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2011, vol. 8, iss. 1, pp. 7-16
EBIT-EPS analysis
University Singidunum, Belgrade

emailmivanis@singidunum.ac.rs
Keywords: capital structure; leverage; rate of return; EBIT (earnings before interest and taxes); EPS (earnings per share); expenses
Abstract
The duty of financial managers in a corporation is to establish as flexible capital structure as possible which will be able to adapt to alternative financing methods of the corporation. Besides, it is necessary to maximize the corporation stock price. In this context, the search for optimal degree of a corporation indebtedness is very complex and it inevitably means the use of more analytical procedures. Among them, the so called EBIT-EPS analysis is especially important. By its use it is possible to set flexible capital structure of a corporation. Applying EBIT-EPS analysis means to determine the point of coverage or the point of indifference of financing at which the lines of common stock and preferred stock are interected, that is, the lines of common stock and credit commitments of a corporation. At that, the point of indifference can be determined in two ways: graphic and mathematical. The aim of this supplement is to present both cited ways of determining the point of coverage (indifference).
References
Ivaniš, M. (2008) Upravljanje finansijama. Beograd: Univerzitet Singidunum
Stančić, P. (2006) Savremeno upravljanje finansijama preduzeća. Kragujevac: Ekonomski fakultet
van Hörne, J., Wachowich, J. (1997) Osnove finansijskog menadžmenta. Zagreb: Mate, prevod sa engleskog
Vunjak, N.M. (2005) Finansijski menadžment. Bečej: Proleter
 

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article language: Serbian
document type: unclassified
published in SCIndeks: 30/03/2012

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