Q1) Southland Industries has $60,000 at 16% (annual interest) bonds outstanding, 1,500 shares of favoured stock paying annual dividend of $5 per share, and 4,000 shares of common stock outstanding. Suppose that firm has a 40% tax rate, compare Earnings per share (EPS) for following levels of EBIT:
a) $24,600
b) $30,600
c) $35,000
Q2) What do you mean by activity-based management and how can it be used to improve profitability of the company?