# EPS Shortcut Formula and Sensitivity
When a question asks for EPS or its change without making you re-draw the full income statement, use this one-line shortcut.
## The shortcut
> EPS = [(EBIT − Interest) × (1 − t) − Preference Dividend] ÷ Number of equity shares
It collapses four lines of the income statement into a single expression. Memorise it.
## Sensitivity to EBIT
For a given % change in EBIT (sales held within the same fixed-cost band):
> % change in EPS = DFL × % change in EBIT
Numerator change = (ΔEBIT) × (1 − t). Denominator (original EAES) stays put. So the algebraic factor of amplification is precisely DFL.
## Sensitivity to Sales
> % change in EPS = DCL × % change in Sales = DOL × DFL × % change in Sales
## Reverse application — "At what sales will PAT be 3/4 of current?"
If the question asks for a sales level corresponding to a given EPS or PAT target, work backwards:
1. Compute target PAT (or EPS × shares + Pref Div).
2. Gross up to target EBT, then add Interest to get target EBIT.
3. Add Fixed Cost to get target Contribution.
4. Divide by P/V ratio to get required Sales.
## When EBIT is missing but DFL is given
If DFL = EBIT / (EBIT − Int) and you know DFL and Interest:
> EBIT = DFL × Interest ÷ (DFL − 1)
A crisp algebraic move that saves a full reconstruction.