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Bus 411 DAY 22. The Rest of the Semester Case Feedback Eps/ebit analysis Case 8 (Kroger) on April 17  Tony Case 9 (Limited Brands) on April 21  Dustin,

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Presentation on theme: "Bus 411 DAY 22. The Rest of the Semester Case Feedback Eps/ebit analysis Case 8 (Kroger) on April 17  Tony Case 9 (Limited Brands) on April 21  Dustin,"— Presentation transcript:

1 Bus 411 DAY 22

2 The Rest of the Semester Case Feedback Eps/ebit analysis Case 8 (Kroger) on April 17  Tony Case 9 (Limited Brands) on April 21  Dustin, Jaime, Donnie and David Case 10 (Wal-Mart) On April 24  Megan, Kristin & Angéle April 28  Tony – Harley Davidson May 1  Nike  Dustin, Jaime, Donnie and David May 5  Final Exam issued  Royal Caribbean  Megan, Kristin & Angéle May 8  Midnight Final exam due

3 Case feedback Individual Feeback forms not complete  Done later today or tomorrow General Feedback  Analysis is better but the presentations are weak! Suggestions  You may considered having only one (or two) present  Assumes your audience is a Board of Directors that you are trying to convince about strategies & directions  Be enthusiastic !  Slides should look like they were made by One person  Dare to be different Think out of the BOX, take risks! Don’t parrot what the instructor does…be creative

4 EPS/EBIT analysis  Earnings per share/Earnings before interest and taxes Finance/Accounting Issues Debt vs. Equity Decisions

5 $Amount Needed: $500 Stock Price $40 EBIT Range $1000 to $2000 Tax Rate 175/673 =.26 = 26% Interest Rate 5% # Shares Outstanding 350 (million) EPS-EBIT Analysis (in $millions) Heinz Company – Year End 2001

6 EPS-EBIT Analysis (in $millions) – Heinz Company Stock FinancingFinancing Combination 60/40 HighLowHighLowHighLow EBIT ($982.4 in 2001)$2000$1000$2000$1000$2000$1000 Interest (5%)0025 10 EBT2000100019759751990990 Taxes 26%520260514254517257 EAT148074014617211473733 # Shares outstanding362.5 350 357.5 EPS4.082.044.172.064.122.05

7 EPS-EBIT Analysis Row 1  EBIT (Earnings before Interest and taxes  Estimated High and Low based on previous earnings and future looking analysis Row 2  Interest paid in one year Loan amount * interest rate Row 3  EBT (Earnings before Taxes)  Subtract Row 2 from Row 1

8 EPS-EBIT Analysis Row 4  Taxes (uses tax rate * row 3) Row 5  EAT (earnings after taxes)  Subtract row 4 from Row 3 Row 6  Shares outstanding (from balance sheet)  For equity financing add amount financed/ share price Row 7  EPS earnings per share  Divide row 5 by row 6

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