Home > categories > Machinery & Equipment > Other Construction Machinery > Does a company's EPS increase because its cash increases due to selling its assets like machinery or property?
Question:

Does a company's EPS increase because its cash increases due to selling its assets like machinery or property?

Thanks for your help.

Answer:

Not necessarily. Machinery and property are capital assets, and selling them reduces the overall profit (assets - liabilities) If there is any profit (according to book values), it isn't strictly speaking earnings.
EPS (earnings per share) is unaffected by increases in cash. If a company sells machinery and property and it creates a gain (selling price is more than tax basis of assets), then EPS would increase, all things being equal.

Share to: