EPS kit

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November 21, 2017 at 2:28 pm #417158
iyamu
Participant
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Dorabella has the following capital and reserves on the 1 April 2001
$000
Share capital $1 O.share 7,000
Share premium 900
Rev. Reserves 500
R. E. 9,000
Total shareholder’s funds= 17,400

Dorabella makes a bonus issue, of one share for every seven held , on 31 August 2002.
Dorabella Plc results are as follows :
Profit after tax 2003 : $1,150,000 and 2002 $ 750,000

Calculate EPS for the year ending 31 March 2003 , together with the comparative EPS for 2002 that would be presented in the 2003 accounts .

Answer : EPS for 2012 is 750,000/8,000,000= $ 0.094
EPS for 2003 is 1,150,000/8,000,000 = $0.144
Again my question is how do they arrive at the number of shares used in EPS calculation for both years 7,000,000 + 1,000,000
November 21, 2017 at 3:01 pm #417171
MikeLittle
Keymaster
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The bottom half of page 117 in the course notes deals with this issue of bonus shares together with the example Larissa on page 118

Both of your problems about 7 million and 1 million shares should be clearer when you have re-worked the Larissa example

OK?
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