5502 Company Particulars (Amount in S) Company Company B EBIT (Earnings Before Interest and Tax) 200000 200000 200000 Less: Interest (10% Debentures) 0 30000 40000 EBT (Earnings Before Tax) 200000 170000 160000 Less: Income Tax @30% 60000 51000 48000 Earnings Available for Equity Shareholders 140000 (EAT) 119000 112000 No. of Equity Shares (Existing + Additional) 10000 7000 6000 Earnings Per Share (EPS) 14 17 18.667 Financial Leverage (EBIT/EAT) 1.4 1.7 1.8 Consider the above information related to three companies Based on the information a) Comment how use of fixed-interest bearing securities (Debentures) contribute to change in EPS? (Two points) (2 marks) b) Which company contributes to higher financial risk? (1 mark) Give rationale for your choice (two points only) (1 mark) va 2