 1437.50 Profit after taxes 4312.50 Number of share outstanding 5000 Earning per share Profit after taxes/ number of outstanding shares Earning per share 0.86