P13–11EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred...

P13–11EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred stock paying an annual dividend of $5 per share, and 4,000 shares of common stock outstanding. Assuming that the firm has a 40% tax rate, compute earnings per share (EPS) for the following levels of EBIT:

$24,600
$30,600
$35,000

Expert Solution

EPS = Earnings available to share Holders / No. of shares

Particulars	Option A	Option B	Option C
EBIT	$ 24,600.00	$ 30,600.00	$ 35,000.00
Int	$ 3,600.00	$ 3,600.00	$ 3,600.00
PBT = EBIT - Int	$ 21,000.00	$ 27,000.00	$ 31,400.00
Tax	$ 8,400.00	$ 10,800.00	$ 12,560.00
PAT = PBT - Tax	$ 12,600.00	$ 16,200.00	$ 18,840.00
Pref Div ( 1500 * 5)	$ 7,500.00	$ 7,500.00	$ 7,500.00
Earnings available for distribution = PAT - Pref Div	$ 5,100.00	$ 8,700.00	$ 11,340.00
No. of equity Shares	$ 4,000.00	$ 4,000.00	$ 4,000.00
EPS = Earnings available per share / No. of shares	$ 1.28	$ 2.18	$ 2.84

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EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred...

EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred stock paying an annual dividend of $5 per share, and 4,000 shares of common stock outstanding. Assuming that the firm has a 40% tax rate, compute earnings per share (EPS) for the following levels of EBIT: A.)$24,600 B.)$30,600 C.)$35,000 Part A, EPS = $.375

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P13–11EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred...

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