EPS
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Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company:
Year 2003 Estimated yr 2004
GDP 11,000 billion
GDP growth 3.5%
Sales per share $800
Operating profit margin 12%
Depreciations/ Fixed Assets 14%
Fixed Asset turnover 2
Interest rate 3.5%
Total asset turnover 0.7
Debt/ Total Asset 45%
Tax rate 36%
In addition, a regression analyst indicates the following relationship between growth in sales per share for MacLog and GDP growth is: % change sales per share= 0.015+ 0.75 (%change GDP)
Calculate the firm EPS for 2004
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Solution Summary
The solution explains how to calculate the earnings per share.
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The % change in sales per share = 0.015 + 0.75 X 3.5% = 4.125%
The sales per share for 2004 = 800 X (1+4.125%) = $833
Operating profit margin (EBITDA) = 12%
So EBITDA per share = 833 X 12% = ...
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