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Plumstead Co had 4 million equity shares in issue throughout the year ended 31 March 20X7.
On 30 September 20X7 it made a 1 for 4 bonus issue. Profit for the year ended 31 March 20X8
was $3.6 million, out of which an equity dividend of 20c per share was paid. The financial
statements for the year ended 31 March 20X7 showed earnings per share (EPS) of $0.70.
What is the EPS for 2OX8
The equity dividend of 20c per share paid is not deducted from profit of 3.6m in EPS calculation…why?
Is it because dividends are paid out of retained earnings?
Pls help ..Thanks
Yes. The earnings figure is the profit for the year and any dividends are deducted from the retained earning figure in the SOCIE, so no adjustment is made to the profit for the year figure on the SPL.