Need some help in answering these questions:
2. How does EBIT/EPS analysis allow financial managers to determine the capital structure of the firm?
3. What benefits accrue to a company by going public? What are some of the principal reasons a firm may want to remain privately held?
The question requires you to answer the importance of off balance sheet financing, EBIT/EPS analysis and the importance and benefits of going public/ remaining private.
<br>There are some assumptions, which the question makes. First, the question assumes that there is a fixed set of reasons why a company goes public; this is not supported by evidence. One company may go public because it has too many debts, and another may go public because it wants to raise capital. Second the question assumes that to remain private a company may have special reasons. This is not always so, in fact most companies start as small self financed businesses and remain so even when they have expanded substantially. On the other hand dubious businesses make a big show of being launched public and only to raise money from the stock exchange.
<br>Given below is a template to help you answer your question.
<br>IMPORTANCE OF OFF BALANCE SHEET FINANCING
<br>1. The cost of off balance sheet financing is reflected as an expense, usually hidden, and as such ...