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9:47 am
May 14, 2010
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Jae Jun
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ok I answered to quickly.
You are right. If EPS increased due to a reduction in expenses, that amount should be subtracted from the EPS amount to get the true earnings.
I should have put a conditional statement to say that if the difference is negative, then it should be a — and not a -+.
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8:25 am
May 14, 2010
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dmop12
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Could the problem be that the formulas for row 8 are backwards? Currently thel formula for cell d8 reads"=if(e6=0,0,(d6-e6)/e6.
Shouldn't it be (e6-d6)? If so then I fixed it, sorry for the confusion.
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8:14 am
May 14, 2010
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dmop12
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I'm still not quite understanding. In the OSV spreadsheet a tax rate reduction would result in the subtraction of the EPS affected by the tax rate. I understand this, and this is what happens in the OSV spreadsheets. If what you are saying is that a decrease in an expense will increase EPS from one year to the next, then I get it. However, shouldn't this difference between the expense accounts be reduced from earnings per share? Here is my train of thought using an increase in R&D expense.
2010 2009
R&D expense 100,000 90,000
% difference 11%
*Gain/(Loss)* (11,000)
Tax on Loss (40%) (4400)
Loss EPS (100000shs) ( .04)
Original EPS .10
Adjusted EPS .14
** On the OSV spreadsheet this would have shown up as a gain on difference in expense accounts. Therefore, causing .04 to be subtracted from the Original EPS**
Once again thanks for helping me understand this concept.
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7:20 am
May 14, 2010
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Jae Jun
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because if SG&A goes down, then EPS goes up.
You reduce expenses and the earnings will go up.
Reduce taxes and earnings go up.
Same for the other way around. Increase expenses and earnings go down.
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1:53 pm
May 13, 2010
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dmop12
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| Member | posts 42 |
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My question is concerning the calculation for Adjusted EPS under the NonOperating tab. When there is an increase in an expense from the past year's expense, shouldn't the eps affected be added back to the original diluted eps (vice versa for a decrease)?
Here is an example using SOHU's SG&A. SOHU is showing $32.9 in 2010 and $34.20 in 2009 for SG&A expense, a difference of -4%. After multiplying the difference by the SG&A, you get -.03EPS affected by the difference. In the spreadsheet it is then adding the .03 difference to the original eps to get a value of .76. I can't figure out why we are adding it back instead of subtracting.
Thanks,
David
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