prepare an EPS/EBIT Analysis for Royal Dutch Shell Plc

purpose

Shell is featured in the opening chapter case as a firm that engages in excellent strategic planning. By some measures, Shell is the second largest oil and gas company in the world and one of the largest firm globally. Incorporated in the United Kingdom but headquartered in the Netherlands, Shell has worldwide reserves of 14.2 billion barrels of oil equivalent. An important part of effective strategic management is wisely using debt versus equity for raising capital. This exercise gives you practice in preparing an EPS/EBIT analysis for a company to determine whether debt versus equity or some combination of the two is best for the firm to expand and grow.

instructions

Step 1 Shell needs to raise $1billion to acquire a rival firm in Southeast Asia.

Step 2 Prepare an EPS/EBIT analysis to determine whether Shell should use stock or debt to raise the needed capital.

Step 3 Prepare a two-page executive summary to provide justification for your financing decision.