This workout asks us to calculate the EBIT, EBITDA and recurring diluted EPS So we've got an income statement at the top here, quite a large one And it's given us some information all the way down to diluted EPS at the moment We've then got some management, discussion, analysis and notes. And then some room to do our answer So in order to start off with EBIT and EBITDA, we'll have to start off with operating profit But then I need to go looking for anything which shouldn't have been there Now I can see in the MD&A and notes that there's an impairment expense in SG&A That means that my SG&A is too high Which means my operating profit is too low, I will need to add back that impairment expense There's also restructuring charge in COGs and the same thing has happened COGs is too high, operating profit is too low, I will need to add that back. That will then get me to EBIT Then I add back depreciation and amortization to get me EBITDA So my operating profit, we need to go and find that, was 170 We then add back the impairment expense and the restructuring charge If I add those three together, that gets me EBIT And we then add back depreciation and amortization of 58, that will get me my EBIT of 293 So EBIT and EBITDA done, the next one was recurring diluted EPS For this, I'm going to start off with net income to common shareholders. And we've got that near the bottom of the income statement That's going to be my starting point I'm them going to go look for any other items which I don't think should have been included Well going up to the income statement, there are some that I see Firstly net income to common shareholders, just above that we've got income/(loss) from discontinued operations Well that's a loss of 10 But it's discontinued, that won't recur next year so it's ok for us to strip that out. We'll add back that 10 to increase net income We can also see the item "other income". Other income, there's actually a note about a little further down and it says Other income primarily relates to a one off gain relating to an acquisition So if that's one off, we can add that back as well So net income Add back the income or loss from discontinued operations and add back that other income Now that figure was pre-taxed (that other income of 10). We'll have to make that post tax because it makes my net income go up Any other items? Well the impairment expense and the restructuring charge will both need to be added back as well They are both pre tax at the moment, so we need to make them post tax which will get me to recurring net income So let's grab these figures, so net income to common shareholders is my starting point, that's 85.5 I then go looking for the income from discontinued operations That was a negative 10, remember I want to add back that expense, so it's now a positive 10 Now the other income expense post tax, that was also a 10 There's my other income expense. Remember we think that's a one off, that's a one off gain (we don't want that to be included in the future) I'm going to subtract of that gain But I also have to say "ah fantastic", that meant that my net income was a little bit too high but it was too high post tax So we need to add back just the post tax amount So I times it by one minus the marginal tax rate So instead of there being a gain of 10, we say "ah okay that gain did exist of 10" But when it got to net income it was post tax (only 6.5) and we now subtract off that 6.5 We now need to do something very similar for the impairment expense The impairment expense we said needed to be added back, but again that needs to be added back by one minus the marginal tax rate So net income won't go up by 20, it will go up by 13 We do exactly the same for the restructuring charge I can now sum everything above and my recurring net income is 131.3 Let's do that final line now, so my recurring diluted EPS That's going to be my recurring net income and I will then divide that through by diluted weighted shares outstanding To give me a figure of 2.19 Why do we divide it by the weighted average shares outstanding? Well remember this is net income for an entire period So I need the number of shares that were in existence for the entire period or the number of shares outstanding I should really say