EPS

This topic has 5 replies, 2 voices, and was last updated 7 years ago by MikeLittle.

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July 15, 2015 at 10:14 pm #260865
josy87
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Hello Sir

Please I need help with this question

waffle had share capital of $7.5 million in 50c equity shares at 1 October 20×6. On 1 January 20×7 it made an issue of 4 million shares at full market price immediately followed by 1 for 3 bonus issues.
the FS at 30 September 20×7 showed a profit for the year of 12 million.

What is the EPS

Sir I dont understand why the share issue of 4 million is time apportioned.
July 16, 2015 at 8:55 am #260878
MikeLittle
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Is the answer eps = 50 cents?
July 16, 2015 at 10:16 am #260885
josy87
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yes sir
July 16, 2015 at 11:52 am #260894
MikeLittle
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Oh! That’s a relief!

Why is the 4 million issue time apportioned? Because we want to know the equivalent number of shares in issue for a full year!

4 million in issue for 9 months is the equivalent of 3 million for a full year

We need to time apportion any change in the issued share capital and that’s why the figure we’re looking for is called the Weighted Average Number of Equity Shares in issue during the year

Ok? Or do you need more?
July 16, 2015 at 1:06 pm #260902
josy87
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Sir I still dont understand, i have never seen such a question before.
July 16, 2015 at 2:29 pm #260921
MikeLittle
Keymaster
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Then you haven’t worked through the examples in the free course notes on this site!
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