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Financial Management

Question
CBSEENBS12004233
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Explain the ‘Earning Before Interest and Taxes - EBIT’.

Solution

EBIT is that profit of the business from which the payment of interest and tax remains to be deducted. It is also known as the operating profit of business. This is an index of the profit earning capacity of the business. For example, the EBIT in case of two companies is rupees eight crore and ten crore respectively while their EAIT (Earning After Interest and Taxes) is five crore and four crore respectively. Here, it can be said that on the basis of EBIT the second company has a more profit earning capacity.

Some More Questions From Financial Management Chapter

What is meant by Financial Management?

Every manager has to take three major decisions while performing the finance function. Explain them.

Explain any six factors affecting the financing decision of a company.

Explain any six factors affecting the dividend decision of a company.

What is meant by Dividend decision? State any four factors affecting the Dividend decision.

What is meant by Financing decision? State any four factors affecting the financing decision.

 

Explain briefly the factors affecting the investment decision.

Explain, in brief, any five factors that should be taken into consideration while determining the long-term dividend policy.

Or

Explain factors affecting the dividend policy of a company.

“Determining the relative proportion of various types of funds depends upon various factors”. Explain any five such factors.

Or

“Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors”. Explain any five such factors.

Investment decision can be long-term or short-term. Explain long-term investment decision and state any two factors affecting this decision.

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