Does Earnings Per Share factor in cost of capital/debt?

Question

If a company has ongoing debt (loans, etc.), is the cost of servicing that debt subtracted from revenue when EPS is calculated?
Put another way:
If you had 2 stocks:  S1, S2, and everything else was equal, and EPS for S1 (EPS1) was 10 and EPS2 was 5, but S1 had a lot of long term debt, would S1 still be worth more because :

It has higher EPS (10/5, twice as much)
The cost to service the Debt is already factored into EPS.

Satria Digja Pratama · Answer

In Financial Statement, Debt recorded under the balance sheet, while earning recorded in  Income Statement. So, short answer, No.
The firm's debt doesn't include earnings.
But the interest expense does.
To give you an illustration:
Firm S1 has 100 in earning, has 150 in Debt.
Interest expense of that debt, let say 10% (15) included in Earning.
Hope this helps

Does Earnings Per Share factor in cost of capital/debt?

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