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PLAN 1
YEARS
No of equity
shares @ 10 each
IST
2ND
3RD
4TH
5TH
ROI
0.11
0.10
0.11
0.15
0.20
EPS
0.68
2.26
2.17
3.10
4.04
Current Ratio
1.54
1.54
1.55
1.56
1.64
PLAN 2
YEARS
No of equity
shares @ 10 each
IST
2ND
3RD
4TH
60,000
60,000
60,000
60,000
60,000
ROI
0.11
0.12
0.13
0.19
0.23
EPS
0.62
1.37
2.19
5.02
7.89
1.41
1.19
1.04
1.12
1.37
Current Ratio
5TH
COMMENTS:
The company is more financially leverage in plan 2 , in plan 2 the
company is having 85% debt capital.
The EPS is increasing in plan 1 at the increasing profits, but it is
not that much considerable difference from plan 2.
Plan 1 is a conservative plan
The financial leverage helps in improving earnings per share.
Return on investment is increasing in plan 2.
In plan 1 current ratio is more is shows companies liquidity
position is high.
The above information shows that second plan is beneficial for
the company.
Because here company is getting mote return on investment.
COMMENTS:
The company is more financially leverage in first plan as
compared to plan first plan
The EPS is increasing in second plan at the increasing profits.
The financial leverage helps in improving earnings per share.
Return on investment is increasing in second plan
Current ratio is also increasing in second pan.
So second plan should be chosen by the company it will be
beneficial.