Final answer:
Managerial actions to boost a company's Earnings Per Share (EPS) include achieving better credit ratings to lower borrowing costs, and using cash flows or borrowed funds to repurchase shares, reducing the share count and potentially increasing EPS. However, such strategies should align with a comprehensive financial plan to ensure long-term growth.
Step-by-step explanation:
The question revolves around managerial actions a company can undertake to bolster its Earnings Per Share (EPS). When a company makes decisions involving capital, it's typically with the expectation of future profits, which may include purchasing long-term assets or investing in R&D. There are four primary methods to raise financial capital: from early-stage investors, by reinvesting profits, by borrowing through banks or bonds, and by selling stock. Options b, d, and e in the query relate directly to these capital-raising methods.
Option b suggests that achieving an A+ credit rating and thus obtaining lower interest rates on borrowings can be beneficial. This can reduce interest expenses and potentially boost EPS if the borrowed funds lead to profitable investments. Option d involves reinvesting cash flows from operations back into the company by repurchasing shares, which can also raise EPS by reducing the number of outstanding shares and increasing the profit attributable to each remaining share. Lastly, option e suggests using cash from new loan issues to buy back stock regularly, which can, in theory, support EPS similarly to option d. However, this carries risk as increasing debt for share repurchases might not always lead to a net positive outcome for EPS.
It is imperative to note that while these actions can increase EPS, they must be done within the context of a sound overall financial strategy to ensure the long-term sustainability and growth of the company.