SFactory

EPS/EBIT ANALYSIS FOR HERSHEY CO.

All the calculations can be found on the excel document: https://unisabanaedu-

my.sharepoint.com/:x:/g/personal/danielagogo_unisabana_edu_co/EUVHL0np
nM1NluRq1EUjJ4MBnjANZlZxX6nxeKHjOv1wNA?e=iD57vo
EPS/EBIT Analysis:

If we use data from boom, the company should go with a financing option
of 100% debt, because these ratio shows the possible profitability of the
company. Hershey’s EPS is 2.910, that means that if the company distributed
every dollar of income to its shareholders, each share would receive almost 3
dollars.
 EPS/EBIT Chart:

The differentiating point or breakeven point is near 3,000,000,000

dollars, meaning that if the money needed by the company was that value, it
would not matter what financing option they used. From that point to the real
needed money point, the 50/50 and the only stock option have really close
values, but the debt one grew instantly when the differentiation point was left
behind.
Recommendations:
Doing this is very good for the company because they can see what could
generate highest EPS for them and what would be better to finance the company
operations. We think that Hershey's CFO have to decide different options. First,
Hershey’s should use 100% stock to raise capital in a recession (see 0.288 EPS).
However, Hershey’s should use 100% debt to raise capital in a boom (see 2.910
EPS), rather than with stock or stock/debt combination, because that would
generate a higher earnings per share.