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Estimating EPS

EPS1 = [sales (EBITDA %) – int - depn] (1 - t)

Where sales, interest & depreciation are all per share amounts.

Question:
Analyst gathered the following financial information about a firm:
  • Estimated sales per share                        $200
     
  • An EBITDA profit margin estimate            20%
     
  • Estimated depreciation per share             $15
     
  • Interest per share                                    $5
If the firm's tax rate is 30%, calculate the firm's estimated EPS?

Ans:
Expected EPS = [(sales)*(EBITDA%) – depn - interest](1-t)

= [(200)(0.20) – 15 - 5] (1-0.3)

= $14
 
 




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