Difference between EBIT & EPS

EBIT EBIT is usually listed on a company's income statement. It is near the bottom of the statement and indicates the company's profit before it pays interest and taxes. It represents the company's actual operating profit and its ability to produce income. To calculate a company's EBIT, subtract the company's expenses from its revenues. This indicates the actual amount of money a company earned before paying required expenses, which are taxes and interest. EPS EPS is also often found on a company's income statement. To calculate it, divide the company's net profit, minus dividends, by the average number of shares of stock outstanding. It is very difficult to find the actual outstanding number of shares of stock outstanding; therefore, companies use an average number. A trailing EPS is the total of a company's EPS for four consecutive quarters, or one year. A company calculates a rolling EPS by using the previous two quarters' EPS amounts and the estimated future EPS numbers for the next two quarters. Trend percentages Method of analyzing information obtained over an extended period by choosing a baseline period (usually the earliest year) and stating the data associated with subsequent periods as a percentage of that period. The changes in financial statement items from a base year to following years are often expressed as trend percentages to show the extent and direction of change. Two steps are necessary to compute trend percentages. First, a base year is selected and each item in the financial statements for the base year is given a weight of 100 percent. The second step is to express each item in the financial statements for following years as a percentage of its base-year amount. This computation consists of dividing an item such as sales in the years after the base year by the amount of sales in the base year.

Optimum sales mix Sales mix is an important consideration in the world of product and financial management. Changes in sales mix can signify changes in consumer demand, which is helpful for new product development. Finding the sales mix variance can help to both track changes in the sales mix over time as well as identify growth areas. It can also help to explain away declines and increases in product revenue, which is very important when trying to diagnose budgeting problems

Determine the current sales mix. You will need to know the sales for all major product groups. For instance, for XYZ comnpany let's say there are 2 different products. Product 1 is selling $4,000 in sales and Product 2 is selling $6,000 in sales per month.
2

Calculate the percentage mix. Divide the sales for each product by the total. In this example Product 1 represents 40 percent ($4,000/$10,000) and Product 2 represents 60 percent ($6,000/$10,000).
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3

Track the change from month to month. Let's say in the following month, sales of Product 1 increased to $10,000, and Product 2 sales increased to $20,000.
4

Calculate the new percentage. The new sales mix of Product 1 is 33 percent ($10,000/$30,000) and 66 percent for Product 2 ($20,000/$30,000).

Calculate the variance in sales mix. Product 1 percentage of total sales changed from 40 to 33 percent. Divide the change by the previous month. The calculation is 7 divided by 40 equals 17.5 percent. This is the one-month variance for Product 1. Product 2 sales went from 60 percent of sales to 66 percent of sales. The calculation is 6 divided by 60, or 10 percent sales variance

Optimal product mix is at that point where net profit from the sales of that product mix is maximum.