Answer to Question No-b
EPS= Net Profit after Tax/ Number of common shares outstanding
Year | Net Profit After Tax | # of common shares outstanding | EPS | 2000 | Rs. -50000 | 50,000 | (1.00) | 2001 | -20000 | 50,000 | (0.40) | 2002 | 15000 | 50,000 | 0.30 | 2003 | 35000 | 50,000 | 0.70 | 2004 | 40000 | 50,000 | 0.80 | 2005 | 43000 | 50,000 | 0.86 | 2006 | 48000 | 50,000 | 0.96 |
Except first two year firm’s EPS has been increased, but share price did not increase with that rate .The firm’s EPS has been increasing in every year, still it has been struggling for cash to repay its debt. It indicates how a profitable firm can be in difficult position.
Answer to Question No-C
Operating Cash Flow(OCF) in 2006= Net Profit After Tax + Depriciation and Amortization =Rs. 48000+11000 =Rs. 59000
OCF measure of how well a company’s current liabilites can be covered by the cash flow