EBIT

Interest Bond*CR
bond 20000
cr 0.1
pd No;shares issued*Per share
no:shares issued pstock 600
per share pstock 4
tax rate 40%
A1
EBIT 10,000
less Interest 2,000
EBT 8,000
less Taxes 3,200
Net profit after tax 4,800
less pd 2,400
Earning available common stock 2,400
E.ps 2.4
eps= EAC/No:oustanding commn
NO:outstanding shares 1000

DFL change % EPS/ Change % EBIT

Change % Eps 100%
change % EBIT 40%
case 1
we increase 40% in EBIT will cause 100% increase in EPS
if we increase 1% in EBIT will cause 2.5% increase in EPS
 10000
2000

2400

A2
14000
2000
12000
4800
7200
2400
4800
4.8

100%/40% 2.5 times

case 1 a 40% increase EBIT