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- January 9, 2020 at 7:07 am #557218
The current accounting year of Entity A is 1 April 2018 to 31 March 2019.
On 1 April 2018, Entity F has 9,000,000 ordinary shares. All the share related transactions for this year are listed as below:
• On 1 May 2018, Entity F issues a 1 for 3 rights issue of $2.00 each. Actual cum rights is $10.00.
• On 31 July 2018, Entity F repurchases 50,000 of its own shares at current market price.
• On 1 October 2018, Entity F issues 600,000, 10% irredeemable convertible preference share of $6,000,000 at one ordinary share for every three irredeemable convertible preference share.
• On 31 October 2018, Entity F makes a 1 for 10 bonus issue.
• On 1 January 2019, Entity F issues 200,000 additional shares at full market price.
• On 1 March 2019, Entity F makes a 3 for 1 share split.
Super has issued employee share options to several key senior staff which are 2,000,000 share options to be convertible to 2,000,000 ordinary shares at an exercise price of $2.50 and the market average for the current year is $8.00.
The profits after tax before any dividend for the period of 1 April 2018 to 31 March 2019 is $68,200,800 and the previous EPS for the year ended 31 March 2018 is $4.8314 per share. The tax rate is 16.50%.Find the Basic earnings per share for the year ended 31 March 2019.
I computed the Weighted average number of ordinary share is 39,433,750, which is the correct figure. So, the Basic EPS should be $68,200,800/39433750=1.7295. However, the answer is 1.4365. But, the convertible preference share or bonds should not affect the Basic earnings per share. I don’t know any factor could affect the profits after tax before any dividend. Could you give me some advice?
January 9, 2020 at 7:46 am #557227This question cannot possibly be asked in Paper FA (especially because of the mention of share options).
Check that you have asked in the correct forum 🙂
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