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Question on EPS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Question on EPS

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • January 9, 2020 at 7:07 am #557218
    torresxdd
    Member
    • Topics: 24
    • Replies: 11
    • ☆

    The current accounting year of Entity A is 1 April 2018 to 31 March 2019.
    On 1 April 2018, Entity F has 9,000,000 ordinary shares. All the share related transactions for this year are listed as below:
    • On 1 May 2018, Entity F issues a 1 for 3 rights issue of $2.00 each. Actual cum rights is $10.00.
    • On 31 July 2018, Entity F repurchases 50,000 of its own shares at current market price.
    • On 1 October 2018, Entity F issues 600,000, 10% irredeemable convertible preference share of $6,000,000 at one ordinary share for every three irredeemable convertible preference share.
    • On 31 October 2018, Entity F makes a 1 for 10 bonus issue.
    • On 1 January 2019, Entity F issues 200,000 additional shares at full market price.
    • On 1 March 2019, Entity F makes a 3 for 1 share split.
    Super has issued employee share options to several key senior staff which are 2,000,000 share options to be convertible to 2,000,000 ordinary shares at an exercise price of $2.50 and the market average for the current year is $8.00.
    The profits after tax before any dividend for the period of 1 April 2018 to 31 March 2019 is $68,200,800 and the previous EPS for the year ended 31 March 2018 is $4.8314 per share. The tax rate is 16.50%.

    Find the Basic earnings per share for the year ended 31 March 2019.

    I computed the Weighted average number of ordinary share is 39,433,750, which is the correct figure. So, the Basic EPS should be $68,200,800/39433750=1.7295. However, the answer is 1.4365. But, the convertible preference share or bonds should not affect the Basic earnings per share. I don’t know any factor could affect the profits after tax before any dividend. Could you give me some advice?

    January 9, 2020 at 7:46 am #557227
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    This question cannot possibly be asked in Paper FA (especially because of the mention of share options).

    Check that you have asked in the correct forum 🙂

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Question on EPS’ is closed to new replies.

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