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Hi The video on EPS was very good thanks. https://opentuition.com/cima/cima-f2/cima-f2-diluted-earnings-per-share/
I tried to use the pro-forma from this video for a question and had no luck.
10,000,000$1 ordinary shares in issue. Earnings for the year is £5,950,000. EPS is 59.5c. Throughout year ended 31st dec x1 there were outstanding options to purchase 74,000 ordinary $1 shares at $2.50 per share. the average fair value of one ordinary $1 share was $4.
Calculate the DEPS?
1. Shares under options= 10,000,000
2. Shares under market value= (10,0000*2.50)/4.00=6250000
3. free shares= 3750000New EPS= 5,950,000/(10,000,000+3,750,000) = 43.2
But the answer is 59.3. please help?
Hi,
Your mistake is with the number of shares under the option. You’ve used the number of shares in issue of 10,000,000 and not the number of shares under the option of 74,000. If you put in 74,000 then you should get the right answer.
Thanks
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