Earning per share

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November 25, 2015 at 4:37 pm #285235
xinyi0711
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Hi, can you help me solve tis question?
Acorn Co had the same 10 milion ordinary shares in issue on both 1April 20X1 and 31March 20X2.On 1April 20X1 the company issued 1,200,000 $1 units of 5% convertible loan stock.Each unit of stock is convertible into 4 ordinary shares on1April 20X9 at the option of the holder.The following is an extract from Acorn Co’s income statement for the year ended 31 March 20X2?
Profit before interest and tax $980000
Interest payable on
5% convertible loan stock ($60000)
Profit before tax. =$920000
Income tax at 30% ($276000)
Profit for the period. =$644000
Calculate the diluted earnings per share for the year ended 31March 20×2.
November 25, 2015 at 10:55 pm #285305
ammar5295
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Diluted EPS = [$644,000 + $60,000 (1 – 0.3)] / [10,000,000 + 4,800,000*]
= $686,000 / $14800000 = 4.63c
*(1,200,000 / 1) x 4 = 4,800,000
You can post your answer in Ask your tutor section so they can provide you with an answer. That’s my answer. I hope it helps.
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