The basic shortcoming of EBIT-EPS analysis is that this model focuses on the maximization of earnings rather than on the maximization of owner wealth as reflected in a firm's stock price.

Question

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EBIT-EPS analysis only considers the impact of earnings on EPS, without taking into account other factors that affect a firm's stock price, such as market conditions, competition, and investor sentiment. Therefore, it may not always lead to the best decision for maximizing owner wealth.

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