The basic shortcoming of EBIT-EPS analysis is that this model focuses on the maximization of earnings rather than on the maximization of share price.

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EBIT-EPS analysis is a financial model that helps determine the ideal capital structure of a company by analyzing the relationship between earnings before interest and taxes (EBIT) and earnings per share (EPS). While this analysis is useful, its primary focus is on achieving maximum earnings rather than maximum share price.

The Basic Shortcoming of EBIT-EPS Analysis Is That This Model