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A company is doing EBIT-EPS analysis as it is planning to use debt in its capital structure.

Arrange the following items in correct sequence for calculation of EPS

(A) Earnings Before Tax

(B) Earnings Before Interest and Taxes

(C) Earnings After Taxes

(D) Interest on Debt

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 4

EPS computation starts with Earnings Before Interest and Taxes (B). Interest on debt (D) is deducted to arrive at Earnings Before Tax (A). Tax is then deducted to obtain Earnings After Taxes (C), which divided by the number of equity shares gives EPS. Correct sequence: B, D, A, C.

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