Weaknesses of the EBIT-EPS Analysis Include

question 108

Multiple Choice

Weaknesses of the EBIT-EPS analysis include

• A) that it disregards the implicit costs of debt financing.
• B) that it ignores the effect of the specific financing decision on the firm's cost of common equity capital.
• C) that it considers only the level of the earnings stream and ignores the variability inherent in it.
• D) all of the above.

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Definitions:

Interdependence

The mutual reliance between two or more groups, individuals, or systems where the actions of one affect the outcomes of the others.

Accommodation

Or smoothing, involves playing down differences and finding areas of agreement.

Conflict Management

Involves employing strategies to limit the negative aspects of conflict while increasing the positive aspects with the goal of improving learning and group outcomes.

Trivial

Insignificant or of little importance; not worth considerable attention or concern.