The cost of Capital (part b) video : Question 6a

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November 30, 2011 at 9:09 pm #50821
regulator
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Hi,

To part A of Example 6, its mentioned that b is the retained earnings as a percentage of EPS. Do we use EPS as an indicator of Profits after interest and tax? Or am I just getting this totally wrong?
December 6, 2011 at 9:21 am #90425
John Moffat
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Earnings are profits after interest an tax. EPS is earnings divided by the number of shares.

Some of the earnings will be paid as dividends, what is not paid is retained in the company and used for expansion.
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