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Anda has correctly calculated EPS for the current year ended 30 September but is confused about how to restate last year’s disclosed EPS.
On 1 January 2014 there had been a 1 for 7 bonus issue and on 1 June 2014 there had been a 3 for 2 rights issue with an exercise price of $2. Mid-market price on 31 May 2014 was $7 and Anda’s corporate rate of income tax is 25%.
By what fraction should last year’s disclosed EPS be multiplied?
PS: I dont understand this question.
You need to work through the earnings per share chapter in the course notes!
Last year’s earnings per share need to be adjusted by multiplying the stated eps by the reciprocals of the bonus fraction and the rights fraction
So, multiply by 7/8 and by 4/7 ie multiply by 1/2