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Sagot :
What is the percentage change in EPS when a normal economy slips into recession -15.0 percent
Under Normal Economic Conditions :
EPS = EBIT/shares outstanding = $216000/8600 = $25.11
Under Expansionary Times:
EPS = [EBIT x 1.60]/shares outstanding = $216,000(1.3)/8600
$280800/8600 = $32.65
Under a Recession:
EPS = [EBIT x (1-.12)]/shares outstanding =$216,000(.15)/8600
$324000/8600 = $37.67
% Δ EPS going from Normal Expansion:
($32.65 - $37.67)/$37.67 = .15 or 15%
% Δ EPS going from Normal Recession:
($32.65 - $37.67)/$37.67 = -.15 or -15%
About EBIT :
Earnings before interest and taxes (EBIT) is an indicator of a company's profitability. EBIT can be calculated as revenue minus expenses excluding tax and interest. EBIT is also referred to as operating earnings, operating profit, and profit before interest and taxes.
Learn more about EBIT :
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