The earnings per share of a company decreased if the additional capital it wanted was obtained by issuing additional shares of stock. Please explain how this phenomenon comes about. Please also discuss how this decrease in EPS would affect a company’s decision whether to issue equity (shares of stock) or debt (a bond issue) for raising capital.
The earnings per share of a company decreased if the additional capital it wanted was obtained by issuing additional shares of stock. Please explain how this phenomenon comes about. Please also discuss how this decrease in EPS would affect a company’s decision whether to issue equity (shares of stock) or debt (a bond issue) for raising capital.
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 12QTD
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The earnings per share of a company decreased if the additional capital it wanted was obtained by issuing additional shares of stock. Please explain how this phenomenon comes about. Please also discuss how this decrease in EPS would affect a company’s decision whether to issue equity (shares of stock) or debt (a bond issue) for raising capital.
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