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Rights issue fraction in Eps calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Rights issue fraction in Eps calculation

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  • November 28, 2020 at 7:28 am #596794
    empress01
    Participant
    • Topics: 4
    • Replies: 2
    • ☆

    Good day sir,
    I found out that if a capital change is due to a bonus issue, each preceding shares available must be multiplied by the bonus fraction. I want to confirm if the same is true for right issue i.e Do all the preceding also get affected or just the immediate balance before the rights issue?

    Thanks

    November 28, 2020 at 7:59 am #596803
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7142
    • ☆☆☆☆☆

    Hi,

    Yes, you are correct. If we have a rights issue then the shares in issue prior to the issue taking place are adjusted using the rights issue fraction.

    Thanks

    November 28, 2020 at 4:50 pm #596917
    empress01
    Participant
    • Topics: 4
    • Replies: 2
    • ☆

    Thanks for the reply sir

    To confirm you mean only the immediate shares in issue prior to the right issue is adjusted right?

    December 5, 2020 at 8:30 am #597709
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7142
    • ☆☆☆☆☆

    You’re welcome!

    It would be all shares in issue prior to the rights issue. So, if there was a rights issue in 30 June, then we would apply it to the shares in issue before this date.

    Thanks

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