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EPS calculation

NNikita4y ago
Hi Sir, Hope you are well! On 31 December 20X1, the issued share capital consisted of 4,000,000 ordinary shares of 25¢ each. On 1 July 20X2 the entity made a rights issue in the proportion of 1 for 4 at 50¢ per share and the shares were quoted immediately before the issue at $1. Its trading results for the last two years were as follows: Year ended 31 December 20X2 20X1 $ $ Profit after tax 425,000 320,000 Show the calculation of basic EPS to be presented in the financial statements for the year ended 31 December 20X2 (including comparative). I was calculating the weighted average no. of shares .. however I am not understanding the below calculation performed: Step 3 – Weighted average number of shares No. Bonus fraction Time Weighted average 1 January b/f 4,000,000 1/0.9 6/12 2,222,222 1 for 4 rights 1,000,000 –––––––– 1 July b/f 5,000,000 6/12 2,500,000 –––––––– –––––––– 4,722,222 –––––––– Why B/f figures are 6/12 ? and instead right issue figures should have been instead.
P2-D2P2-D2Tutor4y ago#1
I'm well, thank you. The opening 4,000,000 were in issue for 6 months and so we need to multiply by the 6/12, with the 5,000,000 being in issue for the following 6 months so also multiplied by the 6/12. This is helping with the weighting calculation.
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