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    Question

    A company has EBIT ₹10,00,000 and interest

    ₹2,00,000. Tax rate 30%. EPS impact if company has 1,00,000 equity shares and no debt vs with debt? Which measure shows interest effect before tax?
    A EPS Correct Answer Incorrect Answer
    B EBIT Correct Answer Incorrect Answer
    C EBT (Earnings before tax) Correct Answer Incorrect Answer
    D ROE Correct Answer Incorrect Answer
    E EPS diluted Correct Answer Incorrect Answer

    Solution

    Interest reduces earnings before tax (EBT). EBIT unaffected by interest, EPS is after tax.

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